A Pivotal Moment for the Music Industry

Barclays’ latest analysis highlights a critical turning point for the global music business. Advances in generative AI have dramatically lowered the barriers to music creation, enabling millions of creators to produce high-quality tracks without traditional label support. The bank cautions that this shift, combined with the rising sophistication of AI-driven piracy and distribution, could destabilize established revenue streams for legacy labels.

Historically, AI-generated music was seen as low-quality and niche, unlikely to challenge professional production. Today, improved technology and widespread adoption are reshaping that assumption. Barclays notes that labels face mounting pressure on streaming revenue, licensing, and market share as AI tools proliferate.

Financial Implications: Risk and Opportunity

In its projections, Barclays outlines multiple scenarios for the industry:

• In a worst-case scenario, labels could lose up to half of usage revenue and around 10 % of market share, resulting in double-digit EBITDA declines for major players.

• A central scenario suggests modest declines ranging from 1 % to 4 % as labels partially adapt to AI trends.

• In a best-case scenario, proactive strategies—including AI licensing, remix platforms, and “super-fan” subscription tiers—could deliver up to 17 % EBITDA growth.

These scenarios highlight that traditional reliance on hit-making and catalog monetization may no longer be sufficient. Labels that fail to evolve risk erosion of margins, while those embracing AI could unlock entirely new revenue streams.

Strategic Responses and Industry Adaptation

The music industry is experimenting with AI-powered virtual acts, creator-driven tools, and immersive fan experiences. Some entertainment companies, particularly in Asia, have introduced virtual performers combining human artistry and AI-generated outputs.

Barclays, however, stresses that control over licensing, rights management, and monetization will be decisive. Labels that cannot effectively integrate AI into their business models risk ceding influence to independent creators and technology platforms.

AI-driven piracy is another pressing concern. Reports indicate that a substantial portion of daily uploads on major streaming platforms is AI-generated, with many streams bypassing traditional revenue channels. Strengthened detection, digital rights frameworks, and innovative licensing models will be critical to sustaining profitability.

The Road Ahead for Labels

Looking forward, industry observers will track several key indicators: adoption of AI licensing agreements, integration of AI tools in streaming and creator platforms, shifts in usage revenue and market share, and the effectiveness of rights management in regulating AI-generated music.

The coming years may define whether labels successfully harness AI as a growth lever or struggle to protect their core business. Barclays’ analysis makes it clear: the music industry is entering a decisive period where adaptation to generative AI will determine long-term success.