Spotify Co-CEOs Frame AI as Cost-Cutting Tool in Earnings Call

Spotify co-CEOs Gustav Söderström and Alex Norström outlined a future in which AI becomes part of how users search, listen, create and eventually pay. Their comments arrived alongside the company's latest growth milestone: 777 million total users and 300 million Premium subscribers.

AI as a margin play

The most provocative line came from Söderström, who addressed industry concerns about the cost of AI investment. "There is plenty of industry debate about AI investment and costs," Söderström said on the call. "Our view is that being an AI beneficiary means winning on the cost side too."

For an industry already grappling with the spread of AI-generated music through controversial platforms like Suno, those remarks land loudly. Spotify is not simply arguing that AI can make the app more useful, but rather characterizing it as a structural advantage for the company's business model to improve its margins while building new features for paying subscribers.

Licensed remixes and covers

One of those features is Spotify's upcoming tool for fan-made covers and remixes. The company announced yesterday that it has inked a landmark licensing agreement with the independent music giant Merlin to launch the new product, which allows users to create covers and remixes using songs from participating artists. It is expected to launch as a paid add-on.

Spotify previously announced a similar licensing agreement with Universal Music Group. In both cases, the company has framed the feature as a controlled alternative to embattled platforms like Suno and Udio, which currently face dozens of lawsuits over alleged unauthorized training on copyrighted music.

Executives say the tool will be built around real artists, approved participation and new revenue streams rather than the anonymous "AI slop" flooding streaming services. "While you can see that there is skepticism around net new artificial music by many people out there, what we're doing is something different, and artists see that our products are about real artists, not fake artists," Söderström said. "And in the case of remixes, real artists with real voices. So you're listening to real people. That's a very different proposition, which is why we're focusing on this."

"We're talking about the first legal way to partake in this AI tailwind that we see coming for interactive music," Norström added.

Conversational search and what comes next

Spotify is also experimenting elsewhere. Earlier this summer, the company introduced "Talk to Spotify," a Premium feature that lets users interact with the platform conversationally. Söderström described the app as "coming alive," saying users can now ask about music, artists, tours, podcasts and books inside Spotify's own ecosystem.

For artists, the bigger question is not whether Spotify can make AI music legally usable. It is who benefits most when creation, discovery and monetization all happen inside the same platform. A licensed remix tool could create new revenue for participating artists but it could also further shift creative behavior toward whatever Spotify decides is productized, searchable and worth paying extra for.