The American Federation of Musicians claims that record labels struck lucrative deals with AI music companies but refused to share compensation with the artists whose work trained those systems. The union, representing 70,000 musicians across the United States and Canada, filed a lawsuit in U.S. District Court in New York on Friday against Universal Music Group and Warner Music Group, arguing that both labels received "significant compensation" from AI companies for past copyright violations and licensed "substantial" portions of their music catalogs, yet kept the money.

What Sparked the Legal Battle Over AI Music?

The conflict centers on settlements and licensing deals struck between major record labels and AI music startups. Universal Music Group and Warner Music Group sued AI music generators Udio and Suno in 2024, accusing them of copyright infringement. Both companies settled with Udio last year, and in November, Warner Music Group announced a partnership with Suno, though Universal's lawsuit against Suno remains pending.

The musicians' union argues that these agreements fall under the "new use" provision of its collective bargaining agreements. This provision requires music companies to notify the union when they license music for purposes not covered by existing contracts and to compensate musicians whose work was used to train AI models.

"While the Defendants protected their own interests and created a significant source of new revenue with the retrospective settlements and prospective licenses, they have refused to compensate the musicians whose work, created with their own instruments and through their talent, creativity, and hard work, is fed into AI machines for profit," the union stated in its lawsuit.

American Federation of Musicians of the United States and Canada

How Widespread Is AI Adoption Among Musicians?

Despite the legal tensions, musicians are embracing AI tools at a surprisingly rapid pace. A new study from Boston's Berklee College of Music surveyed more than 1,000 people associated with the music business, including artists, marketers, music supervisors, and video creators. The findings reveal a complex picture of adoption and skepticism.

• Initial Idea Generation: About 33 percent of respondents use AI to generate initial ideas, melodies, or reference tracks that are later reworked by hand.
• Full Backing Tracks: Approximately 26 percent of artists use AI for complete backing tracks in finished work, incorporating the technology directly into released music.
• Lyric Generation: Around 31 percent of musicians use AI specifically for lyric generation, presumably in finished compositions.
• Creative Exploration: An additional 18 percent experiment with AI tools during the creation process but keep them out of the final released track.

Interestingly, the data inverts conventional assumptions about generational tech adoption. Full-time creators use AI at a rate of 92 percent, while artists just starting out use it at only 56 percent, suggesting that established musicians are more likely to integrate AI into their workflows.

"Had we done this study 18 months ago, these numbers would have been a lot lower, and from that perspective it's pretty shocking," explained Mark Ethier, executive director of the Berklee Emerging Artistic Technology Lab, which conducted the research.

Mark Ethier, Executive Director, Berklee Emerging Artistic Technology Lab

What Are the Barriers to AI Music Acceptance?

Despite growing adoption among creators, consumer resistance remains a significant obstacle. A poll conducted by The Hollywood Reporter and the Frost School of Music found that 52 percent of respondents were "not interested" in listening to music from their favorite artists made with the help of AI. This consumer skepticism could limit the commercial viability of AI-assisted music, even as creators increasingly use the technology.

The music industry faces a fundamental tension. On one hand, technology and sampling have long been part of the musical landscape, and supporters argue that AI is simply the next evolution. On the other hand, critics contend that releasing music derived fundamentally from someone else's work raises ethical and originality concerns.

How Are Labels and AI Companies Responding?

Both Universal Music Group and Warner Music Group have issued statements defending their approach to AI partnerships. Warner emphasized that it is "growing the value of music by establishing guardrails and architecting a healthy AI ecosystem on behalf of artists everywhere." Universal stated that it "has been at the forefront of protecting the rights and advancing the interests of artists and songwriters in the age of AI," pointing to its licensing agreements, legislative advocacy, and legal action against what it calls "bad actors".

Warner

Both labels indicated they are in ongoing negotiations with the American Federation of Musicians on a new collective bargaining agreement. Suno and Udio have also made concessions in response to legal pressure. Udio agreed to create a new platform that trains only on licensed and authorized music, with artists able to opt in. Suno agreed to launch new licensed models and implement download restrictions.

Legal experts expect this lawsuit to be just the beginning. Bradford Auerbach, a partner at law firm OGC, noted that unions typically protect the status quo, creating inevitable conflicts when new technology disrupts established business models. "You've got the unions always protecting the status quo, so you've got this invariable conflict of new technology coming in, and moving the cheese for a lot of people that were accustomed to having their business set up the way it was," Auerbach said.

What Should Musicians Know About AI and Compensation?

• Collective Bargaining Rights: The American Federation of Musicians argues that AI licensing falls under "new use" provisions in existing contracts, which require notification and compensation to union members whose work is used.
• Settlement Transparency: The lawsuit alleges that record labels received significant compensation from AI companies but did not share those payments with the musicians whose work trained the systems.
• Ongoing Negotiations: Both Universal Music Group and Warner Music Group are currently negotiating new collective bargaining agreements with the union to address AI-related compensation issues.
• Platform Changes: AI music companies like Suno and Udio have begun implementing licensed training models and opt-in systems in response to legal challenges and settlement agreements.

The outcome of this lawsuit could reshape how AI music companies operate and how compensation flows to musicians. As AI becomes more integrated into music production, the question of who benefits financially from AI-generated music trained on existing catalogs remains unresolved. The case highlights a broader tension in the entertainment industry: how to balance innovation with fair compensation for the creative work that powers that innovation.