FILE PHOTO: Musical notes are seen on on sheet music in this illustration photo April 4, 2018. REUTERS/Thomas White/Illustration/File Photo

(Reuters) -Warner Music Group settled its copyright infringement case with artificial intelligence-powered song creation platform Suno, enabling the startup to launch licensed AI models next year, the companies said on Tuesday.

Suno's rival Udio has also settled its copyright dispute with Warner Music and Universal Music Group recently, as music companies look to open new revenue streams for the artists and songwriters, while protecting their work.

Major record labels are trying to safeguard their vast catalogs in a sharply evolving music industry, where a surge in AI-generated music has raised ethical concerns, with users unable to distinguish AI content from human-composed songs.

Under the deal, Suno will introduce new licensed AI models that will replace its current versions in 2026.

Suno, which last week raised $250 million at a $2.45 billion valuation, said it will also implement download restrictions, making songs created on the free tier playable and shareable only, while paid users will have monthly download limits with options to purchase more.

"We'll be rolling out new, more robust features for creation, opportunities to collaborate and interact with some of the most talented musicians in the world," Suno CEO Mikey Shulman said in a statement.

The record labels sued Udio and Suno last year, alleging the AI companies copied hundreds of songs from some of the world's most popular musicians to teach their systems to create music that will "directly compete with, cheapen, and ultimately drown out" human artists.

Udio and Suno had said the use of copyrighted sound recordings to train their systems qualifies as fair use under U.S. copyright law, and they called the lawsuits attempts to stifle independent competition.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Vijay Kishore)