It's not so much of an issue with art for art's sake aided by AI. It's an issue with artistic work becoming unviable work.
And this itself is another tired trope. Just because you can pattern match and observe that things repeatedly went a certain way in the past, doesn't mean that all future applications of said pattern will play out the same way. On occasion entire industries have been obliterated without a trace by technological advancement.
We can also see that there must be some upper ceiling on what humans in general are capable of - hit that and no new jobs will be created because humans simply won't be capable of the new tasks. (Unless we fuse with the machines or genetically engineer our brains or etc but I'm choosing to treat those eventualities as out of scope.)
Recorded music and radio obviously reduced the demand for performers, which reduced demand for sheets.
All that is before the fact that streaming services are stuffing playlists with AI generated music to further reduce the payouts to artists.
> Yet here we are, hundreds of years later, live music is still desirable, plays still happen, and faceless voices are still around...
Yes all those things still happen, but it's increasingly untenable to make a living through it.
I listen pretty exclusively to metal, and a huge chunk of that is bands that are very small. I go to shows where they headliners stick around at the bar and chat with people. Not saying this to be a hipster - I listen to plenty of "mainstream" stuff too - but to show that it's hard to get smaller than this when it comes to people wanting to make a living making music.
None of them made any money off of Spotify or whatever before AI. They probably don't notice a difference, because they never paid attention to the "revenue" there either.
But they do pay attention to Bandcamp. Because Bandcamp has given them more ability to make money off the actual sale of music than they've had in their history - they don't need to rely on a record deal with a big label. They don't need to hope that the small label can somehow get their name out there.
For some genres, some bands, it's more viable than ever before to make a living. For others, yeah, it's getting harder and harder.