Does Suno’s $2 billion valuation suggest the music industry is embracing AI?
With Suno reportedly generating $100 million a year and chasing $100 million in funding, its $2 billion valuation could signal a major shift in how the music industry sees AI.
Suno’s latest funding round
AI music generator Suno is reportedly in talks to raise over $100 million in fresh funding in a move that would value the company at more than $2 billion, according to Bloomberg. That’s a valuation four times higher than its previous round in May 2024, when it raised $125 million.
Suno’s growth has been fast. The company is reportedly generating more than $100 million in annual recurring revenue, most of which comes from subscriptions to its service that lets users generate entire tracks from simple text prompts.
With that in mind, could it mean that the industry’s attitude toward AI is starting to change?
Legal clouds still loom
Of course, it’s not all smooth sailing. Suno still faces legal disputes that could shape the future of AI-generated music. Major record companies have accused the startup of using copyrighted material without permission to train its AI models. More recently, Suno dismissed fresh claims that they stream-ripped YouTube videos to train its model.
At the same time, Bloomberg reiterated earlier reports that suggest Suno is in talks with major labels to settle the lawsuits and potentially reach licensing agreements. Interestingly, Music Ally questions whether the two may be dependent on each other. For example, investors may be hesitant to commit more money until legal issues are resolved, and settlements are perhaps hinging on fresh funding. Could it be possible to achieve both?
It’s not just the majors either. Suno is also facing action from Germany’s GEMA and a lawsuit on behalf of independent artists who say their work was used without consent.
Signs of an AI shift
So far, much of the music industry has pushed back against AI-generated tracks- and for good reason too. When AI companies use copyrighted material without permission, real artists have no say in how their work is used, and don’t receive any compensation. Not to mention, AI-generated music outputs also compete with human artists.
As of late, there are signs that attitudes might be shifting. Take Spotify, for example. Just last week, the platform revealed plans to develop “responsible” AI music tools in partnership with major labels and key independents. It’s also investing heavily in AI research and product development.
Then there’s Universal Music Group, whose CEO Lucian Grainge recently reaffirmed the company’s openness to AI partnerships and new experiences. That’s as long as those partnering companies respect artist rights and their intellectual property. For example, UMG was among the first to ink AI-related deals with YouTube, TikTok, Meta, BandLab, and others.
When you look at this altogether, it’s hard not to feel that the conversation around AI in music is changing.
(Although, it remains to be seen how the industry can prevent AI music generations from competing with real artists)
A turning point?
Suno’s $100 million in annual revenue and a potential $2 billion valuation, shows just how much demand there is for generative AI music. Plus, with major labels entering licensing talks, streaming services adopting AI products, and artists experimenting with tools, it feels like we’re entering a new phase.
Regardless of what lies ahead: transparency, fair licensing, and proper credit for artists remain key. As funding pours in and adoption continues, AI in music might be shifting from controversy to collaboration.
As for now, whether Suno can close its next round or settle its legal battles remains to be seen.