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Valve appear to be not willing to publish games with AI generated content
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Let the market decide. If Valve doesn’t provide them a sales avenue, another party will. Many don’t comprehend yet is that AI generation is entirely user-driven. Without hundreds of refinements, you would only receive the most generic output. As for copyright infringement, what exactly is being violated here? When we use material X or Y to generate an original output Z, how does that infringe upon any rights? It doesn’t. Rather, it highlights that people need to adapt and evolve. The sooner this realization sets in, the better. The calligraphers and and book artisans went through this ordeal so will they.
Intellectual property of the original art creators? OP says "unlicensed", if you take any piece of art someone else created, and you use it to make your own stuff without their authorization, you're committing a crime.
And risk being sued? Valve is right in being wary of this, especially since there's no real regulation about it.
Let's have regulations first, then we can tell people to adapt.
This is not accurate. No art is made in a vacuum; all artists are influenced by other art. That's even before we bring in fair use, which may or may not apply depending on specifics.
Copyright does not restrict who/what can be trained on copyrighted works. That's just not a real thing. It's becoming an issue because AI is rapidly becoming "good enough" that human artists are worried they will be replaced, so they're scrambling to find a way to hold back technology. This happens every time a new technology is used in reference to media. Every. Single. Time. It never works.
Exactly, that's the problem.
The problem is plagiarism, easy to control when humans do it, not so much when AIs are involved, that's why we need regulations.
What do you think counts as plagiarism, in this context? If I draw a picture of the stranger things characters in the style of the simpsons, have I plagiarized anything?