Can stable diffusion be created without using copyrighted content? Maybe we should have some exemption for non-commercial research but definitely not for commercial exploitation or generating copyrighted images using open-source models.

There is already exemptions for research. Look at licensing around things like ImageNet. There's similar licensing around things like LAION and Common Crawl[0] It's also not legal to just scrape everything without paying. There's a reason the NYT sued OpenAI and then got a settlement. It's still illegal for Meta to torrent terabytes of textbooks too.

[0] https://commoncrawl.org/terms-of-use

  > In this regard, you acknowledge that you may not rely on any Crawled Content created or accumulated by CC.  CC strongly recommends that you obtain the advice of legal counsel before making any use, including commercial use, of the Service and/or the Crawled Content.  BY USING THE CRAWLED CONTENT, YOU AGREE TO RESPECT THE COPYRIGHTS AND OTHER APPLICABLE RIGHTS OF THIRD PARTIES IN AND TO THE MATERIAL CONTAINED THEREIN.

Can an artist be created without using copyrighted content? Raise a child without movies, books, songs or the internet, see how much they contribute to "popular culture".

Public Diffusion: https://source.plus/public-diffusion-private-beta