Music royalties and AI: what’s changing and why it matters

The music world is facing unprecedented turmoil, as legal, technological, and financial pressures threaten to reshape how artists create, earn, and control their work. From AI-generated songs to royalty scandals, the industry’s foundations are under siege. Here’s a breakdown of the four seismic shifts rocking the business—and what they could mean for the future of music.

1. AI’s Silent Takeover: The Unchecked Rise of Machine-Made Music

Artificial intelligence isn’t just assisting musicians—it’s now composing entire songs, and companies are racing to capitalize on the trend. Startups like Udio and Klay have begun paying licensing fees to artists, but others, such as Suno, are locked in legal battles over whether they even need permission to train AI on existing tracks.

The stakes escalated when Spotify partnered with Universal Music Group to let fans remix songs using AI. While artists may earn a sliver of revenue from these fan-made versions, the long-term implications remain unclear: Could AI one day replace human creativity—or at least undercut its value?

2. The Royalty Scandal: Who’s Really Looking Out for Songwriters?

Behind every stream, radio play, or café performance, music rights organizations (MROs) collect royalties on behalf of songwriters. But these middlemen are now facing explosive accusations of mismanagement and opacity.

• Kobalt, a major player, admitted it can’t track where 30% of its payments end up.
• Heavyweights like Elton John and Paul McCartney have publicly demanded stricter oversight, questioning whether MROs are truly serving artists—or hoarding funds.

With billions in royalties in flux, the industry is asking: Are these organizations failing the very people they’re supposed to protect?

3. The Streaming Cheat Code: How AI Is Flooding Platforms with Fake Hits

Streaming fraud just got an upgrade—thanks to AI. In one of the most brazen cases, a North Carolina man used AI to generate songs, then paid bots to stream them millions of times, raking in millions before authorities caught on.

Major platforms are fighting back:

• Apple Music reported blocking two billion fake streams in a single year.
• Spotify now holds payments until a song hits 1,000 streams, but critics argue this is a Band-Aid on a gaping wound.

With AI capable of producing endless tracks at zero cost, the race is on to stop the deluge—before real artists drown in the noise.

4. The Pay Dispute: Will AI Worsen the Streaming ‘Penny Gap’?

The battle over streaming payouts is heating up as the Copyright Royalty Board prepares to renegotiate rates. The current system already pays artists a fraction of a cent per stream, and the next round of talks could get ugly.

• Music publishers want higher rates to offset AI’s disruption.
• Streaming giants warn of financial strain if payouts rise.

History suggests compromise is unlikely—past rate-setting rounds have sparked lawsuits and stalemates. If no deal is struck, songwriters face a bleak future: earning less from streams while AI dilutes the market even further.