Why the music industry needs to learn to live with AI

It has been some time since I last posted here. Most of my blog activity now takes place over at MIDiA Research https://www.midiaresearch.com/blog and in the MIDiA newsletter (including the newsletter-only ‘Letter from the MD’). Follow me there and LinkedIn https://www.linkedin.com/in/markmulligan/ for regular updates and posts. Now onto today’s Music Industry Blog post. It’s a controversial one, so hold onto your hats…

If life is a party, AI gate crashed it in 2025. With financial losses rising even more quickly than critical voices, AI will not find things quite so easy in 2026. You don’t have to look very far to find alarm bells being rung. Deutsche bank said of OpenAI’s $143 billion cumulative negative cash flow, “No startup in history has operated with losses on anything approaching this scale” (per Adweek). Meanwhile, at the World Economic Forum, Microsoft’s Satya Nadella said that we must “do something useful” or lose “social permission” for the vast quantities of electricity it requires. So much of the financial system is vested in AI’s success that a bubble burst akin to the dot-com era is possible. However, with an MIT report claiming 95% of businesses are getting “zero return” from AI investments, something is going to have to change. 

This is the state of AI at the start of 2026 – but it is not the state of music AI. Music is emerging as a case study of where AI is actually delivering (and getting better by the day). This means that everyone in the music industry needs to start thinking about how to co-exist with AI, whether they like it or not.

The impact of generative AI on music creation

The music creator economy may be the canary in the coal mine for AI’s impact on music. Leading company Native Instruments just announced that it is entering preliminary insolvency (per Music Radar). Native Instruments make beautiful software, hardware, and sounds that appeal most to established, successful music creators – creators that have spent years honing their craft. What it doesn’t do so well is cater for the emerging generation of younger creators that want to go to 0-100 in a millisecond. 

This new breed of creators want making good music to be as easy as taking good photos and videos on their phones. A growing number see making music as personal entertainment rather than chasing dreams of multi-platinum success. It is a dynamic we explore in our brand new report: Music creator survey | Creation: Rise of the new breed.

AI did not create this dynamic but it did supercharge it. If music software democratised the means of production, AI has set it free. Thom York sang “anyone can play guitar” but anyone who has tried  (as I have done since I was five) will tell you that you have to spend a lot of time being bad before you are good. This is the case with all instruments. Gen AI, however, takes away being-bad-to-be-good. Anyone can write a text prompt. Now, is a single line of text ‘creation’. I’d personally say ‘no’, but those doing it will likely think ‘yes’. It is a similar question to whether an unmade bed installation in a gallery art? Does that text prompt become creative if it is a deeply considered paragraph of text defining melodic feel, lyrical content, instrumentation and arrangement? If so, what is the word count cut off between being creative and not?

Is entering a text prompt ever going to be creative in the same way as sitting down at a piano and writing a song? No. But neither is opening a DAW and building a track from samples and typing in MIDI notes. But does that make electronic music not creative? (And before you answer, I know there are still plenty of people out there who would say electronic music is not ‘actual’ music!).

And we should expect gen AI music to develop and become more sophisticated, as all consumer apps do over time. But whereas most consumer apps improve convenience and reduce friction, gen AI music will likely go in the opposite direction. It started as zero friction but make music creation too easy and the creative satisfaction soon wears thin. Creative friction is what make music making so important to people. And, from a cynical perspective, the longer it takes to make music, the more time spent on an app.

Regardless of whether current gen AI is creation or not, the result is a whole new wave of people making music – and the number paying do so is rising rapidly. In 2025, gen AI music users were already 10% of all music creators, and the number paying to create with AI doubled. Meanwhile the number of people buying traditional music software fell in both 2024 and 2025, as did revenues. This indicates that not only are new creators flowing in, established creators are shifting activity and spend to AI too.

One of the reasons is that gen AI music is improving. While licensing disputes roll on, gen AI has learned from the best chord progressions, vocal performances, arrangements, etc., that music has to offer and – crucially – what consumers do with that. The constraint on quality was always going to be computation technique, not innate capability. 

Industry stakeholders can make the AI slop argument, and music critics can claim that they can identify even the best AI songs as not being made by humans. But that misses the point. AI is for the masses, both on the creation side and the consumption side. 

Tracks on Suno can sound convincing enough to the average listener. AI artists like Sienna Rose command millions of Spotify listeners, while earlier this month ‘Jag vet, du är inte min’ hit the top of the Swedish charts only to be banned for being AI (per the BBC). AI is not going to replace human content, but it will increasingly displace it. 

AI is here to stay in music

The music industry needs to learn not just where AI fits in it, but where it fits in AI. This requires work from the industry, such as creating ‘lanes’ for AI as we argued in our Future of music streaming report. However, it also requires artists to put in work too. 

Last year, YouTube-first music creator Mary Spender laid bare the challenge: 

“First it was about gigs and selling CDs, then it was streams, then it was about content, now it is something else entirely.”

Her solution? To use her YouTube channel as her ‘proof of work’, the thing that communicates the humanness of her music. As this piece from It’s Nice That lays out, this is an approach being pursued throughout the creative industries.

Gen AI music enters 2026 of the back of two years of hockey stick growth. The coming 12 months will likely be more of the same. None of this is to suggest that creators and rightsholders should simply sit back and let unlicensed activity continue unabated – those battles still need to be fought. But, just as happened with music piracy, consumer behaviour is accelerating regardless. 

Some rightsholders are already leaning into AI’s capabilities – as explained by UMG’s Jon Dworkin at MusicAlly’s great Connect conference. Others are resisting with every effort they can muster. Neither approach is more right or wrong than the other. Part of carving out a role is deciding whether you want to be part of or apart from. Whatever your choice, music AI is not going away – at least not anytime soon.

Gen AI music is going to get bigger before (if) it gets smaller. Legislation isn’t going to be fast enough to stop this near term surge. Until it does, everyone in the industry needs to work out what they want to do in that time. To be ‘part of’ or ‘apart from’. Doing nothing and hoping for it to go away is not an option anymore. And whether AI stays or goes, it has catalysed the consumerisation of creation. That genie is out of the bottle. And the implications for music listening are clear. The more time that people spend making music, the less they spend listening to music. Whether the music they make finds an audience is almost besides the point. As I wrote about consumer AI music back in 2023: the music industry should worry less about the song with 1 million streams and more about the 1 million songs with 1 stream.

AI futures: Culture wars

AI is transforming culture, entertainment, business, and society at a pace unprecedented in the digital era. Unlike previous tech, AI is evolving at the speed of computing, not the speed of the human brain. While some disillusionment with AI will inevitably follow, it is likely to be shallow and short lived. Meanwhile, entertainment business and culture will have been turned upside down. 

Building on MIDiA’s already-extensive body of AI analysis, we have just released our biggest and most comprehensive report yet. The report provides an exhaustive view of where AI is at right now, where it is heading, and how entertainment companies need to respond and adapt. With more than a hundred companies and brands referenced, nearly 30 pages of analysis, new data, workflow analyses, and scenario mapping, if you are in entertainment or the creator economy, this report is a must read. The report is immediately available to MIDiA clients.

Here are a few highlights…

The early buzz around AI has focused on what it can make rather than what it can do. The simple fact is, it is easier to gauge the potentially transformational impact of something by seeing or hearing what it does than by thinking about how it might change processes and workflows. Yet, it is the latter that we should pay most attention to – and this is where AI’s most important work will be done.

AI will reshape entertainment from three directions:

1. Creators using AI
2. Consumers using AI
3. Companies using AI

AI alone will not drive change and disruption to entertainment – it needs consumers, creators, and companies to use it. While the first wave of AI hype focused on creation, creators’ primary needs lie in their wider workflows, and the AI vendor landscape is evolving to meet this wide array of needs. The following are key workflow focuses:

●  Inspiration (e.g., Songstarter, CoSo, vidIQ) 

●  Creative co-pilot (e.g., CoPilot, Descript, CoProducer)

●  End-to-end creation (e.g., LTX Studio, Mubert)

●  Final touches (e.g., LANDR, Captions AI, Resound.fm)

●  Workflow(e.g., Podcastle, COSMOS, Dream Screen)

●  Career (e.g., MNGRS.AI, Replo, Albert)

While creators are leaning into workflow tools, consumers are engaging en masse with utility and creation tools. While much of this leans towards functional creation (writing cover letters, writing college papers, etc.) AI is also presenting wider creative opportunities to consumers, and this behaviour will grow. Rather than a blurred line between creator and audience, the overlap is more like a segment of a Venn diagram. AI will result in more consumers creating – not just for the results, but because creation will become a form of entertainment in its own right. 

Entertainment companies are adopting AI at pace too, integrating it across their workflows, from sourcing content through to royalties and reporting. The most interesting area to keep an eye on is entertainment companies using AI to stamp their visual or sonic identity on their releases and output and using AI to identify talent before it is talent. In other words, the top of the funnel is going to start outside the funnel!

It is becoming clear that, unless specific lanes are built for it, AI will encroach upon everything. There is a growing body of thinking about how to compete against AI, but the harsh reality is AI can compete with everything where it can exist, and we are going to reach a point where it is hard to distinguish between “AI” and “non-AI” content. It is the platforms, therefore, that must actively build walls around AI.

This is just a high level overview of the report. There are lots (and I mean, lots) of interesting reads about AI at the moment – but, this is not only an interesting read, it is a necessary read! 

If you are not yet a MIDiA client and would like find out more about the report, email businessdevelopment@midiaresearch.com 

State of the music creator economy – The consumer era

MIDiA is excited to announce the publication of the latest edition of its annual ‘State of the music creator economy’ report. Based on months of research, MIDiA creator and consumer surveys, market sizes and forecasts, this report is the definitive assessment of the music creator tools industry. The report is available to clients here.

The highlights:

The pandemic triggered a surge in the music creator economy, bringing an influx of interest and investment. Suddenly, everyone was talking about music creator tools while investors ploughed investment into leading companies, like Native Instruments and Splice, while newer entrants, like LANDR, carved out new models. 

By 2022, the industry found itself in a post-pandemic lull – always a possibility, even before the subsequent cost-of-living crisis. But, as our report reveals, the slowdown does not represent a sector returning to a pre-inflated level, but instead, a natural rebalancing before long-term, dynamic growth kicks in. This is because the pandemic did not create the market but catalysed an already growing sector, driven by a new wave of creators focused on simplicity and efficiency. The pandemic compressed three years of user growth into one and a half years, so slowing revenues are, in large part, a reflection of the bedding in of this cohort. 

But it is post-pandemic trends that will grow the market most: a) the rapid rise of AI, and B) the rise of the consumer-creator. Consumer-creators transformed photography (Instagram) and videography (TikTok); music will be next. Not only will casual music creation become mainstream, it will trigger an unprecedented widening of the music creator economy funnel. So the market’s future will be defined by: 

1. Simplification
2. Consumerization 

Perhaps the clearest sign that the music creator space continues to grow at pace, despite lacklustre results from some key companies, is that the number of creators grew by 12% to reach 76 million, with the number of those who upload their music growing by more than double that rate. Interestingly, the number of artists who self-release into the traditional streaming supply chain grew at half this rate. A forking of the music business is taking place before our very eyes, with the streaming ecosystem playing the traditional establishment, and social apps and new platforms, like BandLab, representing a new, future-facing, creator-centred ecosystem. 

Humans like to think of history in chapters, and music is no different – sorted into neat sections: the CD, piracy, downloads, streaming. We are now entering the creator era. A paradigm shift that will see the creator become centre stage, with creation itself being entertainment, and fans being given ever-more ways to participate and create themselves.

The new, post-streaming models will be defined by characteristics that are almost mirror opposites to the DSP model: 

• Creator-centric versus rights-centric 
• Creation versus consumption 
• Dynamic versus static 
• Non-linear versus linear 
• Fans versus audiences 

The streaming-centred music business and creator tools used to be separate industries but they are now becoming part of one, extended value chain. With revenues of nearly six billion in 2022, and rising to $10 billion by 2030, the creator tools sector is going to have both commercial and cultural transformational impact. Though hardware will continue to be a crucial part of the market, creation is becoming increasingly virtual, software, sounds and services will account for the majority of future growth.

The growth of the creator tools market to date has resulted in a surge of new tools and services. In fact, there are too many, making it hard for creators to identify what they need and why. Cloud services, such as the recently launched FL Cloud, which combine multiple tools to create joined-up workflows, are a new and important part of the market. This reaggregation approach will become far more prevalent, with subscriptions gaining share, up from a quarter of software, sound and services revenues in 2022, to nearly a third in 2030.

AI will, of course, also be a key growth driver, building on an already long history in creation. Current music AI tools cluster around three groups: 

1. Assistive tools 
2. Generative creator tools 
3. Generative consumer tools 

Established creators will increasingly use generative tools as sound sources, but they will play a more foundational role for younger, newer creators. AI’s biggest impact will be its opening up of the consumerization of music, which itself will comprise of three key components: 

1. Voice
2. AI
3. The phone 

The days of audience, creation, rights and distribution being discreet sectors are numbered. Creation is going to become the linking element, with a new generation of fast-moving creators opting into new models that enable them to operate across all elements simultaneously. The shift of cultural capital will be industry-changing and, in this context, ByteDance launching its creator tools, Mawf and Ripple, demonstrates it is staking its claim to be a key player in this brave new world.

Even though this post covered a lot of ground, it is only a tiny fraction of the 7,000 word, 46 page, 18 figure report! It includes four sections, covering:

1. Music creators
2. AI
3. Market size
4. Future models

With deep data on music creators, consumer creators, market sizes and forecasts, AI vendor mapping and future business models, there is simply no other report you need to understand both the creator tools market and its growing influence on music business and culture.

If you are not yet a MIDiA client and would like to learn more about how to become one, email stephen@midiaresearch.com.

Finally, here is a list of the companies and brands mentioned in the report: Ableton, Amp, Apple, Arturia, Audiocipher, Avid, BandLab, Bandzoogle, Beatclub, BeatStars, Boomy, ByteDance, CD Baby, Coursera, Discord, Discovery Mode, Distrokd, Fender Play, Final Cut Pro, Fiverr, Focusrite, FL Cloud, FL Studio, FRTYFVE, Google, HIFI, IK Multimedia, Image-Line, Instagram, iZotope, Jamahook, Korg, LALAL.AI, LANDR, LANDR Network, Linkfire, Live, Logic, Loopcloud, MasterClass, Mawf, Meta, Moises, Moog, Native Instruments, Neutron, Pandora, Ripple, Roland, SongStarter, SoundBetter, SoundCloud, Songtradr, Spitfire Audio, Splice, Spotify, Stem, Submix, Suno Chirp Bot, Symphony OS, TB303, TikTok, Tracklib, TuneCore, United Masters, Waves, Yamaha, YouTube, YouTube Shorts 

AI will unlock creation rather than consumption

Unlike most new technology hype cycles, the impact of AI on the world is already surpassing expectations. The current hype around AI far exceeds that of more recent tech, such as VR, NFTs, and 3D printing. This is in part because AI represents a crucial part of the architecture of tomorrow’s internet, along with various web 3.0 technologies, rather than being just another new tech product. AI continues to shape the music industry’s contemporary narrative. News sites regularly reference new statements from industry execs and announcements from new companies, while AI dominates discussions both on and off stage at industry events. Of course, AI is a catch-all term that refers to a massive variety of applications even within music. Even with this caveat, it is clear that it is going to reshape the future of music, culture, business and, ultimately, society. However, as impactful as this change might be, it will help turn back the clock for music to how music was before the recorded music business came to the fore.

Prior to the establishment of the recorded music business, music was a participatory experience. Whether that be a 19^th century family gathering around a piano on a Sunday, mediaeval peasants singing along with a travelling bard, or the majority of 16^th–18^th century European populations singing hymns in church. Recorded music used quality to build walls between listeners and performers. The vast majority of people could never expect to sound as good as a piece of recorded music. However, the trend started to reverse with the introduction of music production software and sample culture, re-democratising the means of production, while streaming and social media combined to democratise the means of digital distribution.

In the 2020s, these technologies have accelerated scale and capability, supported by the proliferation of online learning (e.g., Masterclass) and skills sharing platforms (e.g., Fiverr), making it easier than ever for aspiring music creators to release good quality music. In 2022, the number of artists direct (i.e., self-releasing artists) reached 6.4 million, a 16.8% increase from 2021. While the music creator economy continues to grow; the even more transformative potential lies in the consumerisation of these technologies – much like Teflon making its way from NASA spaceships to kitchen pans.

Assistive AI is already well established in music creation (e.g., iZotope’s Neutron 4, Splice’s CoSo). It is a relatively small step to further simplify user interfaces, making them ready for consumer primetime. When combined with generative AI, anyone with a smartphone has the ability to create convincing-sounding music as easily as they would take a photo – a process that was far more difficult to do to a high standard before the consumerisation of digital photography by smartphones and Instagram.

The crossover between music creation and social media is still in its early days, largely confined to TikTok duets and Snapchat’s Sounds lens, but it is approaching a tipping point and AI is about to push it over the edge.

In 2011, I wrote a report entitled Agile Music in which I suggested that music’s creative full stop was going to be erased, with songs evolving beyond the static full stop. Endel’s UMG deal shows us that this future is coming to pass. The report laid out the ‘3 Cs’ framework:

• Customise
• Create 
• Contribute

AI is the technology that will unlock this new paradigm. Music will not only become better adapted to our behaviour, but it will also make music participative again. While record labels are focused on the copyright and volume / stream dilution threats AI poses (and they are very real threats), the truly exciting potential is making music something that all consumers can use as an expressive medium, rather than simply consuming. Is that the same as ‘real’ music? No, but just as TikTok is not the same as Netflix, the marketplace will inevitably delineate between places to create versus consume. Then, maybe, just maybe, the whole volume risk will become moot.

If you liked the themes in this blog post, check our latest report: AI and the future of music – The future is already here