The battle between record labels and generative artificial intelligence companies is opening up a second front, less visible than the copyright lawsuits but potentially decisive for the economics of musical labor. The American Federation of Musicians (AFM), the union representing instrumentalists and other music professionals in the United States, has filed its opposition in a New York federal court against motions to dismiss submitted by Universal Music Group, Warner Records, and Atlantic Recording Corp.
The lawsuit concerns agreements struck by labels with Suno and Udio, two generative music platforms at the center of a fierce dispute with the recording industry. According to AFM, recordings made by its members were licensed to AI companies for commercial use without musicians receiving either compensation or the notifications required under the applicable collective bargaining agreement. The opposition filing was submitted on September 4: it will now be up to federal judge Edgardo Ramos to decide whether the dispute can move forward into discovery.
It is therefore not a matter of determining, at least for now, whether Suno or Udio infringed the majors' copyright. The question put before the court is different: when a record label authorizes the use of a recording in systems capable of generating new music, does it owe anything to the musicians who performed that recording? It is a contractual issue, but it touches on a core question the industry can no longer defer: who shares in the revenues and decision-making when catalogs become raw material for new business models?
The collective bargaining agreement at the heart of the case
AFM launched the legal action in June, later filing an amended complaint on July 24. At the center is Article 21(a) of the Sound Recording Labor Agreement, the collective bargaining agreement between the union and signatory record companies. The clause governs the so-called “new use”—that is, a use of a recording not already contemplated by other sections of the agreement.
According to the union, licensing tracks and recordings to a company that trains or operates music generation systems falls squarely into this category. This would trigger a payment and notification mechanism that the labels should have activated. In the filing submitted in New York, AFM argues that its reading of the contract is at least plausible and sufficient to survive a preliminary motion to dismiss. The union is not asking the judge to write new rules for AI from scratch, but rather to apply to existing agreements the framework designed for uses not anticipated at the time of negotiation.
Universal asked the court to dismiss the case on August 5. Its position, in short, is that the cited clause does not independently establish a rate: payment should be determined with reference to another specific AFM agreement covering the new use. Since no separate agreement exists governing AI use, Universal argues that no financial obligation arises. Warner Records and Atlantic Recording Corp. filed a similar motion on August 14.
AFM’s reply challenges this interpretation. If the companies’ argument were accepted, the union observes, any truly unprecedented use could fall outside the scope of protection precisely because it had not been explicitly regulated beforehand. This is the paradox at the heart of the proceedings: a clause designed to accommodate the evolution of formats and platforms could become ineffective in the face of the most radical transformation of recent years.
From copyright litigation to commercial licensing
The lawsuit is part of a dispute that has changed direction several times. In June 2024, Universal, Warner, and other majors sued Suno and Udio, alleging the unauthorized use of protected catalogs to develop their services. In the complaints, the record labels argued that the large-scale proliferation of artificially generated tracks could squeeze artist compensation and crowd human recordings out of the market.
Subsequently, the landscape evolved toward commercial agreements. Warner reached deals with Udio and, a few days later, with Suno in November 2025. Universal signed a settlement and licensing agreement with Udio in October 2025, while failing to reach an agreement with Suno. It is precisely these deals that give weight to the AFM's challenge: according to the union, the majors turned a use they had previously denounced as harmful into paid licenses, without, however, granting a share to the performers involved in the recordings.
The AFM also points to the public statements in which the companies had presented the agreements as a positive step for artists, songwriters, and the creative community. The union disputes that the musicians it represents benefited from the proceeds of the transactions. It is a delicate issue because it separates three categories often conflated in public debate: master recording rights holders, songwriters, and performing musicians. Their contractual positions do not align, nor do the channels through which revenues and royalties are distributed.
In a preliminary hearing on July 21, Judge Ramos asked the labels a question now cited by the AFM in its filing: if companies are licensing music to AI firms and profiting from it, why shouldn't they pay the creators of that music? The question does not foreshadow the outcome of the lawsuit, nor does it amount to a definitive ruling by the court. However, it shows that the issue of value sharing has already clearly emerged in the legal arguments.
A contractual precedent for studio work
For session musicians and performers, the case could have tangible consequences well beyond Universal and Warner. The recording industry has already navigated phases where a new channel of exploitation—from video games to international licensing—required specific negotiations between companies and labor representatives. AI poses an additional challenge: a recording may not simply be distributed in a new format, but instead become part of processes that generate potentially vast amounts of derivative or competing content.
An eventual ruling will not resolve all the issues surrounding model training, voice replication, or copyright. However, it could determine whether a collective bargaining agreement signed before the current generative boom is flexible enough to cover AI licensing. A validation of AFM’s position would strengthen unions’ leverage in demanding compensation, reporting, and consent for future uses. A dismissal, on the other hand, would shift the center of gravity toward new collective negotiations, where rates and conditions would have to be explicitly established.
There is also a broader industry impact. Major labels are trying to move from confrontation with generative platforms to licensed, controlled models. To be sustainable, that transition must address the full chain of rights and professionals involved in recordings, not just the relationship between labels and AI companies. The New York proceedings do not yet determine how that system should function. But they force the parties to confront an issue that early licensing deals left open: behind the music used to power these services are people, contracts, and compensation yet to be defined.
