I have yet to see any AVNs make their own music; the closest I've seen is one dev commission a song from a musician, but that was for a special track for one of the characters and not BGM. AI music will be seeing an uptick in usage now, but most devs license tracks from music libraries; I don't know which platforms. I've used AudioJungle for my job, but I'm not sure if they allow their tracks to be used in NSFW works or not, which is another reason why AVN devs are moving towards AI music.
I know that some of the big VNs currently on the market commission artists to create custom music for them, but I'm not aware of any team that creates everything from scratch
And yes, AI-generated music is growing more and more, and it's getting better, just like AI-generated images
Before one of the games I worked on as an artist was released on Steam, I decided to change the entire soundtrack due to copyright issues. When updates were released on Patreon, I used royalty-free music from libraries, but I wasn't sure how Steam would handle that. Since I've been making music myself for a long time, I decided to write a few tracks specifically for our game and also release the soundtrack on Steam. You could consider this an example of a developer creating their own music for their game, haha.
I haven't yet learned how AI-generated music is regulated by laws or gaming platforms, but it's an interesting and promising topic nonetheless.
By the way, you have a great project,
DTZ Games – excellent visuals and storytelling! Congratulations!

