They took a base model, so something trained on stolen work - and then added a vaneer of non-stolen work. I too would be skeptical of their legal position.

I believe a service like this could succeed if the initial base model wasn't Stable Diffusion and wasn't trained internet scrapes without the copyright permissions.

Their solution basically just amounts of "Ethically sourced Styles" which still has all the red tape that a normal text2image model has because majority of the data is still unapproved for use in an AI model.

Businesses didn't want to get wrapped up in a pesudolegal model that really has no better legality than base SD.

They took a base model, trained on but not reproducing work, so entirely fair with no theft, and then tried to tweak it so it could make money for an artist.

Except that as soon as it is used to create work, it’s reproducing work that is derived from what it was trained on. Not just the stuff it was TUNED on or asked to derive style from.

If anything the legal position is probably the opposite: The law is leaning towards AI training being transformative/fair use and AI generated content not getting any copyright protection at all. So something paying artists for style-rips probably was a net positive for artists, because it's very possible it will end up outright legal to have gen AI rip off artists' styles wholesale.

In which case they would have zero business model.

Cite one legal case where an AI company trained on a particular work, and the judge ruled that they quote-stole it-unquote.

Courts pretty much always rule in favor of rich corps that steal from individuals, and increasingly so. AI companies have money. Artists don't. That makes AI thievery fine, doubly so since AI corps have financially contributed to the government.

You should realize that this is happening not only in the space of images(where conglomerates aren't a thing), but also in music.

Music conglomerates have money and their lawsuits will probably settle the issue.(unless they settle) That will be applied for all copyrighted works, regardless of the medium.

I believe going against the big guys is the reason why the big ones don't yet have music generation LLMs.