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Old 16th November 2019
Legally he owes the original singer nothing--especially if she didn't develop the melody or anything else that was kept in the final recording or was ultimately copyrighted.

Morally, he could certainly offer her some form of recompense/payment, though that may be seen by the original singer as some "admission" of wrongdoing--of which, again, legally, there was none (at least, not in what he's described here).

But if the bridges haven't been completely burned between them and he can enlist her help on another tune, he could certainly offer her some sort of "work for hire" payment for that one. I'd make sure it was all in writing, however, so she knew she was being paid for her work on the demo, and so that she didn't expect anything else.