If you want to know how worried venture capitalists (and Silicon Valley in general) are about legal challenges to AI training using copyrighted material, look no further than the AI music site Suno.
Suno, which allows anyone to create AI-generated songs through prompts, announced Wednesday that it has raised $250 million in a Series C round at a post-money valuation of $2.45 billion. The round was led by Menlo Ventures, with participation from Nvidia's venture arm NVentures, as well as Hallwood Media, Lightspeed, and Matrix.
The company offers monthly subscriptions for consumers (a free tier plus $8 or $24 monthly plans), and in September released a version of Suno for commercial creators. Annual revenue now stands at $200 million, Suno told The Wall Street Journal.
The company previously raised a $125 million Series B at an estimated valuation of $500 million in May 2024, led by Lightspeed Venture Partners, Nat Friedman, Daniel Gross, Matrix, and Founder Collective.
But Suno is also the poster child for AI training lawsuits by human artists. The company is being sued by three major record labels, Sony Music Entertainment, Universal Music Group, and Warner Music Group, alleging that Suno trained using copyrighted material collected from the Internet without permission.
This type of litigation remains a legal gray area in the United States, and most are typically resolved through training data licensing agreements. (Last month, Universal and Audio settled a lawsuit in this manner.) Suno also faces similar legal challenges from Danish music rights organization Coda and Germany's GEMA. Incidentally, earlier this month, GEMA won a lawsuit in Germany against OpenAI that also challenged the legality of training scraped from copyrighted material.
But given Suno's market success, growth, and clear market potential for AI-generated music, the legal complexities are a shrug for investors.
“Enter your ideas,[作成]When you click , suddenly you're not just imagining music, you're making music. “The transition from listener to creator? That's what Suno unlocks,” the Menlo VCs who backed the startup explained in a blog post about the investment.
Mr. Menlo not only liked the technology, but he also liked the way Suno had grown primarily by word of mouth, sharing songs in group texts, investors said.
There is no doubt that the AI industry will and will eventually resolve the legal implications of acting first on training data and asking for permission later. But before that is resolved, the era of AI-generated music is clearly here.