AI’s disruptive forces are rapidly reshaping the music industry

A few months ago, French DJ David Guetta posted a video that probably sent chills down the spines of some artists and music executives. “There’s something that I made as a joke and it worked so good I could not believe it!”, Guetta marvelled.

In the clip, Guetta is DJ-ing a set for thousands of fans in a dark club. He plays a song that appears to sample the rapper Eminem, whose distinctive voice delights the crowd.

“Eminem, bro!”, Guetta says. Except it was not actually Eminem. Instead, Guetta had used an artificial intelligence site to generate lyrics in the style of Eminem and then entered that text into another AI site that recreated the sound of Eminem’s voice. The result: “I played the record and people went nuts.”

The use of AI to produce music has made the industry increasingly alarmed in recent months, with insiders likening the disruption to that of the sharing site Napster in the early 2000s.

The barrier to entry to making music had already been a lot lower than, say, making a movie. Artists can produce songs from their bedrooms. But AI has further opened the floodgates. It has never been easier to create a piece of music and add it to Spotify. One such site that enables this, called Boomy, says its users have generated more than 14mn songs. In comparison: Spotify’s entire catalogue is about 100mn songs.

Lucian Grainge, chief executive of Universal Music, has been sounding the alarm. “Unchecked generative AI poses many dangers,” he told investors last month. Universal Music recently sent a letter to all the leading streaming platforms warning them against allowing AI technology to train itself on copyrighted music, the Financial Times reported last month.

There are a few reasons for such concerns. The first one is obvious: copyright infringement. An AI-generated fake Drake can only sound like the star because it learned to do so by listening to Drake. So the music companies argue Drake should receive some of the money these songs earn. Some musicians, such as Grimes, though, are happy to opt in and allow their voices to be duplicated, while splitting the royalty income 50/50. The copyright issue could take time to sort out, but eventually music companies and other stakeholders will create a framework for how to license music used by AI generators.

But there is another reason why Universal is worried. The market share of major-label music on streaming platforms has been declining, slowly but steadily. In 2017, the four biggest suppliers accounted for 87 per cent of all listening on Spotify. By 2022, that had shrunk to 75 per cent.

Listening is increasingly being diverted towards music from independent artists, as well as ambient tracks and AI-generated songs. Grainge has spent the past few months talking about an “oversupply” of content on Spotify, where 100,000 new tracks are being added every day. He says AI has been a leading contributor to this.

The big music companies care because they earn billions of dollars of royalty income that is directly tied to their proportion of streams. But this shift is also fundamentally changing what Spotify is, and raises big questions about how we will consume music in the future.

For a long time, Spotify had compared itself with Netflix. It was the place where you could pay a monthly subscription fee for access to a large catalogue of professionally produced music. But Spotify is turning into more of a combination of Netflix and YouTube — a platform where you can listen to megastars, but also 30-second clips of rainfall that can be created in seconds by anyone with access to a computer.

AI has helped spur this shift. A senior music executive described AI-generated music to me as “UGC on steroids”, referring to “user-generated content” — the homemade clips of cats, memes, covers of popular songs, etc, that dominate YouTube.

Grainge and his peers, such as Warner Music chief executive Robert Kyncl, are talking about developing an economic model for streaming. “It can’t be that an Ed Sheeran stream is worth exactly the same . . . [as] a stream of rain falling on the roof,” Kyncl said recently.

What might this model look like? Maybe all the user-generated music will be siphoned off to a different platform entirely, while professional music is kept to premium services. Spotify might be reluctant to agree to that. But more industry change is looming. “The music industry’s disruption has only had one chapter,” says Mark Mulligan, analyst at consultancy Midia. “There’s more to come.”

anna.nicolaou@ft.com