That combination can be profitable, but it's not as easy as it seems, spotify is investing in AI and advertising, but it's also fighting music spam, they've already deleted millions of artificially generated tracks and launched tools for artists to verify that no one is using their name fraudulently.
The big problem is that spotify wants listeners to know which profiles are real people, if your music is generic and you don't show that there's an artist behind it, you could do poorly, for the model to be profitable, you have to run ads on Meta to get people to save your music, and those plays then generate royalties, the key is to accurately measure how much you spend versus how much you recoup.
The real profit doesn't come solely from plays, but from building a loyal audience, if you can get those people to buy merch, concert tickets, or exclusive content, that's where the business becomes sustainable, AI is a tool, but listeners still connect with authenticity, not just the sound, if you manage the numbers well and showcase a real project behind it, you can make money.