Generative AI music startup Suno is in negotiations to raise over $100 million in a funding round that would value the company at more than $2 billion, a fourfold increase from the previous valuation.
That’s according to Bloomberg, which reported on Friday (October 17), citing people familiar with the matter, that the company is currently generating more than $100 million in annual recurring revenue.
Suno’s service lets users generate complete musical tracks from text prompts, often including vocals and lyrics.
The company is currently the subject of a lawsuit filed by record labels owned by Sony Music, Universal Music Group and Warner Music Group, who sued the company for mass infringement of copyright, alleging the AI startup used copyrighted recordings without permission to train its AI.
Earlier this month, Suno asked a federal court to throw out allegations made by the major record companies that it illegally ‘stream-ripped’ YouTube videos for its AI model training.
The labels are seeking damages of up to $150,000 per infringed work. Bloomberg says the damages could reach billions of dollars.
Suno’s Co-Founder and CEO Mikey Shulman has publicly defended Suno against the recording companies’ allegations, saying Suno’s technology “is designed to generate completely new outputs, not to memorize and regurgitate pre-existing content. That is why we don’t allow user prompts that reference specific artists.”
Despite the ongoing lawsuit, the Financial Times reported earlier this month that Universal Music and Warner Music are in licensing deals with AI music companies including Suno. Bloomberg reported in June that those talks included negotiations over licensing fees and equity stakes in both Suno and its peer, Udio.
Suno previously secured $125 million from investors including Lightspeed Venture Partners, Nat Friedman and Daniel Gross, Matrix and Founder Collective.
The reported financing round comes as the music industry has started embracing AI. Last week, Spotify disclosed plans to develop “responsible” AI music products in partnership with all three major music companies plus key independepents.
The streaming giant stated that it is “making significant investments in AI research and product development” and has already begun building a “state-of-the-art” generative AI research lab and product team.
Meanwhile, French streaming service Deezer says it has been removing fully AI-generated content from algorithmic recommendations and excluding it from editorial playlists since January, via its patented AI detection tool.
Deezer last month said fully AI-generated music now constitutes 28% of all tracks delivered to Deezer each day, adding that it now receives over 30,000 fully AI-generated tracks daily, marking a sharp increase from the 20,000 figure it reported in April and the 10,000 it disclosed in January when it first launched its proprietary AI detection tool.
In a memo to employees last week, Universal Music Group CEO Lucian Grainge reiterated the company’s willingness to partner with AI companies on product development, provided they respect copyrights.
Grainge said UMG “was the first company to enter into AI-related agreements with companies ranging from major platforms such as YouTube, TikTok and Meta to emerging entrepreneurs such as BandLab, Soundlabs, and more.”
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