Spotify Technology SA (SPOT  ) stated that agreements with every major music label weren't required before launching its AI music service. During the earnings call, Co-CEO Gustav Söderström said the company does not require a complete catalog agreement. He said Spotify wants to include as many artists as possible but noted that the platform originally launched without major acts and expanded its catalog over time.

Söderström added that Spotify plans to first release the AI music product as a public research preview to gather user preference data and improve its models before deciding on a full launch.

"We would like to have as many artists as possible, obviously, but we don't expect to have all artists," he said.

On Tuesday, Spotify and global digital music licensing partner Merlin announced a deal for Spotify's upcoming fan-made covers and remixing tool, allowing eligible artists and songwriters to participate.

The paid feature will let fans create new versions of songs while providing participating artists across 30,000 labels in Merlin's network the opportunity to make their catalogs available for covers and remixes. Spotify executive Charlie Hellman said the partnership with Merlin will ensure independent artists receive proper credit and compensation while helping listeners discover original music. He added that Spotify plans to expand the model by bringing in more partners.

"Deals like these take time, but we built this so that virtually every rights holder who wants can join in," Söderström said.

Spotify's AI Music Partnerships

In January 2025, Spotify and Universal Music Group N.V. (UMGNF  ) (UNVGY  ) signed a multi-year agreement focused on expanding music experiences and accelerating innovation. Spotify and UMG said the partnership could create new opportunities for artists, songwriters, and listeners through innovative offerings, new subscription tiers, music bundles, and a richer content catalog.

In October, Spotify also announced plans to collaborate with major music rights holders, including Sony Music Group, a subsidiary of Sony Group Corp. (SONY  ), Universal Music Group, Warner Music Group Corp. (WMG  ), Merlin, and Believe, to develop responsible AI tools that support artists, songwriters, and fan engagement. The company also stated that it is keen on bringing more partners into the initiative over time.

Spotify Rethinks User Expansion

On Tuesday, Spotify 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. Higher marketing and AI spending pressured profits, fueling investor concerns over future growth.

Spotify expects monthly active user growth to slow in Q3 as it shifts focus from expanding its free-tier user base in emerging markets to improving monetization and converting users into paid subscribers. Co-CEO Alex Norström said markets like India and Indonesia drove strong user growth, but the company is now adjusting its strategy to build a more profitable business.