Music Industry Hits Record Revenues, But AI Threat Looms Large
The global music industry continues its remarkable decade-long growth streak, fueled by the dominance of streaming services. However, a new challenge is emerging: artificial intelligence. While revenue reached $31.7 billion in 2025, a 6.4% increase, according to the Federation of the International Phonographic Industry (IFPI), the industry is now grappling with how to address the potential impact – and potential exploitation – of AI-generated music. This tension between continued success and a looming technological disruption is forcing record labels and artists to consider new legal and business strategies.
Streaming remains the engine of this growth, accounting for 69.6% of total revenue, exceeding $22 billion. Subscription streaming, in particular, is a major driver, representing over half of all streaming revenue. The number of global subscribers reached 837 million in 2025, demonstrating a sustained willingness among consumers to pay for access to music. This growth isn’t limited to established markets. significant increases in subscriptions are being seen in Africa, the Middle East and South America, with growth rates of 22-23% in those regions. Meanwhile, physical formats, including a resurgent vinyl market, are also contributing to the industry’s health, generating $5.3 billion in revenue, with vinyl sales experiencing their 19th consecutive year of growth, increasing by 13.7%.
The success isn’t evenly distributed geographically. While streaming dominates in North Africa and the Middle East, accounting for 97.5% of revenue, Asia represents 45.1% of all revenue from vinyl, and CDs. China has emerged as a key market, becoming the fourth largest globally thanks to a 20.1% growth rate, surpassing Germany. Leading the charts in terms of sales are American artist Taylor Swift, the K-pop group Stray Kids, and Canadian rapper Drake, according to the IFPI, which represents over 8,000 record companies worldwide.
The Rise of AI-Generated Music and the “Fair Use” Debate
The increasing sophistication of AI music generation platforms, such as Suno and Udio, is raising concerns within the industry. These platforms allow users to create original songs in various styles with minimal musical expertise, and some of these creations are gaining significant traction online. A notable example is the AI-generated cover of Stromae’s “Papaoutai” which gained considerable attention in late January 2025. RFI reports that these platforms often rely on “fair use” doctrines, a legal principle that permits limited use of copyrighted material without permission for purposes such as criticism, commentary, news reporting, teaching, scholarship, or research.
However, the music industry argues that this interpretation of “fair use” is overly broad and threatens the livelihoods of artists and rights holders. The IFPI is calling on governments to establish clear regulations requiring AI developers to obtain licenses before using copyrighted music to train their algorithms or generate new content. This stance reflects a broader concern about the potential devaluation of music if AI-generated content floods the market without proper compensation to creators. The core argument centers on ensuring that the “value of music” is “fully recognized” when AI is involved, as stated by the IFPI.
The legal landscape surrounding AI and copyright is complex and evolving. The concept of “fair use” varies by jurisdiction, and there is ongoing debate about the extent to which it should apply to AI-generated works. Some legal scholars argue that AI-generated music should be considered transformative, and therefore not infringe on existing copyrights. Others contend that the use of copyrighted material to train AI models constitutes a derivative operate, requiring permission from the original rights holders. Europe 1 highlights this ongoing legal battle, noting the industry’s desire to ensure proper compensation for the use of their intellectual property.
Deezer’s Breakthrough and the Future of Streaming
Amidst these challenges, some companies are experiencing significant success. Deezer, the French music streaming service, achieved profitability in 2024 for the first time in its history, reaching the point where its revenue equals its expenses. This milestone is attributed to a combination of factors, including increased subscriber numbers and a strategic focus on growth markets. Deezer has set an ambitious goal to double its revenue within the next two years, signaling confidence in its future prospects. This success story demonstrates that, despite the competitive landscape dominated by giants like Spotify and Apple Music, there is still room for innovation and growth in the streaming sector.
The continued growth of the streaming market is also driving innovation in service offerings. Platforms are experimenting with new features, such as personalized playlists, interactive music experiences, and high-fidelity audio quality, to attract and retain subscribers. The rise of podcasts and audiobooks on streaming platforms is also contributing to increased engagement and revenue. The industry is increasingly focused on creating a holistic audio entertainment experience, rather than simply offering access to a vast library of music.
The Impact of AI on Artists and Songwriters
The implications of AI extend beyond copyright concerns. Artists and songwriters are also grappling with the potential for AI to disrupt their creative processes and livelihoods. AI tools can now generate melodies, harmonies, and lyrics, raising questions about the role of human creativity in the future of music. Some artists are embracing AI as a tool to enhance their songwriting and production capabilities, while others fear that it will ultimately replace human musicians. The debate over the ethical and artistic implications of AI-generated music is likely to intensify in the coming years.
The IFPI’s call for collaboration with AI companies suggests a recognition that AI is not going away. The industry is seeking to find ways to harness the power of AI while protecting the rights and interests of its members. This may involve developing new licensing models, establishing industry standards for AI-generated music, and advocating for legal frameworks that address the unique challenges posed by this technology. The future of the music industry will likely depend on its ability to navigate this complex landscape and strike a balance between innovation and protection.
Looking Ahead: Legal Battles and Industry Adaptation
The coming months will be crucial in shaping the future of the music industry in the age of AI. Several legal cases are expected to test the boundaries of copyright law and the application of “fair use” to AI-generated content. These cases will likely set precedents that will have a lasting impact on the industry. The IFPI is actively engaging with governments and policymakers around the world to advocate for stronger copyright protections and regulations for AI-generated music. Swissinfo.ch reports that the organization is emphasizing the need for a framework that ensures AI developers obtain authorization from rights holders before utilizing their content.
Beyond the legal battles, the music industry will need to adapt its business models and strategies to thrive in an AI-driven world. This may involve exploring new revenue streams, such as licensing AI-generated music, developing AI-powered tools for artists and songwriters, and focusing on creating unique and authentic experiences that cannot be easily replicated by AI. The industry’s ability to embrace innovation and collaborate with technology companies will be key to its long-term success.
The next major update from the IFPI, expected in early 2027, will provide further insights into the evolving impact of AI on the music industry and the effectiveness of the measures taken to address these challenges. The conversation surrounding AI and music is far from over, and the industry remains at a pivotal moment, balancing unprecedented growth with the need to protect its creative core.
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