Speaker 1: Our CNBC senior media and tech correspondent, Julia Boorstin, has been digging into how AI is disrupting a range of different industries for our AI Impact series. Julia joins us right now with her next installment in that series. Good morning, Julia.

Speaker 2: Becky, I'm so excited about this story because the music industry is going through massive changes as artists, labels, and distributors grapple with how AI is going to impact their future. So we took a look at how they're all trying to get out in front of AI disruption. This may sound like Demi Lovato, but it's not. It's an AI generated song created by YouTube's Dream Track tool, part of Google's latest experiments in generative AI. The company is partnering with record labels, including Universal Music Group, to create guardrails to protect artists' voices from being exploited and to enable them to profit from custom AI created music. Dream Track, which is being tested as an integration into YouTube's TikTok rival, YouTube Shorts, allows creators to make AI generated songs with the voices of famous artists. Nine big-name artists are participating and being paid for their participation by YouTube, from John Legend to Demi Lovato and T-Pain. Drinking tequila, hanging with my friends. Yeah, AI is crazy, bro. I got a thousand people watching me. Bro, I ain't made a song like this in years. We were the first TV journalists to demo the new tool, alongside Melanie Wilking, a YouTube creator who's part of the initial test. And we asked Dream Track to create us a song about the stock market.

Speaker 3: S&P, S&P, you're so sweet. You're gonna make me rich one day.

Speaker 2: Two decades after music piracy threatened the music industry, it's facing another reckoning as music labels and artists decide whether to embrace the new tech or risk being left behind.

Speaker 3: We have to figure out how to effectively partner to drive innovation, to be able to adapt to new technology. I think you'll see that we've worked to try to understand where the opportunity is and to get out in front of it.

Speaker 2: YouTube wasn't the first to experiment with AI-generated music. Last year, the artist Grimes invited her fans to use Gen AI to create songs in her voice. If the songs are a hit, she says she'll split royalties with them. As to when YouTube's Dream Track tool will be widely available, the company's still working on it.

Speaker 4: We know that there are challenges and a lot of work that we need to do to get to the place where we will be able to fully scale a product.

Speaker 2: In other words, it might take some time before you have the ability to make your own song. In the meantime, 100 of YouTube's creators and their millions of fans are getting a window into what the future of custom AI music will look like. One thing that was so remarkable about this Dream Track demo, which was how quick, almost instantaneous it was for the generative AI tool to create the music. So it's amazing to think what's going to happen when these tools are available at scale. So it'll be a whole new kind of custom playlist, perhaps full of just custom songs.

Speaker 1: I mean, it's crazy from the creative side of things, because that was actually pretty good. It sounded like John Legend or Demi Lovato was really their voices. Which I can't imagine the upheaval that that has artists themselves feeling.

Speaker 2: But if they feel like they own a piece of it, like they're going to profit from it, and also like there are going to be guardrails about how their voices are going to be used, then they want to get on board. If they feel like it's just a Wild West and people are going to be stealing their voices, then that's a threat. I think it leads to that.

Speaker 1: The other question is, how do you ever make a name and become big?

Speaker 4: If you can't beat them, join them. That's what's going to happen anyway.

Speaker 1: It seems like it's something that will only help the very biggest names, just like the concert business now. It's like smaller names, there's no way to make your name and make your way out.

Speaker 4: I remember dealing with you saying, wow, that sounded good. I'm still trying to figure that out.

Speaker 2: For instantaneously put together like that? I got John Legend to serenade me. I mean, like instantaneously. That was pretty fun.

Speaker 4: Okay. It was a, that's a boomer comment. It is. Yeah, it is.

Speaker 1: You said it, not me.

Speaker 4: No, I said it. I don't, some of this, I don't like that music, I don't know.

Speaker 1: I liked it.