AI is forcing humans to mature and come to terms with our existence and nature.
When automated sewing arrived, there was rebellion and attacks on the machines. We're seeing the same from some artists and writers now.
When the dust settles, we'll be have a choice whether to mandate and regulate compliance with the current copyright framework or allow the system to evolve and adapt to reality. It will simply be impossible to police or enforce the current regime without creating a huge "black market" of content -- forks of AI generation tools which omit the copyright checks required by future regulations.
A new generation of artists will arise who embrace the AI tools, but "handmade" art will continue just as the niche for a handmade suit still exists.