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Universal Music Group said Wednesday it has reached licensing agreements with artificial intelligence music startup Udio, settling a lawsuit that had accused Udio of using copyrighted music to train its AI.

Users create music using Udio’s AI, which can compose original songs — including voices and instruments — from text prompts.

Udio has agreed with UMG to launch a new platform next year that is only trained on “authorized and licensed music,” and will let users customize, stream and share music.

“These new agreements with Udio demonstrate our commitment to do what’s right by our artists and songwriters, whether that means embracing new technologies, developing new business models, diversifying revenue streams or beyond,” Lucian Grainge, UMG’s chairman and chief executive, said in a statement.

Udio declined to disclose the financial terms of the settlement and licensing agreements. UMG did not immediately return a request for comment on the terms.

Artificial intelligence has brought new opportunities as well as challenges to the entertainment industry, as AI startups have been training their models on information on the internet, which entertainment companies say infringes on their copyrighted work.

In the music industry, music businesses have accused New York City-based Udio and other AI music startups of training on copyrighted music to generate new songs that are based on popular hits without compensation or permission.

UMG, Sony Music Entertainment, Warner Music Group and other music businesses sued Udio last year. In the lawsuit, Udio was accused of using hits like The Temptations’ “My Girl,” to create a similar melody called “Sunshine Melody.” UMG owns the copyright to “My Girl.”

“A comparison of one section of the Udio-generated file and ‘My Girl’ reflects a number of similarities, including a very similar melody, the same chords, and very similar backing vocals,” according to the lawsuit. “These similarities are further reflected in the side-by-side transcriptions of the musical scores for the Udio file and the original recording.”

Udio said on its website at the time that it stands by its technology and that its AI model learns from examples, similar to how students listen to music and study scores.

“The goal of model training is to develop an understanding of musical ideas — the basic building blocks of musical expression that are owned by no one,” Udio had said in a statement. “We are completely uninterested in reproducing content in our training set.”

On Wednesday, Udio’s CEO and co-founder, Andrew Sanchez, said he was thrilled at the opportunity to work with UMG “to redefine how AI empowers artists and fans.”

The collaboration is the first music licensing agreement that Udio has reached with a major music label.

“This moment brings to life everything we’ve been building toward — uniting AI and the music industry in a way that truly champions artists,” Sanchez said in a statement. “Together, we’re building the technological and business landscape that will fundamentally expand what’s possible in music creation and engagement.”

Udio said that artists can opt in to the new platform and will be compensated, but declined to go into the specifics or the artists involved.

Udio, launched in 2024, was co-founded by former Google DeepMind employees. Udio’s backers include music artist will.i.am, Instagram co-founder and Anthropic’s chief product officer Mike Krieger and venture capital firm Andreessen Horowitz.

Udio said millions of people have used Udio since it launched in 2024. Users can access the platform through its app or website. The company did not break out specifically how many downloads or website users it has.

Udio has had 128,000 app downloads in Apple’s App Store since its app was released in May, according to estimates from New York-based mobile analytics firm Appfigures.

On Thursday, UMG also announced a partnership with London-based Stability AI to develop music creation tools powered by AI for artists, producers and songwriters.

Universal Music Group Chief Executive Lucian Grainge called Drake’s lawsuit over Kendrick Lamar’s hit diss track “Not Like Us” a “farcical” effort that’s “groundless and indeed ridiculous.”

In a declaration letter filed Thursday night in the Southern District of New York, Grainge said that Drake’s accusation that UMG (the parent label firm to both Drake and Lamar) defamed him and damaged his career “makes no sense due to the fact that the company that I run, Universal Music Group N.V., has invested hundreds of millions of dollars in Drake, including longstanding and critical financial support for his recording career, the purchase and ownership of the bulk of his recording catalog, and the purchase of his music publishing rights.”

Drake signed a new deal with UMG label Republic in 2022 for a reported $400 million, and he’s one of the bestselling artists of the last 20 years. Yet Interscope artist Lamar’s scathing “Not Like Us” famously capped a venomous battle between the two artists, which resulted in a pair of Grammy wins for Lamar, who performed the song at the Super Bowl halftime show.

Drake’s attorneys, in discovery, have recently tried to obtain UMG’s contract with Lamar and information about his personal life (Drake accused Lamar of beating his partner in the song “Family Matters”). Drake has accused UMG of both defamation and running a clandestine campaign to boost “Not Like Us” at the expense of his own reputation and career.

A notably exasperated Grainge wrote to the court that “Given my role, I am accustomed (and unfortunately largely resigned) to personal attacks, and I further recognize that a frequent strategy of UMG’s litigation opponents is to attempt to waste my and UMG’s time and resources with discovery of the sort that Drake is seeking here — either in an attempt to gain media attention or in an effort to force some kind of commercial renegotiation or financial concessions.”

Grainge also denied having any personal involvement in the rollout or marketing for “Not Like Us.”

“Whilst, as part of my role, I certainly have financial oversight of and responsibility for UMG’s global businesses,” he said, “the proposition that I was involved in, much less responsible for, reviewing and approving the content of ‘Not Like Us,’ its cover art or music video, or for determining or directing the promotion of those materials, is groundless and indeed ridiculous.”

In a separate letter to the court, UMG said that “The premise of Drake’s motion — that he could not have lost a rap battle unless it was the product of some imagined secret conspiracy going to the top of UMG’s corporate structure — is absurd.”