Cafes are playing AI music to cut costs, so what does that mean for musicians and songwriters?

Across New Zealand, a subtle but significant shift is underway in the ambient soundtracks of cafes and small businesses. Increasingly, establishments are turning to AI-generated music as a cost-saving alternative to traditional licensed tracks. This emerging trend, while economically motivated, is stirring debate about the cultural and financial consequences for musicians and songwriters.

Traditionally, venues like Gisborne’s Flagship Eatery have secured copyright licenses to play original music, supporting artists through royalty payments managed by OneMusic NZ. However, the rising availability of AI music—capable of producing entire playlists based on simple prompts such as “early morning cafe jazz”—offers businesses a royalty-free option that requires no licensing fees. With hospitality margins tightening sharply amid a challenging economic climate, some operators find this a compelling choice.

The global market for AI-generated music is anticipated to surge to nearly US$3 billion by 2030, reflecting rapid technological advances that enable customized, on-demand songs, sometimes even embedding customer names in the lyrics. Internationally, the phenomenon is already prevalent, with AI soundtracks permeating retail environments and service venues. Brands like Starbucks in Indonesia have even launched marketing campaigns leveraging AI music to enhance customer engagement.

Yet, this technological convenience comes with nuanced implications. Research conducted by OneMusic NZ reveals that music profoundly influences consumer behavior, with nearly 40% of surveyed customers walking out of venues due to unsatisfactory music choices. Particularly discerning younger audiences can detect generic, repetitive AI loops, potentially diminishing the authenticity of the atmosphere.

The financial stakes are significant for music creators. Apra Amcos estimates that generative AI could reduce revenues for composers and songwriters in Australia and New Zealand by up to 23% by 2028, equating to hundreds of millions in lost earnings. This decline compounds existing challenges posed by streaming platforms, which have already disrupted traditional royalty models.

New Zealand artists and industry bodies emphasize that music embodies cultural identity and emotional depth, qualities that AI-generated tracks struggle to replicate. Many local businesses, such as Auckland’s Tala restaurant, consciously curate soundtracks reflecting their cultural heritage, recognizing music’s role beyond mere background noise.

However, for numerous small operators, the cost of music licensing—typically starting around $70 monthly for modest venues—can represent the profit margin of thousands of coffee cups. This financial pressure leads some to forego licenses in favor of AI music, which legally circumvents copyright fees. Such decisions, while pragmatic, provoke ethical concerns about fair compensation for artists.

Copyright enforcement remains complex and uneven. While OneMusic NZ licenses are widely held and provide legal clearance for public performances, misunderstandings persist among businesses unaware of licensing requirements. Instances of infringement have occasionally resulted in substantial fines, underscoring the legal risks involved.

The debate extends into the regulatory sphere, with calls from Recorded Music NZ and Apra Amcos for clearer government frameworks addressing AI’s role in music creation and copyright. The opacity of AI training datasets complicates attribution and enforcement, raising questions about the protection of original works used to generate new content.

Ultimately, the infiltration of AI music into everyday commercial spaces challenges the music industry to reconcile innovation with sustainability. Musicians express concern that AI’s derivative nature threatens creative livelihoods, while some producers acknowledge AI’s limitations in crafting genuinely original compositions. As businesses balance survival against artistic integrity, the future soundscape of New Zealand’s cafes may hinge on decisions made today about the value placed on human creativity versus algorithmic convenience.