Why the Suno Lawsuit Matters for the Music Tech Ecosystem

In June 2024, the major labels - Universal Music Group, Sony Music Entertainment and Warner Music Group - together with the Recording Industry Association of America (RIAA) filed lawsuits against Suno and its peer Udio AI alleging that the AI music tools trained on copyrighted recordings without authorisation.

The case, filed in US federal courts, accused Suno of stream-ripping recordings from YouTube by bypassing encryption systems. Damages are claimed at up to US $150,000 per work infringed, plus an additional US $2,500 per act of circumvention. Suno, in response, argues that its training practices fall under “fair use”, framing its technology as an innovation rather than an infringement.

If the labels succeed, the result could redefine how generative AI systems must license underlying recordings. If they settle, it may set a new framework for how rights holders negotiate with AI developers. Reports already suggest early discussions between the major labels, Suno and Udio about possible licensing structures.

For rights owners, this moment offers a chance to reset contract terms, revenue-sharing models and attribution standards for AI-generated works. For technology companies, it is a reminder that “build first, clear later” is becoming a riskier path as regulation and litigation catch up.

This is more than a single lawsuit. It is a test case for how creative value, technology and rights governance can coexist. A Suno victory or favourable settlement could open the door to new norms for AI-music licensing. A decisive win for the labels would push tech platforms towards heavier up-front rights clearance, reshaping the economics of music AI overnight.

Despite the ongoing legal dispute, reports indicate that Suno is negotiating to raise over US $100 million at a valuation exceeding US $2 billion, with annual recurring revenue above US $100 million. The scale of investor interest shows how rapidly the AI music sector is commercialising, even as copyright challenges continue. For investors, this signals confidence that Suno’s technology and market position can withstand legal uncertainty and drive a sustainable new category in music creation.

Looking ahead, the implications extend well beyond the United States. UK and EU policymakers are already exploring frameworks to govern the use of copyrighted works in AI training, including transparency obligations and potential collective licensing models. The outcome of Suno’s case may influence whether the UK chooses to align with a more permissive US-style approach or adopt tighter, rights-led regulation. Either way, the verdict will echo far beyond the courtroom, shaping how creators, investors and platforms define fair use in the age of generative music.