AI's Impact on Music Economics - The Velvet Sundown Effect

The music industry is at a turning point as generative AI reshapes how songs are created and monetized. By flooding streaming platforms with cheap, infinite music, AI exploits the “pro rata” royalty model—diluting payouts for human artists. Industry forecasts suggest creators could lose over €10 billion in revenue by 2028. Cases like “Velvet Sundown” highlight how AI bands achieve algorithmic success with no real-world presence. Meanwhile, listeners say they prefer human art, but blind tests reveal they can’t tell the difference. This podcast explores how AI blurs the line between art and product, challenging the future of music itself.