> A good argument is that therefore there is no reason to pay royalties on AI generated work as it is the equivalent to public domain.

That has some different second order consequences that I don't think you're seeing. It's not that they will be free to you as a user, it's more that they will be free from the platform perspective to do whatever they want with the revenue they get from it.

Say for example you have a platform with Spotify monetization scheme for instance, which is already very unfair to small artists. But now imagine you have to compete to be included on auto play or playlists against something that's basically free for Spotify, what's your chance of getting any money out of it? Say Spotify changes their algorithm and starts pushing 20% of all auto play playlists to consist of AI songs, that's basically a 20% bump on their profit basis.