Tidal Cuts the Cord on Royalties for 100% AI-Generated Music

Imagine a band that openly brags about being "engineered to fill playlists" and "avoid royalties." That is the exact pitch of The Velvet Sundown, an AI-generated music act that recently released a synthetic, unlabeled cover of Dolly Parton’s "I Will Always Love You." As generative AI makes it effortless to flood the internet with synthetic tracks, the music streaming industry is facing an existential question: who actually gets paid for this?

Tidal, a streaming service famous for catering to audiophiles—listeners who invest in high-end digital-to-analog converters and obsess over lossless FLAC audio—has decided to draw a hard line in the sand. The company announced that it will no longer pay any royalties for music that is "wholly AI-generated." Starting July 15, tracks where every single component was created by generative AI will be demonetized on the platform, and they will also be barred from direct-to-fan sales.

However, Tidal isn't banning AI altogether. The platform acknowledges that artists should have the freedom to use AI as a creative tool, and listeners can still stream AI bands if they choose to. The Velvet Sundown, for example, remains searchable on the app. Instead of outright censorship, Tidal is targeting the economics of what critics call "AI slop"—low-effort, high-volume content designed to game recommendation algorithms. By partnering with external detection firms, the company aims to ensure that its royalty pool is reserved strictly for works directly produced, written, and performed by human beings.

This economic blockade stands in stark contrast to the broader industry's approach. Streaming giant Spotify, for instance, has promised to label and filter AI spam, but it has largely embraced the technology as part of the future of music. AI acts like Breaking Rust and The Velvet Sundown currently rack up millions of streams on Spotify, generating real revenue. Spotify is even exploring features that allow fans to create AI remixes of their favorite artists.

Tidal’s move represents a pivotal moment for the creator economy. It shifts the debate from whether AI art is "real" to how we value it financially. As the technology advances and licensing models evolve, the industry must decide if the streaming royalty pool will be diluted by an infinite supply of synthetic audio, or protected as a reward for human creativity. By cutting off the money supply to fully automated tracks, Tidal is making a clear statement: code may be able to carry a tune, but it hasn't earned a paycheck.

Key Points

• Tidal is demonetizing music that is entirely generated by AI, effective July 15.
• The platform will still host AI-generated tracks and allow artists to use AI tools, but fully synthetic songs will not earn royalties.
• Rival platforms like Spotify currently allow AI-generated acts to accumulate millions of streams and earn money.
• Tidal is working with external partners to detect wholly AI-generated tracks to protect the royalty pool for human creators.

Why It Matters

Tidal’s policy sets a major precedent in the creator economy, establishing that while AI can be used to generate content, the financial rewards of streaming should be reserved for human effort.

Sources:

• Tidal Says It Won’t Pay Royalties for AI-Generated Music — 404 Media