Isn't the scenario you are describing the ultimate collapse of art and culture as we know it? If everyone sits at home and creates the content that they want, what do we talk about? How do we engage in shared culture if there is nothing to experience together?

Welcome to the life of fringe subcultures. Of course subcultures, even most fringe ones, still have some community. But even in generated content world, some people would end up with similar taste and that generated content being similar. They may even share that content and watch some of each other's content! And oh boy the joy of meeting that rare human who has similar taste! E.g. knowing some fringe band that created a demo tape 2 decades ago that you found in some strange torrent tracker.

But yes, mass/pop culture as we know it would be dead. And IMO the world would be better off.

I agree with other comments that may lead to people staying inside their comfort zone. But I think it's question of time when good portion of people would start sharing that content with other people. Expanding each others' imagination. And few that don't... Well, existing pop culture is not exactly good at expanding mind as well. And such decentralized content creation may be less prone to propaganda and other social control efforts.