New Delhi [India] October 17 : Growth in Artificial Intelligence (AI) generated music could gradually weaken demand for artist-created content and impact royalty-backed music intellectual property (IP) asset-backed securities (ABS), cautioned Fitch Ratings
According to Fitch, AI tools are enabling users to create and distribute music at unprecedented speeds, flooding digital service providers (DSPs) platforms and intensifying competition for listener-based revenues.
This trend could eventually reduce royalty payments that support music IP ABS. Big Industry stakeholders says tighter AI controls are needed to protect copy rights.
"DSPs continue to adapt to evolving technology disruptions, and major industry stakeholders broadly support tighter AI controls to protect copyright holders." noted Fitch Ratings
While fully AI-generated tracks still make up a small share of total streams, platforms are already tightening controls.
Deezer has been excluding such content from recommendations and playlists since January, while Spotify is enforcing stricter anti-impersonation rules and introducing filters to detect spam, mass uploads, and duplicate tracks.
Fitch noted that these measures promoting transparency and prioritizing artist-created content could help protect royalty flows.
However, some digital service providers may choose to produce or own AI-generated music themselves, potentially lowering content costs and capturing royalty rights.
The rating agency emphasized that diversification by genre, geography, artist, and vintage remains crucial for the stability of music IP ABS cash flows. Legal developments and licensing agreements, such as those between ElevenLabs and Kobalt Music could also shape future revenue streams for artists and copy rights holders.
Under the deal "artists receive compensation for the use of their copyrighted music to train ElevenLabs' AI model used in their "Pro" product, demonstrate a potential path for durable, new revenue streams.
While it is unclear how royalties will be distributed under such contracts" noted Fitch Ratings.
Fitch says tighter controls on AI-generated music will help ensure transparency and protect artists' royalties.
By removing AI tracks from recommendations, labelling and filtering AI content, and promoting artist-made music, streaming platforms can boost fair payments and visibility for human artists.
However, if platforms create or own AI music themselves, they could cut costs and earn royalties as the rights holders.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor