If you want insight into how worried venture capitalists and Silicon Valley generally are about legal challenges to AI training on copyrighted material, look no further than the AI music site Suno. On Wednesday, Suno announced it has raised a two hundred and fifty million dollar Series C round at a two point four five billion dollar post-money valuation. The investment was led by Menlo Ventures with participation from Nvidia’s venture arm NVentures, as well as Hallwood Media, Lightspeed, and Matrix.
Suno offers consumer monthly subscriptions including a free tier and paid plans for eight or twenty-four dollars per month. The company launched a version for commercial creators in September and has now reached two hundred million dollars in annual revenue. This latest funding follows a one hundred and twenty-five million dollar Series B round raised in May of 2024, which was led by Lightspeed Venture Partners, Nat Friedman and Daniel Gross, Matrix, and Founder Collective at an estimated five hundred million dollar valuation.
However, Suno has also become a prominent example of the legal challenges facing AI companies from human artists. The company is currently involved in a lawsuit filed by three major record labels: Sony Music Entertainment, Universal Music Group, and Warner Music Group. The suit alleges that Suno trained its AI on copyrighted materials scraped from the internet without permission. Similar legal challenges have been brought by the Danish music rights organization Koda and Germany’s GEMA.
These types of lawsuits exist in a legal gray zone in the United States and are often settled, typically through a training data licensing agreement. For instance, last month Universal and another AI company, Udio, settled their litigation in this manner. It is worth noting that GEMA recently won a suit filed in Germany against OpenAI that also challenged the legality of training on scraped copyrighted material.
Despite these legal complications, Suno’s market success, growth, and the clear potential of the AI-generated music market have made investors confident. The venture capitalists from Menlo Ventures described the appeal of Suno by highlighting the shift from listener to creator, where anyone can type an idea, click create, and make music. The investors also noted that they were impressed not only by the technology but also by Suno’s organic growth through word of mouth, with people sharing songs in group texts.
The AI industry is still navigating the legal ramifications of its approach to training data, often acting first and asking for permission later. While these issues remain unresolved, the era of AI-generated music has clearly arrived.