The music industry is becoming a test case for an economy transformed by generative AI.
For most of the last century, the music business operated under a surprisingly simple idea: If you want to use someone else's work, you ask permission and pay them money. Want to sample a song? There's a licensing process. Want to use a song in a movie, advertisement or television show? The people who own the song get paid.
The industry built a massive economy around identifying who owns a piece of music, who contributed to it, and who deserves compensation when it creates value. Now, generative AI is challenging that entire system.
AI music platforms like Suno and Udio let anyone generate complete songs, including vocals, lyrics and instrumentation, from a simple text prompt. Used by everyone from hobbyists and content creators to independent musicians and Grammy-award-winning producers, they've become the public face of AI-generated music. In February, Suno CEO and co-founder Mikey Shulman said in a post on X that the company had surpassed two million paid subscribers.
Suno and Udio can generate songs in a few clicks, but the bigger disruption may not be the songs themselves. For us at Planet Money, we're interested in the economic question: When an AI model learns from millions of songs, who gets paid for that use?
This question is now at the center of a growing legal and financial battle in the music industry as AI music is already stealing income from human musicians.
The first fight: What did AI train on?
Part of this battle's complexity is that it's been unclear exactly what material has gone into training many AI models. That lack of transparency has made it harder for artists and researchers to understand what these systems learned from, and build a legal case.
Alex Reisner, a journalist at The Atlantic, has been investigating AI training datasets through his AI Watchdog project. The tool has helped musicians, including artists such as SZA, spot their own work in AI training datasets.
" I think it's really difficult to discuss the potential of the technology, the risks of the technology, without having more information out there about how it's trained," Reisner says. "And so my purpose with AI Watchdog and these search tools is just to try to give people access to… some of the raw data."
Reisner says many artists are still surprised to learn their work was used to train AI systems.
"Which I think really reflects the strength and persuasiveness of the narratives that these tech companies are putting out there about how they're just creating this kind of magical resource when really what they're doing is taking everyone's stuff and kind of reorganizing it, remixing it," Reisner says.
Suno has previously acknowledged in court filings that its training data included "essentially all music files of reasonable quality that are accessible on the open Internet," combined with other available data.
Even assuming this is fair use (a debate which we will address below), the deeper question is over compensation. If these models create songs, and those songs make money, where was the value created and what compensation system makes sense between the original music rights holders, the AI company, and the users of the AI models?
The next fight: Who gets paid?
AI-generated music will almost certainly change the economics of streaming itself. Streaming platforms already divide revenue among enormous catalogs of songs. As we put it in our Inflation Song series, where we explore the economics behind releasing a song, the services take all the subscription revenue of all the users then divide a portion of it by all the plays of all the music on the platform. A tongue twister, I know. As AI makes it possible to create music at a much larger scale, some argue that the supply of songs could overwhelm the system and dilute the share going to human-made music.
Krystle Delgado is an entertainment lawyer, independent artist, and podcaster who's been following the legal and financial battle closely. She says, "This matters because it's actually the same pool. Everyone's music, the AI music, the human-made music, goes into the same place, and then it's divided up."
She points to tens of thousands of AI-generated tracks appearing on streaming services.
"And so right now we just have a numbers issue," Delgado says. "And so is it taking away from the other music that is already there? Yes. And just by simple math, at some point the AI music is just gonna drown out the human-made music."
That is why some organizations are focused not only on copyright lawsuits, but on creating rules that ensure that AI models have to get permission from song owners and compensate them for using their works.
Ron Gubitz, executive director of the Music Artists Coalition, a nonprofit advocacy group, says many artists are not opposed to AI itself. The concern is whether creators will have meaningful control over how their work is used.
"We're not anti-AI," Gubitz says. "We think that the clarity, consent, and compensation framework does provide us the opportunity to have the conversations and make those agreements that work."
This framework comes from an open letter by global musicians' advocates and centers on three principles: informed creator consent, fair compensation that ensures creators share in the value generated by AI, and transparency in how AI uses are authorized, managed, and monetized. For Gubitz, the goal is not to stop the technology. It is to make sure artists have a role in shaping the negotiations around consent and compensation.
But figuring out who gets paid starts with figuring out who has the right to ask for payment in the first place.
The legal fight over copyright
That question is now playing out in a series of lawsuits that could help determine who gets a say, and who gets paid, when AI companies use music to train their models.
In June 2024, the Recording Industry Association of America (RIAA), a trade organization that represents major labels in the United States, announced the filing of two copyright infringement cases against Suno and Udio, alleging the companies trained their AI models on copyrighted recordings without permission. The main plaintiffs in the suits include the three major labels, Sony Music Entertainment, Universal Music Group and Warner Music Group.
Since then, the lawsuits have produced a medley of deals and new disputes. Universal settled with Udio in October 2025, Warner Music settled with Udio and Suno the following month, and the Sony lawsuits are ongoing. The deals generally move toward requiring licenses for the music used to train the models, with Universal giving artists the option to opt in or out of AI training.
But the legal fight didn't end with those deals. And there's a catch: The record labels aren't the only people arguing over who should get paid.
In June, the American Federation of Musicians of the United States and Canada (AFM), a labor union representing professional musicians, sued Universal and Warner Music alleging that the labels licensed recordings made by its members for AI use without compensating or crediting those musicians. Both labels have asked a federal court to dismiss the suit, arguing that AI compensation is not covered by the existing Sound Recording Labor Agreement (SRLA).
At first glance, this looks like another fight over technology and copyright. But the more I reported on it, the more it looked like something bigger: a test case for how an entire economy might change when artificial intelligence uses human-generated content to compete with humans doing the creating.
And that brings us to one of the biggest legal questions in the whole fight: Is it legal for an AI company to use copyrighted music to train its model without asking permission?
Is AI training fair use?
Suno and Udio have argued their use of training data falls under fair use protections. Fair use is a legal doctrine that allows people to use limited portions of copyrighted work without permission in certain situations. These include news reporting, commentary, criticism, teaching, and research. There's no magic word count or percentage that makes something fair use. It's determined case by case based on the context of how the material is used.
In a statement to Planet Money, Suno said it believes "the best music will always be made by people" and that it has safeguards to help users create new songs rather than reproduce existing ones. Udio did not respond to a request for comment.
Delgado is co-leading a class action lawsuit against Suno and Udio. She argues that Suno and Udio's use of copyrighted music should not fall under fair use. "What they did was absolutely piracy at mass scale, and they absolutely should pay for it."
Where's my cut?
That last question, who benefits financially, is one many artists are still asking.
Tiffany Red is a Grammy-winning songwriter and founder of the 100 Percenters, a music creator advocacy organization.
"I don't know any songwriter worth their salt that's scared that AI's gonna take their job," Red says.
But she worries about something else: whether artists will share in the value created from their work.
When discussing deals between AI companies and major music companies, she asked a simple question: "Where's the money going, if they stole all of our music?"
For Red, the issue is not just whether AI companies and labels reach agreements. It is whether the individual creators whose work helped build these systems benefit from those agreements.
"When I think about when I was signed to Universal, I wrote 'Replay' for Zendaya," Red says. "[If] 'Replay' was used, and they find that as a line item, what percentage of that settlement comes to me? To me it makes me think of a class action lawsuit. So if you went and settled this, where's my cut?"
Music may just be the beginning
The music industry has a long history of confronting technological change, and then being a springboard for difficult questions about ownership and value.
Napster changed how music was distributed. Streaming changed how it was monetized. Now AI is forcing the industry to ask something even more fundamental: When technology learns from human creativity, who should benefit?
Alex Reisner believes the answer will matter far beyond the music industry.
" I think what's happening in the music industry now is something that could happen in pretty much any industry," Reisner says.
As songwriter PJ Frantz put it to me, the future of AI music may depend less on what the technology can create and more on what listeners choose to value. If listeners choose human-created songs, it will push music labels to prioritize artist development and equitable business practices.
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