Tl;dr. Another one bites the dust.
The other aspect that's missing from the discussion here is LEGAL. If Tidal is making money from stolen music -- although arguably they still are by offering it on a subscription basis -- then that opens them up to litigation. From that perspective, this may double both as risk-mitigation and also a marketing opportunity for them, would love an attorney to weigh in there.
(From the comments here, Spotify is the market leader and already pays out for AI generated music. But I can't say that independently.)
AKA: We will take the value, if any, AI-generated music gives, but we will not be paying royalties. This is a contradictory statement. How does the AI-generated music give value if the generated content is inherently worthless?