Udio signs AI licensing deal with Merlin for independent labels
Udio has agreed a new AI licensing deal with Merlin, giving independent rightsholders greater control.
As part of its AI music licensing mission, Udio has formed another significant partnership. This time, with digital rights agency for independent labels and distributors, Merlin. The deal adds another major piece to Udio’s growing network of licensed partners, and secures fairer compensation for AI training for independent artists.
This new agreement allows Merlin members to license their recordings for use in training Udio’s AI music models. Participation is strictly opt-in, meaning rights-holders decide whether their music is included. According to Billboard’s report, Udio has not shared details about payment rates or whether any backdated compensation will be offered for music previously used in training. However, it has confirmed that only opted-in recordings will be used from this point on.
This partnership follows Udio’s earlier licensing deals with Universal Music Group and Warner Music Group. Those agreements arrived after both companies, alongside Sony Music, sued Udio and rival platform Suno in 2024 over the alleged unlicensed use of copyrighted recordings. By late 2025, Udio had reached settlements with Universal and Warner, leaving Sony Music’s case ongoing.
The outcome of those settlements has reshaped Udio’s platform. As Billboard explains, the company is moving away from generating fully original songs from text prompts and is instead focusing on remixing and customising licensed, pre-existing tracks. Udio plans to retire its current model during 2026 and relaunch as a closed system where all creation remains within the platform. Users will no longer be able to download AI-generated tracks for use elsewhere.
Udio CEO Andrew Sanchez has described this direction as a way to align AI creation with how people already listen to and interact with music. Speaking to Billboard, he said, “We believe there’s an incredibly exciting market that combines creation and consumption, both of human-generated songs and of AI-generated songs.” He added, “Because if you can go and you can do stuff with your favorite artists, make a song in their style or remix [a] favorite song, you’re also going to listen to their own music.”
Merlin’s new CEO, Charlie Lexton, framed the deal as part of a broader strategy to engage with AI rather than react to it. In a statement reported by Billboard, he said, “As AI develops, it is critical to Merlin that we work with partners who respect artists, their work, and the requirement to license music.” He continued, “Our partnership illustrates that Merlin is committed to not simply reacting to AI developments, but to being a participant in shaping the opportunities they promise.”
Sanchez echoed this in comments shared by both Billboard and Music Ally, stating, “By teaming up with Merlin, we’re ensuring they maintain control over their work and are compensated for their creativity.”
As Music Ally notes, for Merlin, this is its second significant AI licensing agreement, following its opt-in deal with ElevenLabs in 2025. For Udio, it brings the company closer to having licensing agreements with all of the major music groups, with Sony Music now the only one still absent. It also fits into a wider pattern of AI platforms entering formal negotiations with rights-holders, rather than operating in legal grey areas.
AI music remains a complex and often uncomfortable topic, particularly for creators concerned about control and long-term value. However, deals like this suggest that licensing, consent, and clearer rules are becoming central to how the technology develops. The direction may not satisfy everyone, but it does bring us closer towards systems where rights-holders are at least part of the conversation.