If the LLMs are capable of filling the economic role that human artists filled, then yes, human creativity becomes "unnecessary." But so what? We do plenty of unnecessary things for fun. We have machines that can transport us around or that can show us images of pretty forests and yet we still go on hikes. We could build machines that shoot baseballs at whatever velocity we want and with extreme accuracy, but we still play baseball.

It used to be that an evening's entertainment required actors on a stage. They mostly got replaced by movie projectors. For a while the movie cinema would have live musicians playing accompaniment to the silent film, but then recorded music replaced those too. In neither case did humanity lose its soul or whatever. The artistry just moved to other niches or continued on as a hobby.