The Labels Cashed In on AI Licensing Deals. The Musicians Who Made the Records Got Zero.

What is the AFM actually accusing the labels of?

The American Federation of Musicians isn't fighting over whether Suno and Udio should exist, and it isn't suing either AI company. On June 5, 2026, the union filed suit in the Southern District of New York against Universal Music Group, Warner Records and Atlantic Records, then amended the complaint on July 24 to sharpen its target. The claim is contractual, not a copyright fight: AFM says the labels breached the Sound Recording Labor Agreement, the union's collective bargaining agreement, by licensing catalogs built on its members' recorded performances to Suno and Udio for AI training and generation, without telling the musicians it happened or paying them a cent.

That distinction is the whole story. Sony Music never settled with either AI company and is instead pursuing its own $4.5 billion copyright suit against them directly, a fight over whether the platforms stole the music in the first place. This is a different fight: a labor dispute over where the money went AFTER a label decided to cash in.

What counts as a "new use", and why does it matter here?

The SRLA has long included a "new use" clause: when a label repurposes a recording for something beyond its original release, it owes the musicians who played on it a fresh payment. AFM's own case summary points to precedent, arguing that when labels first licensed music for video games, no specific rate existed for that use either, yet the industry still treated it as a new use requiring notice and payment. The union's position is that training an AI model, or letting that model generate new tracks derived from a catalog, is exactly the same kind of repurposing, just automated and running at a scale no video-game deal ever touched.

Universal and Warner have pushed back procedurally rather than conceding the point, filing to dismiss the case and to pause discovery while the underlying question, whether Article 21(a) of the SRLA actually covers AI licensing, gets argued. On July 17, AFM formally opposed both moves. As of the most recent filings, Judge Edgardo Ramos had not ruled.

"Record labels built multi-million-dollar AI deals on the backs of our members, yet the artists whose life's work powered these technologies haven't received a single dime."

Where did the licensing money actually go?

The timeline is what makes AFM's case land. Universal settled its copyright suit against Udio in October 2025 and struck a licensing deal covering an upcoming AI platform. Warner settled with Udio the following month, then settled with Suno days after that, with Suno acquiring Warner's Songkick platform as part of the package. Those deals resolved the labels' own copyright exposure and opened new revenue lines built on their catalogs, catalogs made by drummers, guitarists, session singers and arrangers under union contract. AFM says none of that revenue, and none of the notice the SRLA requires, reached the musicians whose performances are now training the models. UMG has said it remains committed to resolving the dispute through ongoing negotiations; Warner called the litigation an "unproductive action" while talks continue.

Why should anyone outside a New York courtroom care?

This case is a test of whether decades-old union labor contracts, written for tape reissues and video-game syncs, actually reach into the AI era, or whether labels can license an entire catalog into a generative model and call the underlying performances irrelevant to the deal. If AFM wins, every major label with an AI licensing agreement has a new, retroactive bill coming for the musicians on those records. If it loses, "new use" clauses across the industry get a lot narrower, right as AI licensing becomes the biggest new revenue category labels have opened in a decade.