When the majors embraced the machine: what KLAY’s licensing deals with the “big three” mean for music’s AI future

The music industry has been wrestling with artificial intelligence for the better part of this decade — first in courtrooms and headlines, then in negotiation rooms and press releases. This week’s news that Los Angeles–based AI music startup KLAY Vision Inc. has struck licensing deals with the three major record groups — Universal Music Group, Sony Music (and their publishing arms), and Warner Music Group — marks a clear inflection point. For the first time, the companies that own the lion’s share of recorded and published music have formally licensed their catalogs to an AI-driven streaming product intended to let fans remake songs in new styles. That’s business-as-usual turned on its head: the record industry is no longer only defending copyright against automated imitators — it’s now actively building a commercial framework to monetize AI creativity. 

Below, I unpack what the KLAY deals actually are, why they matter, the unanswered questions they raise for artists and listeners, and what they suggest about how the music business will adapt to — and profit from — generative audio technologies.

What KLAY says it does (and what the labels licensed)

KLAY bills itself as a music-technology company building a streaming product with integrated AI tools that let users remix and “remake” songs. The startup says it trained its systems on thousands of licensed recordings and compositions, and that the agreements with Universal, Sony, and Warner grant KLAY the rights to use those catalogs both to power its machine-learning models and to enable listeners to create personalized AI variations of the original songs. In press materials and label statements, the emphasis is on a paid, controlled system that compensates rights-holders and gives participating artists “control” over how their work is used. 

Put simply: instead of AI engines scraping the internet for music (and getting sued for it), KLAY has secured the catalogs it needs officially — licensing the underlying recordings and publishing rights so it can legally train models and offer derivative experiences to subscribers. This is the fundamental pivot from conflict to commerce.

Why the labels decided to license, not litigate

The move reflects a broader cooling of the industry’s initial, lawsuit-heavy reaction to AI-generated music. Early skirmishes — including high-profile cases targeting companies accused of training models on copyrighted recordings without permission — exposed how difficult it is to police every synthetic output on major platforms. Licensing gives labels an avenue to recapture value from AI activity rather than leave it to unregulated creators and deepfake projects.

From a business perspective, the labels are treating AI as a new revenue stream: licensed models can be monetized through subscriptions, micro-payments for individual remixes, and potential new sync/derivative licensing arrangements for commercial use. By agreeing on terms now, labels lock in payment frameworks and control mechanisms rather than ceding the field to adversaries. Reuters and other industry outlets reporting on the deals note that this is the first time a single AI company has landed agreements across all three majors — a symbolic and practical milestone. 

What this could mean for artists and songwriters

The labels stress payments and artist protection, but practical outcomes will depend on contract details that aren’t yet public. Important questions include:

• Revenue split mechanics: Will revenues from AI-remixes be shared with performers, songwriters, producers and publishers in the same way as traditional streams, or will there be a bespoke split for AI-derived works? Early statements promise “proper recognition and reward,” but the breakdown — and whether smaller artists get a fair share — is not yet transparent.

• Opt-in vs opt-out: Some label statements imply artist participation will be managed through label agreements, but will individual artists be able to opt out of allowing their work to be used by AI remixes? Opt-in models (where artists explicitly authorize usage) are friendlier to artist autonomy; blanket label-level licensing is administratively simpler but risks leaving artists surprised by new forms of derivative use.

• Moral rights and voice cloning: Even when a song is licensed, voice impersonation or highly realistic vocal “clones” of living artists raise unique reputational and ethical concerns. Will artists be able to veto impersonations that sound like them, or require additional consent for likeness-based uses? The deals suggest labels will attempt to govern these uses, but public-facing safeguards remain to be seen. 

In short: licensing opens the door to new income streams, but it also creates novel bargaining points and potential pitfalls. Musicians and their managers should read the fine print closely as product specifics unfold.

How KLAY’s product model could work in practice

Based on available reporting, KLAY appears to be positioning itself as a hybrid of a streaming service and an interactive creative tool. Imagine a subscription app where a fan can pull up a favorite track and choose stylistic options — tempo, instrumentation, genre twist, vocal emphasis — and the AI generates a personalized version on the fly. That output would be playable inside the app, shared within the platform, and possibly downloadable or licensed for other uses depending on rights negotiated.

Business models that have been floated by industry commentators include:

• Subscription-first: paying for access to the AI remixing engine and licensed catalog (similar to an advanced streaming tier).

• Per-use micropayments: small fees for individual remixes or for the right to download/share an AI-created version.

• Creator tools and marketplace: artists and producers could sell presets, commercial licenses, or custom remixes created with the platform.

All of these require plumbing to allocate money back to the correct rights-holders and to catalogue derivative uses for accounting — a nontrivial metadata and royalty-engineering challenge. 

Risks and friction points

While the deals are a big step toward normalization, several hazards remain:

1. Quality dilution and platform clutter: Generative tools can flood platforms with low-quality, AI-generated tracks masquerading as new music. That trend has already raised concerns on existing streaming services where “AI spam” has pushed down discoverability for human artists. A licensed approach may mitigate some of that, but discovery algorithms and curation will matter. 

2. Deepfake vocals and likeness rights: Even with catalogs licensed, using an artist’s vocal likeness without separate consent is a distinct legal and ethical issue. Platforms and labels will need enforceable rules about vocal impersonation and identity-protecting mechanisms.

3. Creative credit and attribution: How will AI-remixes credit the original artist, songwriter, and the machine model? Proper attribution standards are crucial for maintaining transparency and preserving the lineage of creative works.

4. Inequality of bargaining power: Major-label artists and top-tier songwriters are likely to get better negotiated terms than independent or legacy artists signed on older deals. Without industry-wide standards, smaller creators could be left behind.

Why is this also an opportunity

For listeners, platforms like KLAY could unlock new ways to interact with music: personalization, reimagined versions of favorites, and collaborative experiences where fans co-create with AI. For creators, licensed AI can serve as an additional income source and a promotional tool: remixes can introduce songs to new audiences, and interactive experiences can enhance fan engagement.

More broadly, the deals hint at an industry strategy: partner with AI entrepreneurs and formalize revenue pathways rather than attempting to shut down innovation entirely. That approach promises to steer AI development toward mutually beneficial products — if the commercial terms are fair and transparent. 

What to watch next

If you’re tracking this story, here are the developments that will matter most in the coming months:

• Public launch and product UX: How KLAY implements artist controls, attribution, and payment flows in its actual app will show whether the deals were symbolic or substance-driven. A consumer launch will reveal whether listeners embrace remixable subscriptions. 

• Artist reactions and opt-ins: Watch for statements or actions from major artists about whether they authorize voice-cloning-like features for their work, and whether there’s an opt-out movement among musicians uncomfortable with the new model.

• Regulatory scrutiny and industry standards: Governments and industry bodies may step in to set guidelines around deepfakes, voice rights, and transparent royalty reporting. The deals with the majors could influence those standards.

• Extensions and competition: Other AI firms and major labels may ink similar deals, or the majors might partner with multiple AI players. Competition could be healthy — pushing platforms to improve artist protections and user experience.

Final take: pragmatic adaptation, with caveats

KLAY’s licensing deals with Universal, Sony and Warner represent a pragmatic shift: the music industry is no longer fighting the generative-AI tide by default. Instead, it’s trying to steer that tide into monetizable channels. For fans and creators, that can be a win — new experiences and revenue streams — but the outcome depends on how equitably and transparently the underlying systems are built.

This moment is a reminder that technology doesn’t just disrupt markets: it forces social and legal frameworks to catch up. Licensing the catalogs was step one. Step two is delivering a platform that truly balances innovation, artist rights, and fair payment. If the majors and KLAY can design that system together — with clear artist consent, transparent accounting, and sensible limits on voice impersonation — the music ecosystem may emerge more diverse and more lucrative for creators. If not, the next chapter will be courtrooms and headlines all over again.

Either way, the industry’s choice to collaborate with — rather than simply contest — AI companies signals that generative audio is here to stay. The crucial question now is who writes the rules, and whether those rules will protect the people who make the music.