AI generated music is more of a threat to the current state of the recording industry. If I can create exactly the album or playlist that I want using AI then why should I pay a record label for a recording that they're going to take 90% of the retail price from? The playlist I listen to while I'm working out or driving is not competing with live band performances, I'm still going to go to a show if there's a band playing that I like.
I disagree that it's a threat to the recording industry. They aren't going to be able to sell AI music, but nobody else is either, because anyone who wants AI music can just create it themselves. Record labels will continue to sell and promote real artists, because that's how they can make money. That's what people will pay for.
There are a lot more fuzzy edges too, you can use AI tools to "autotune" your own voice into a completely different one. You can tap out a quick melody on a keyboard and then extend, embellish and transform it into a full song. You could even do the full song yourself first and then remix it using AI.
The point I agree on would be that one-click hits are going to be few and far between for a while at least. If no effort is put into selecting the best then it's really just random chance. I'd be willing to bet that there will be an indie smash hit song created by a single person who doesn't perform any of the vocals or instruments within a year though. It'll get no play time on anything controlled by the industry titans but people will be streaming it regardless.