🔵 Let's talk about Universal's deal with Udio

So many questions...

Last Wednesday, Universal issued a press release announcing it had reached a deal with Udio, the AI generative music platform that, until then, it had been in the process of suing, citing untold instances of copyright violation. In the release, the companies claim they will “collaborate on an innovative, new commercial music creation, consumption and streaming experience” which will be launching in 2026.

The new service will “transform the user engagement experience, creating a licensed and protected environment to customize, stream and share music responsibly, on the Udio platform.”

Sounds great, right?!

I have various questions, so I thought it would be worth laying them out here, as I suspect most of you might be having similar queries. So let’s dive in…

Whose music is this being trained on?

The entire issue around Udio, just as with its rival, Suno, hung on the music both created sounding like relatively weak copies of existing music. With relatively little effort, one could spin up songs that sounded like whatever you’d described.

With some kind of deal now in place, does this mean Universal is now providing access to its catalogue for the purposes of training AI? We have to assume so based on the press release, but have artists unilaterally signed on for this?

It brings to mind the issues we once saw when artists sued labels for deducting breakage fees on downloads. Breakage fees, for those unaware, were costs held back relating to physical product, originally to handle product getting smashed or otherwise damaged in transit. Ergo, it made no sense that breakage could be charged on digital products… and yet labels still attempted to do so, resulting in various lawsuits from artists who had clocked the subterfuge. More on that here.

So have artists explicitly signed something stating it is fine to have AI trained on their music? Certainly I’d think any artist signing a deal in the last two years conceivably might have, but what about prior to that? It seems unlikely, unless it is covered by some kind of catch-all clause.

Equally, where are the lines drawn with that AI training? Are artists running through Virgin on licence deals part of that? Are labels distributed through Universal part of it?

It would be good to get a clear understanding of that, if only for transparency and fairness.

How exactly are Udio paying Universal?

Now a deal has been done, one has to question exactly how Universal is being compensated. In the past, deals have been done that afforded Universal (and other majors) shares in a business. Those shares, however, became contentious issues when it became clear that - until they were called out on it anyway - the majors had little intention of passing any benefits from those shares back to the artists whose music was powering the platforms in question (Spotify being the biggest example, of course).

Being some kind of joint venture, it feels logical to conclude that Universal will own shares in this business, but I am yet to see a clear declaration that any benefits from the company’s growth will be shared with the artists whose music AI has been trained on to power it.

Equally, has any kind of advance been paid on this deal? Because advances often get paid out on businesses, only for those businesses to then fail. In this case, I would argue that the likelihood of this failing is very high, but in the event the business falls over, potentially before even seeing a launch, where does that advance payment go? Again, is it shared with artists, or does it simply apply to Universal’s bottom line?

Is this even a product people want?

One comment I keep seeing over and over again is that the Achille’s Heel of AI is that Big Tech and investors are all wildly overestimating demand for these platforms.

I have said repeatedly that whilst these generative music platforms are capable of spitting out novelty songs, or “what would Oasis sound like as a 70s soul band” type scenarios, they have yet to prove remotely valuable in delivering anything of lasting value.

To me the reason for that is simple: music is about so much more than just the songs. People latch on to artists because of who they are, what they stand for, how relatable they are etc etc. AI simply cannot step up to deliver on those fronts, because it is fake by design, and if it lacks all authenticity, it is fatally flawed from the get-go.

So why create this platform? I suspect part of it is simply the logic that AI is here, it is not going away, and that therefore all music companies should engage with it.

One can see the reasoning, but again, this makes all manner of assumptions that consumers give even the tiniest of shits about this stuff. Are Suno and Udio making billions in profit? Of course not: they are coasting on VC investor cash, and they’re burning through that at an unprecedented rate. Will consumers sign on? Some, maybe, but when the underwriting from VCs runs out (more on that in a mo), the costs of this will spiral upwards. Sure, you might pay £4.99/mo to make daft AI songs, but will you pay £15.99 when the realities of the computing and hosting costs hit home? I think not.

Will this become another victim of the AI bubble?

It was ironic to read Universal’s press release on Wednesday, only to then have Meta see over $200BN wiped off its market value when, after revealing its latest financials, Wall St got seriously cold feet over the unprecedented levels of cash the company is burning through.

They are not alone either; as

Ted Gioia

outlined in his article “The Bubble Just Burst”, Oracle has also seen its share price swan dive, dropping $60 per share, and overall, Big Tech is currently investing $30BN per month to earn $1BN back.

Make no mistake: investors are now terrified, because if the AI bubble bursts, the impact on the US economy will be catastrophic.

With that in mind then, is this platform even a smart idea, when there’s little evidence to suggest that consumers want this enough to even pay for it?

I would argue not.

Again though, this circles back to the previous point: arguably, Universal could just be doing this deal to take Udio for millions of dollars, knowing that this will all blow up before it even gets off the ground. So will artists get a share of the advance money?

Will this have a wider impact for Universal?

To say AI is a contentious topic where artists and creatives are concerned would be the understatement of the year. Only this morning I was reading this interview with Guillermo del Toro, stating he would “rather die” than engage with AI in his film-making - a sentiment I’d say is echoed by many.

But if AI is loathed by the creative community, what kind of message does it send when a company like Universal is so keen to turn its artist’s work into something to be cloned and commoditised in a manner they never signed on for?

One has to wonder if this might be a move that will, in time, be a catastrophic one for the music giant. It is easy to see why Big Tech wants music, arts and culture in general to be something it can churn out and keep people happy with. Win that space and you’ve got it all in terms of influence. This is now something I have come to expect from Silicon Valley and those adopting its mindset.

Universal is not a tech company though; it is meant to be in the business of music, of arts and culture.

So will history remember this moment favourably, when it decided to align with Big Tech and favour a space where technology will do its best to replace artists? Is there even a logical end point where Universal believes it can phase the humanity out of music and simply become a creator of endless AI-generated music? The company might strenuously deny it, but moves like this one certainly suggest otherwise.

Have a great day,

D.

🎶 Listening to various Halloween FX playlists by Nightmare Soundworks, AKA LVCRFT. In a few hours we’re going to be inundated by Trick or Treating kiddies, and this year I’ve elected to hide a Sonos portable speaker in a cupboard next to my door, so as to provide spooky soundbeds. Where better to look than LVCRFT’s own YouTube site, where all manner of playlists exist for just that purpose. Perfect. If you need something to add some ambience to your party or just your front door area, look no further!

📺 Watching “Phone Sleep Collection” by IKEA on YouTube. I feel like I should hate this, but I can’t. The furniture giant is now making little beds for your phone, with the idea being that this should somehow encourage you to use your phone less before bedtime. I struggle to see that part, but I can’t fault the smarts behind the concept as a whole…

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