美国娱乐：人工智能....或早或晚——音乐参与的下一阶段，而非人类替代

US Entertainment: Artificial Intelligence.... Sooner or Later - Thenext phase of music engagement, not human displacement This report is part of a global series in which our analysts consider what their sector will looklike by the early 2030s when AI has been fully integrated and commercialized. There arebroadly two schools of thought running through our research on AI globally. The “Sooner”camp generally believes that Artificial Intelligence is a game-changer for their sector, rightnow. The “Later” camp believes that Artificial Intelligence is a game-changer for theirindustry… just not yet. In this series, each analyst is declaring their view on the timing andnature of AI disruption in their sector and what that implies for warranted valuation today. Ian Moore+1 917 344 8434ian.moore@bernsteinsg.com Nosher Ali Khan+1 917 344 8578nosher-ali.khan@bernsteinsg.com While live events & sports betting are essentially insulated (Exhibit 1),generative AIhas become one of the most debated themes in music, with investors increasinglyquestioning whether AI-generated content could dilute the value of music assets ordisrupt the streaming ecosystem. In our view, the early evidence still points more towardenhancement than displacement. While AI-native music platforms are seeing risingadoption, scale and engagement remain far below established streaming services, andobservableconsumer behavior continues to favor human artists, reinforcing the viewthatAI is more likely a complement to rather than a replacement for the traditionalmusic business(Exhibit 4- Exhibit 7). Instead of displacing human artists, we believe AI is likely to emerge as anewmonetization layerwithin the music ecosystem, reshaping how music is discovered,experienced, and monetized. The clearest early pathway, in our view, is through AI-enabledpersonalization, discovery, and premium product differentiation within established &emerging DSP platforms. We also see licensed ecosystems around music IP as offering aparallel route for rights holders to participate in AI monetization. More broadly, we believeAIaffords platforms & rights holders with incremental pricing power and engagementpotentialthat can more than offset royalty leakage & competition, adding incrementalgrowth potential to the 5-year streaming TAM (Exhibit 9 - Exhibit 10). For SPOT, we see competitive lean-forward AI features enabled by innovative licensingagreements as the cleanest path toward alleviating the AI disruption narrative, whileresilient engagement, pent-up pricing power, and a potential second-half 2026 ad re-acceleration support further momentum for upward revisions to revenue estimates.For WMG, we see AI as a high-margin incremental layer on top of accelerating corestreaming and margin expansion. Taken together, we believe AI is more likely to expand theeconomics of the music industry than disrupt it, with the earliest benefits accruing to scaledincumbents that control discovery and IP (Exhibit 17 - Exhibit 18). We place music firmly in the“Sooner”camp.AI is likely to be a meaningful monetizationand market-structure shift for the industry. That shift began when Warner, Universal &Merlin licensed their artists’ works to the emerging music creation platform Udio and couldaccelerate if the major labels grant licenses to scaled music DSPs (including Spotify) assoon as this year. BERNSTEIN TICKER TABLE INVESTMENT IMPLICATIONS We view the music sector as a likely AI winner. We rate SPOT & WMG Outperform. We view live events & sports betting as especially insulated from generative AI. We rate LYV, TKO, FWONK & DKNG Outperform.We rate FLUT Market-Perform. DETAILS We do not see AI exposure as evenly distributed across our coverage. In our view, music ranks highest, as it is the part of ouruniverse where content creation, discovery, engagement, rights ownership, and monetization are most directly exposed to AI-driven change. Elsewhere in our coverage, the impact looks more indirect or more incremental: for FWONK and TKO, AI appearsmore likely to show up through sponsorship dollars from big tech; for LYV, the relevant channel is more likely to be commercialenablement through Ticketmaster and agentic commerce integrations over time (we view the bear narrative that AI-generateddigital artists could displace demand for human talent as exceedingly unlikely as we discuss in this report); and for DKNG andFLUT, the opportunity appears more tied to software-driven cost savings and efficiency (AI models make for poor sharps as theFT reported last week). By contrast, the AI debate is most urgent around SPOT and WMG, where novel technologies have the potential to influence bothcompetitive positioning and the long-term economics of the ecosystem. That ranking is what leads us to focus this report onmusic and, in the pages that follow, on why we believe AI is more likely to enhance rather than displace the traditional market,with the earliest economic effects emerging through discovery, premiu