Suno could get sued by the record business. Who’s backing it with $125m?

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MBW Explains is a series of analytical features in which we explore the context behind major music industry talking points – and suggest what might happen next. Only MBW+ subscribers have unlimited access to these articles.
What’s happened?

News broke last week that AI music generator Suno has raised USD $125 million in a Series B funding round.

According to sources cited by The Information, that gives the company an implied value of $500 million. Not bad for a startup born just two years ago.

Suno is one of the most prominent AI music generation platforms, capable of creating complete tracks that sound so convincingly like human-made music that it has reportedly unnerved even some of its own developers.

So far, it’s proving to be popular. The Boston area-headquartered company says that in the eight months since publicly launching its first version of Suno, 10 million people have already made music using the tool, including Grammy-winning artists – though Suno is quick to stress that “our core user base consists of everyday people making music — often for the first time.”

With its new war chest in hand, Suno will now be able to greatly increase staff, which earlier this year numbered just 12, and accelerate the development of its technology and platform.

So far, at least one Silicon Valley giant has placed its faith in Suno: Last December Microsoft integrated Suno into its Copilot AI app.

“You don’t have to know how to sing, play an instrument, or read music to bring your musical ideas to life,” Microsoft declared.

That, of course, is the promise of AI music generators – and also a source of anxiety among artists and music companies…

To date, the music industry has taken comfort in the notion that AI music generators aren’t yet “ready for prime time.” And there is a common argument out there that music created by algorithms will never have the emotional resonance of music created by humans.

Yet Suno’s platform is putting that idea to the test. Some of the tracks generated by users have amassed upwards of 100,000 streams. And tracks like Looming Nightmares and This Second in the Sky might challenge the notion that AI music doesn’t resonate on an emotional level.

To create music as convincing as some of the examples generated by Suno and other platforms using AI algorithms means training those algorithms on existing music, and lots of it. And that’s where copyright comes into play, because it’s become plainly obvious that many AI models have been built by ingesting enormous quantities of copyrighted material.

Many (if not most) artists in the (let’s now call it) traditional non-AI music industry see it as fundamentally unfair that their copyrighted works are being used without license or remuneration to create technology that is increasingly capable of replacing them.

Remarkably, one of the early investors in Suno – Antonio Rodriguez, a partner at VC firm Matrix Partners – came within a whisker of admitting that Suno has used copyrighted materials.

In an interview with Rolling Stone, Rodriguez said he was aware that Suno could be the target of lawsuits by recording companies and music publishers, but that’s “the risk we had to underwrite when we invested in the company.”

What’s more, Rodriguez said he didn’t want Suno to sign deals with rightsholders.

“Honestly, if we had deals with labels when this company got started, I probably wouldn’t have invested in it. I think that they needed to make this product without the constraints.”

That, in itself, highlights the scale of the problem facing the non-AI music business: Deep-pocketed investors could be willing to swallow the cost of copyright lawsuits, presumably because they believe that the revenue these AI businesses will eventually generate will be far greater than anything they’ll have to pay to the music industry.

Below, we take a look at Suno’s investors, their philosophies, and the other businesses they’ve put money behind…

Lightspeed Ventures: ‘Songs worthy of Top radio airplay’

Lightspeed Ventures was the lead investor in Suno’s recent Series B funding round, and the company is absolutely sold on Suno’s product.

“Suno’s latest AI model, version 3, can generate full length songs worthy of top 40 radio airplay in mere seconds,” the company declared on its website.

The Menlo Park, California-based VC firm certainly believes in the “democratization” philosophy of AI music.

“All humans are inherently creative. Smartphones and the internet have made expressing that creativity much easier… However, the creation of music, a medium that’s consumed by nearly everyone on the planet, remains inaccessible to most,” Lightspeed writes.

“But generative AI changes this equation. AI is yet another amazing innovation in the evolution of music creation, much like digital audio workstations, synthesizers, turntables, and electric guitars before it.”

“AI is yet another amazing innovation in the evolution of music creation, much like digital audio workstations, synthesizers, turntables, and electric guitars before it.”

Lightspeed Ventures

Lightspeed suggests that, like with previous technological changes in music, AI will be resisted by artists, but will eventually become “mainstream” and “enable many more people to express themselves than before their existence.”

Lightspeed has built an impressive portfolio of current and former investments, including Epic Games, Nest (the maker of connected home devices), Snap (owner of Snapchat), in-game ad app AudioMob, Giphy, and small-job hiring platform TaskRabbit.

It’s also invested in AI companies like Stability AI and Mistral AI, and it’s had some involvement in the music business, primarily through investments in music-sharing platform Audius and mobile record studio/producer marketplace RecordGram. It’s also an investor in Everyrealm, the metaverse firm backed by music stars like Nas and Lil Baby.

The company boasts $25 billion in assets under management.

Matrix Partners: ‘We are an entrepreneur’s most valuable partner’

Matrix Partners, from where Antonio Rodriguez hails, was one of the pioneers of the venture capital industry in the US in the 1980s.

Like Lightspeed, it’s headquartered near Silicon Valley (Palo Alto) and the company says it has more than $4 billion invested, and more than $4 billion in assets under management.

Matrix’s greatest claim to fame may be the fact that it was an early investor in Apple. It has also invested in such firms as FedEx, Motorola, Quora, SanDisk and Zendesk.

“We are an entrepreneur’s most valuable partner over a long period of time. We engage early. We wear well. We are steady. We are the best firm for you on day one, and the best firm for you at $1 billion,” Matrix co-founder Paul Ferri states on the company’s website.

Matrix came under some scrutiny following a 2021 report in the Wall Street Journal that it was a major investor in Chinese semiconductor technology – something the Biden administration sees as a national security risk.

Notably, the WSJ named Lightspeed Partners as another VC firm whose China-based affiliate is involved in semiconductor investment in the country.

Founder Collective: ‘Deliberately anti-thematic’

Boston area-headquartered Founder Collective is a somewhat smaller VC firm than the two listed above, having raised around $280 million in four funds as of 2020.

Yet the company boasts an impressive portfolio of current and former investments, including media brand Buzzfeed, web traffic data firm Chartbeat, food delivery network SkipTheDishes (acquired by Just Eat), Spanish-language podcast producer Sonoro, payment app Venmo, and Uber.

It has some peripheral connection to the music business, in the form of an investment in ticket platform SeatGeek.

The company describes its investment philosophy as “deliberately anti-thematic… Visionary founders have shown us that the weird use cases of today can become the hot themes of tomorrow.”

The VC firm says that “everyone at Founder Collective has started a technology company,” and for that reason, it sees its business model as “peer-to-peer investing.”

Nat Friedman and Daniel Gross: ‘It is our right (maybe our moral duty) to reshape the universe to our preferences’

Tech entrepreneurs Nat Friedman and Daniel Gross often invest together in startups, and that’s the case with their investment in Suno.

Friedman is a former CEO of developer platform GitHub (today a subsidiary of Microsoft) and former Chairman of the GNOME Foundation, which is working to create a computing platform for the general public that uses only free software.

He also developed, a web interface for large language models (the type of programs on which many AI tools are built).

On his website, Friedman says he’s invested in more than 100 startups, and declares that “as human beings it is our right (maybe our moral duty) to reshape the universe to our preferences… Technology, which is really knowledge, enables this.”

“As human beings it is our right (maybe our moral duty) to reshape the universe to our preferences.”

Nat Friedman

Gross founded Cue (earlier known as Greplin), a customized, automated search engine app that was acquired by Apple in 2013. He later led AI development efforts at Apple.

Having been accepted into the Y-Combinator program before the age of 20, he became a partner at the startup accelerator in 2017. He’s been referred to as among the most influential people in AI development.

On top of their investment, Friedman and Gross also run a $250,000 fund called AI Grant that offers AI companies access to servers running Nvidia chips used for developing AI models.

Aravind Srinivas: CEO of a firm that has content creators worried

Aravind Srinivas is the CEO of Perplexity AI, a company that’s got many content creators worried: Perplexity is the developer of a chatbot-powered search engine that gives users answers to questions without them having to click through to the websites where those answers were sourced.

That, of course, is a threat to the livelihood of many content-creating businesses.

In a submission to the US Copyright Office consultation on copyright and AI, the Directors Guild of America (DGA) named Perplexity AI in a list of AI companies that have started using AI to “manipulate motion pictures, television shows, and other entertainment to regenerate new works.”

And when Google recently announced its own search engine would be integrating AI to do roughly the same thing as Perplexity – again worrying content creators – Srinivas criticized the tech giant for what he sees as making its search engine less predictable.

“When somebody uses the search bar, they expect instant rendering of the 10 blue links,” he said, as quoted by Fast Company. “When that changes . . . and you’re not exactly sure what’s going to happen when you type in a query on Google anymore, it actually makes the product worse.”

Srinavas’ LinkedIn page identifies him as an angel investor in a number of AI startups, including Eleven Labs, Pika Labs, Groq, Julius and Extropic.

Aaron Levie: New industries, new jobs will come from AI

Lighstpeed Ventures named Aaron Levie an investor in Suno, while Suno’s CEO, Michael Shulman, has identified him as an adviser to the firm.

Levie is the co-founder of and CEO of Box Inc., a company that provides cloud services to businesses. He is also a longtime optimist when it comes to AI.

Asked in a 2017 interview with CNBC about the potential of job losses from AI, Levie described that concern as “myopic.”

“There is so much untapped talent and human capability and capacity that is constrained by the fact that we spend so much time just doing things that computers can do way better.”

Aaron Levie

“It’s so easy to identify the businesses or the industries or the job functions that are going to be replaced or that are better served with AI. And it’s so much harder to imagine the things that will be borne out of that innovation and the new industries that emerge and the new job functions that emerge,” he said.

In Levie’s view, the implementation of AI will free humans to do things that computers can’t do, creating a more creative and productive society.

“There is so much untapped talent and human capability and capacity that is constrained by the fact that we spend so much time just doing things that computers can do way better,” Levie said.

“If you look at human history, any time there has been some major technological innovation, you ultimately have some significant increase in productivity that then creates the need for a new set of industries, a new set of jobs.”

Andrej Karpathy: Human-free AI corporations may be the future

Andrej Karpathy is one of the most prominent figures in AI development. He is a co-founder of ChatGPT maker OpenAI, where he worked from 2015 to 2017 and again from 2023 to 2024, and he developed and taught the first course in deep learning at his alma mater, Stanford University.

From 2017 to 2022, he was director of artificial intelligence at Elon Musk’s Tesla.

Lightspeed Ventures has identified him as an investor in Suno, while Suno has named him an adviser to the firm.

Karpathy has said little about copyright or the effects of AI on the music industry to his his nearly 1 million followers on X; he’s deeply focused on the technical aspects of developing the technology.

But his vision for AI’s future is expansive: In one semi-humorous tweet, he envisioned a world of corporations composed entirely of AI: A “CEO LLM [large language model], manager LLMs, IC LLMs, running asynchronously and communicating over a Slack-like interface in text…”

It’s worth noting that OpenAI, the company Karpathy helped found, has become the target of multiple infringement lawsuits alleging that its ChatGPT models were trained without authorization on copyrighted materials – though it has also begun signing licensing deals for training materials.

Suno’s advisers: Artists embracing tech

All of this is not to suggest that Suno is being built without the help of any musical artists at all.

To be entirely fair, the company has noted that some artists are working as advisers to the company, though their specific roles haven’t been identified.

One of these advisers is Jason Blau, aka musician and producer 3LAU, who has been deeply involved in cutting-edge music-related technology.

3LAU is a co-founder of Royal, a blockchain-based music investment platform. His involvement in NFTs has proven quite lucrative, and he was a seed-round investor in Web3 music-making platform Arpeggi Labs.

More recently, 3LAU developed 3LAU AI, a generative AI modeled on his own music. Using Grimes’ vocals via GrimesAI, he created a song that Fortune described as “quite a bop.”

“People say ‘really good’ AI music doesn’t exist yet and that humans will always need to be involved, but I wanted to challenge that assumption, and figure out how to leverage AI to make a song I was confident enough in releasing,” 3LAU wrote on X.

“AI music is not just a possibility – it’s the imminent future.”


Another musician advising Suno is DJ Curt Cameruci, aka Flosstradamus. This should give the conventional music industry some hope about Suno, as Flosstradamus’ company, Rubin, is working on a platform that he says will be to the current AI music moment what Spotify was in the Napster era.

“We’re trying to make the Spotify for the Napster moment right now,” he told Gen Z Mag in a recent interview – presumably meaning it’s working on a way to reconcile AI and musical artists.

But Flosstradamus is by no means trying to stop AI’s involvement in music. He urges artists to “embrace the next technology,” because “AI music is not just a possibility – it’s the imminent future.”

A final thought…

Many of the people behind AI companies argue that they are ‘democratizing’ music – taking it out of the hands of a small group of corporations and uniquely talented people, and bringing the ability to make music to the masses.

Matrix Partners’ Antonio Rodriguez himself seems to subscribe to this philosophy. In a tweet last December, he wrote: “I’ve always thought that the 99 consumers for every creator on the internet is a sad end state and [Suno] has a shot of fixing it for music.”

Rodriguez is not entirely a stranger to the music business. As a partner at Matrix, he was involved in the development of the Echo Nest, the music intelligence and data platform that Spotify acquired in 2014.

He’s also been involved in a number of other high-profile startups, including Oculus VR, the virtual reality hardware company acquired by Facebook/Meta, and Owl Labs, a company building hardware for work-from-anywhere businesses.

But, overall, the investors putting money behind Suno have fairly little to do with the music industry, and much, much more to do with the tech industry.

Which makes us wonder: Do these investors truly understand the conflict with the music industry in which they may find themselves? Do they understand the passion that artists and rightsholders will put into this fight, given how high the stakes are?Music Business Worldwide

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