Spotify Co-CEOs Say AI Can Improve Company's Cost Margins

Spotify is no longer treating AI music like a distant threat.Instead, the company is starting to leverage the technology as a core revenue driver, its co-CEOs indicated on its latest earnings call.

Ad 0:00 Click for sound 0:00 / 0:00 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.

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.

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.Scroll to continue more from edm Music...