AI Music Startup Klay Lands Major Label Deals — What It Means for Music Stocks

Tip Ranks
2025.11.20 12:03
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AI music startup Klay has secured licensing deals with major labels Universal, Warner, and Sony, allowing it to use popular tracks on its platform. This move positions Klay as the first AI-powered music platform to partner with all three major labels. The partnerships are expected to create new revenue opportunities and boost music stocks. Analysts rate Warner Music stock as a Strong Buy, while Universal and Sony have Moderate Buy ratings. These deals reflect growing confidence in the AI music sector and its potential to disrupt the industry.

Major music labels Universal Music (UMGNF), Warner Music (WMG), and Sony Music (SONY) have reportedly licensed their songs to AI streaming startup Klay, giving the company the rights to use popular tracks on its platform. Investors are paying close attention, as these partnerships could create new revenue opportunities, improve efficiency, and give music stocks a fresh boost.

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Universal Music, Warner Music, and Sony Music are leading music companies representing top artists like Taylor Swift, Drake, Beyoncé, Britney Spears, Ed Sheeran, and more. Meanwhile, Klay is an AI-powered music streaming startup.

More About the Deals

According to Bloomberg, Universal, Sony, and Warner have licensed their catalogs to Klay, which allows users to remix and recreate songs using artificial intelligence (AI). Notably, Klay is the first AI-powered music platform to secure deals with all three major record labels.

The startup is developing a streaming service similar to Spotify (SPOT), enhanced with AI that lets users remake songs in different styles. As part of these agreements, Klay has licensed the rights to thousands of hit songs to train its AI model and power its AI-driven features. Positioning itself as a partner to the music industry, Klay ensures that artists and labels will retain some control over how their work is used.

Music Industry Faces AI Disruption

The music industry has been battling AI companies over copyright issues as AI-generated tracks are becoming increasingly common on streaming services. However, major labels are now embracing the technology, striking deals with AI startups.

Yesterday, Warner Music also signed a licensing deal with AI startup Udio to provide its songs for a new AI-powered streaming platform. Similarly, Universal also signed a licensing deal with Udio in October.

Industry insiders see these deals as a proactive way to manage disruption from AI and avoid the mistakes of the early internet era.

Which Music Stock Is a Strong Buy, According to Analysts?

Deals between major labels and AI startups like Klay and Udio signal growing investor confidence in the AI music sector. As these partnerships unlock new revenue streams and expand streaming capabilities, music stocks could see renewed interest and upward momentum.

Using TipRanks' Stocks Comparison Tool, we analyzed music stocks favored by analysts. WMG stock is rated a Strong Buy, while UMGNF and SONY have Moderate Buy ratings. Warner Music's stock carries a price target of $38.63, implying an upside potential of 26.6% from current levels.

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