There's a key difference. A compression algorithm is made to be reversible. The point of compressing an MP3 is to be able to decompress as much of the original audio signal as possible.
Stable Diffusion is not made to decompress the original and actually has no direct mechanism for decompressing any originals. The originals are not present. The only thing present is an embedding of key components of the original in a multi-dimensional latent space that also includes text.
This doesn't mean that the outputs of Stable Diffusion cannot be in violation of a copyright, it just means that the operator is going to have to direct the model towards a part of that text/image latent space that violates copyright in some manner... and that the operator of the model, when given an output that is in violation of copyright, is liable for publishing the image. Remember, it is not a violation of copyright to photocopy an image in your house... it's a violation when you publish that image!
At what point does it become lossy enough that it's not protected, though? You can imagine a lossy compression algorithm that merely stores a 1 for images that are "more red" and a 0 for images that are "more blue." Such a compression algorithm would be storing some information about the thing it's compressing, but the closest reconstruction you could get from the compressed data is a red square or a blue square. Surely that's not copyright infringement? What about an algorithm that counts the fingers portrayed in an image and just reconstructs an image with the same amount of fingers? Where's the line?
Pedantically, yes, lossy compression is not 100 percent reversible. Practically, the usefulness of compression is that it does return the original content with as little loss as possible… so lossy compression is mostly reversible.
All of my other points remain unchanged by this pedantry.
You can't rip something and compress it badly enough to not violate copyright when you sell it. The point of compression is to throw away information about the original in ascending order of importance.
>You can't rip something and compress it badly enough to not violate copyright when you sell it.
While I doubt that specific case has been tested in court, arguably you could. If you created glitch art (https://en.wikipedia.org/wiki/Glitch_art) via compression artifacts, and your work was sufficiently distinct from the original work, I think you would have a reasonable case for transformative use (https://en.wikipedia.org/wiki/Transformative_use).
Stable Diffusion is not made to decompress the original and actually has no direct mechanism for decompressing any originals. The originals are not present. The only thing present is an embedding of key components of the original in a multi-dimensional latent space that also includes text.
This doesn't mean that the outputs of Stable Diffusion cannot be in violation of a copyright, it just means that the operator is going to have to direct the model towards a part of that text/image latent space that violates copyright in some manner... and that the operator of the model, when given an output that is in violation of copyright, is liable for publishing the image. Remember, it is not a violation of copyright to photocopy an image in your house... it's a violation when you publish that image!