Universal Music Group and Udio announced Wednesday evening that they have settled the copyright infringement lawsuit UMG and other major labels filed against the AI music generator in June 2024, and signed licensing agreements covering both recorded music and publishing.

The centerpiece is a new subscription service slated to launch in 2026. UMG and Udio describe it as a place to customize, create, stream and share music in a licensed and protected environment, built on generative models trained only on authorized and licensed music. Udio’s existing product stays up during a transition period, but moves into what the companies call a walled garden, with fingerprinting and filtering added before the new service arrives. The settlement is compensatory; Udio declined to disclose the financial terms, and UMG did not immediately return a request for comment on them. Artists can opt in to the new platform and be compensated, Udio says, without naming names.

UMG is calling these ‘industry-first strategic agreements,’ and says it was the first company to enter into AI-related agreements with YouTube, TikTok, Meta, KDDI, KLAY Vision, BandLab, Soundlabs and Pro-Rata, among others. Udio, launched in 2024 and developed by former Google DeepMind researchers, backed by a16z and will.i.am, framed the deal as proof that AI and the music industry can be aligned. The labels are still suing Suno, and Udio still faces claims over YouTube-scraping allegations.