The company plans a public research preview first as it expands licensing deals, even as higher AI spending weighed on quarterly profit and user growth is set to slow in Q3.
Spotify Technology SA said it does not need agreements with every major music label before launching its AI music service, signaling a phased rollout that starts with a public research preview rather than a full commercial release. Co-CEO Gustav Söderström said Spotify wants to include as many artists as possible but does not expect to have all artists at launch, drawing a parallel with Spotify’s early years when the platform started without major acts and broadened its catalog over time. The company is building the product around licensed participation. Spotify and Merlin, a global digital music licensing partner, announced a deal Tuesday covering an upcoming paid tool for fan-made covers and remixes. The arrangement allows eligible artists and songwriters to opt in, giving participating acts across 30,000 labels in Merlin’s network a way to make their catalogs available while letting fans create new song versions. Spotify executive Charlie Hellman said the structure is designed to give independent artists proper credit and compensation and help listeners find the original music. Spotify said it aims to add more rights holders over time. Söderström said such agreements take time but that the system was built so virtually any rights holder that wants to participate can do so. The broader push follows a multi-year agreement signed in January 2025 with Universal Music Group N.V. to expand music experiences and speed innovation, and an October plan to work with Sony Music Group, Universal Music Group, Warner Music Group Corp., Merlin, and Believe on responsible AI tools for artists, songwriters, and fan engagement. The AI push comes as Spotify reassesses growth priorities. The company reported second-quarter earnings of $3.03 per share, below the $3.29 analyst estimate, while revenue rose 14% year over year to $5.554 billion, missing expectations of $5.600 billion. Spotify said higher marketing and AI spending hurt profits, and it expects monthly active user growth to slow in Q3 as it shifts away from aggressively expanding free-tier users in emerging markets and toward monetization and paid subscriber conversion.