Artificial intelligence can impact music industry, royalties: Report

Artificial intelligence will not only hit the job market but will impact the music industry as well, as AI-generated music could gradually weaken the demand for artist-created content and impact royalty-backed music intellectual property (IP), said Fitch Ratings in a report.

How will AI impact the music industry?

Since this trend can eventually reduce royalty payments that support music, industry stakeholders have said that tighter rules are needed to protect copyrights.

"DSPs continue to adapt to evolving technology disruptions, and major industry stakeholders broadly support tighter AI controls to protect copyright holders," said Fitch Ratings.

Music platforms are tightening controls even when AI-generated tracks make up a small share of total streams.

Spotify is enforcing stricter anti-impersonation rules and introducing filters to detect spam, mass uploads, and duplicate tracks.

These measures promote transparency, and prioritizing artist-created content could help protect royalty flows, it said.

According to the report, some service providers might produce their own AI-generated music, which would lower their content costs and provide them with royalty rights.

Diversification is key to stabilizing music IP ABS cash flows, with genre, geography, artist, and vintage being crucial factors. Additionally, legal developments and licensing agreements, like ElevenLabs and Kobalt Music's deal, may impact future revenue streams for artists and copyright holders.

AI tracks can also be removed from recommendations. These tracks can also be labeled as AI content, boosting fair payments and visibility for human artists.