Spotify says it does not need licensing deals with all of the major record companies before it can launch its AI-powered covers and remixes tool.
That was the message from Co-CEO Gustav Söderström on the company’s Q2 2026 earnings call on Tuesday (August 4).
His comments landed hours after Spotify announced a licensing agreement with Merlin, the licensing body for independent labels and distributors, covering the same tool.
The Merlin deal gives artists across the 30,000 labels in the organization’s network the option to make their catalogs available for AI-generated covers and remixes.
It builds on the agreement Spotify struck with Universal Music Group in May, when UMG was unveiled as the launch partner for the product.
Deals with the other two majors, Warner Music Group and Sony Music, have not been announced for the tool.
Asked by an analyst whether Spotify needs deals with every major label before it can go live, Söderström was blunt.
“So the answer is we do not need a deal with all the majors,” said Söderström. “We would like to have as many artists as possible, obviously, but we don’t expect to have all artists.”
Söderström pointed to the streaming service’s own history as precedent.
“And if you go back to the beginning of Spotify, Spotify started without significant parts of the catalog,” he said.
It took many years, he added, before acts such as The Beatles and Metallica arrived on the platform. A full catalog is not a prerequisite, Söderström said, though Spotify wants as many artists as possible because that’s “better for consumers and for creators.”
“The answer is we do not need a deal with all the majors.”
Gustav Söderström
According to Söderström, the next step for the product is a research preview released to a subset of users.
“What you should expect is that we start improving this product in the public as a research preview so that we can start getting the preference data that automatically improves our model,” said Söderström.
Söderström said the preview is not a test of the product but a way to train the underlying model, through what the machine-learning field calls reinforcement learning.
“For those of you who know about machine learning, you know that one of the most important phases is the post-training using reinforcement learning,” said Söderström.
“So what we will do is we will allow people who are fans of a certain artist to start making remixes with songs from that artist,” Söderström said.
Söderström continued: “And what they do is they say, I think this remix was better than this remix. And then we get the preference data that actually makes the model better.”
Söderström framed Spotify‘s listener base as its edge over rival AI music developers.
“We have now 777 million people and music fans to do reinforcement learning with, which is why we think we’re very well positioned in this business,” he said.
Spotify crossed 300 million Premium subscribers for the first time in the quarter and reported 777 million total monthly active users, as covered by MBW.
The covers and remixes tool traces back to October 2025, when Spotify unveiled an ‘artist-first’ AI initiative alongside all three majors plus Merlin and Believe.
At the time, Spotify said it would develop the products through “upfront agreements, not by asking for forgiveness later”.
Söderström said the model is “winning over the industry”, and that Spotify has built the product so that “virtually every rights holder who wants can join in”.
“The enthusiasm from the independent community has been striking,” said Söderström.
On the company’s Q4 2025 earnings call in February, Söderström said the technology was ready and that licensing was the only thing standing in the way.
The first piece of that licensing arrived in May, when Spotify and UMG struck their agreement covering recorded music and publishing.
The finished tool will be a paid add-on for Premium subscribers, creating a new revenue stream for the artists and songwriters who opt in.
Co-CEO Alex Norström said the product is built on what Spotify calls the “3 Cs”.
“First of all, we are looking for consent,” said Norström.
Norström said Spotify wants artists “to be consenting their work into this catalog so people can play around with covers and remixes based on their art”.
“We also obviously want to give them credit. And last but not least, this is about compensation to the labels and publishers and artists and songwriters,” Norström said.
Norström described the model as “the first legal way to partake in this AI tailwind that we see coming for interactive music”.
Söderström drew a distinction between Spotify‘s approach and fully AI-generated tracks.
“While you can see that there is a skepticism around net new artificial music by many people out there, what we’re doing is something different and artist see that,” said Söderström.
Söderström added: “Our products are about real artists, not fake artists. And in the case of remix, real artists with real voices.”
Söderström said the feature is one that only Spotify can build.
“Normal generative music will happen with or without us. This product will not happen without us, and it needs to exist so that existing artists can participate in this,” said Söderström.
The covers and remixes product sits within a wider Spotify AI push.
Söderström said AI-powered experiences such as its DJ feature reach about a quarter of the platform’s active users.
Prompted Playlists has reached 14 million of the first 100 million people it has been rolled out to.
He also pointed to the Large Taste Model, a recommendation system Spotify has developed.
Söderström said the model is based on an open-source system that Spotify then continues to train on its own listening data.
Söderström said Spotify will launch the covers and remixes tool “when it’s ready”, with no price or launch date confirmed.
“There is more work to do before launch, and it will take time to scale into a material revenue driver,” said Söderström.
“There’s more to come, but very strong momentum,” said Söderström of the product.Music Business Worldwide
Spotify’s Co-CEO Gustav Söderström recently clarified during the company’s Q2 2026 earnings call that the streaming service does not require licensing agreements with all major record labels to launch its new AI-powered covers and remixes tool. This announcement came shortly after Spotify secured a licensing deal with Merlin, which represents independent labels and distributors, allowing artists from around 30,000 labels within Merlin’s network to opt-in for AI-generated covers and remixes.
The Merlin agreement builds on an earlier partnership with Universal Music Group (UMG), announced in May, marking UMG as the launch partner for the new product. However, as of now, Spotify has yet to finalize deals with the other two major labels, Warner Music Group and Sony Music, for this tool. When asked by an analyst if Spotify needed agreements with every major label before launching, Söderström responded firmly, stating, « We do not need a deal with all the majors. » He emphasized that while Spotify aims to include as many artists as possible to enhance consumer experience, a full catalog is not essential for the launch.
Söderström referred to Spotify’s own history, noting that the platform initially launched without access to significant portions of the music catalog, taking years before iconic acts like The Beatles and Metallica were available. This historical perspective illustrates that a comprehensive catalog is not a prerequisite for Spotify’s success, although having a broad array of artists is beneficial for both consumers and creators.
The next phase for the covers and remixes tool involves a research preview, which will be rolled out to a select group of users. This phase is designed not as a test but as a means to gather preference data to improve the underlying machine-learning model. Söderström explained that fans will have the opportunity to create remixes of songs and provide feedback on which versions they prefer, effectively helping to refine the model through what is known as reinforcement learning.
Spotify believes its substantial listener base gives it an advantage over other AI music developers. With 777 million active users, Söderström indicated that this audience can significantly contribute to the reinforcement learning process, enhancing the tool’s capabilities.
The initiative for this AI-powered tool was first introduced in October 2025, alongside agreements with all three major labels, including Merlin and Believe. At that time, Spotify committed to developing products through upfront agreements rather than seeking forgiveness later. Söderström expressed confidence that Spotify’s model was gaining support within the industry, noting the positive reception from the independent music community.
In a previous earnings call, Söderström had mentioned that technology readiness was the primary barrier to launching the product, with licensing being the only obstacle. The collaboration with UMG marked a significant step forward, enabling Spotify to move closer to realizing the tool.
The covers and remixes tool will be available as a paid add-on for Premium subscribers, creating new revenue opportunities for participating artists and songwriters. Co-CEO Alex Norström highlighted three key principles behind this model: consent, credit, and compensation. He emphasized the importance of artists consenting to have their work included in the catalog for remixes and covers, ensuring they receive appropriate credit and compensation alongside labels and publishers.
Norström characterized the launch of the tool as a “legal way” for artists to benefit from the upcoming trend of interactive music powered by AI. Söderström further differentiated Spotify’s approach from fully AI-generated music, emphasizing that their focus is on real artists and their voices, rather than creating artificial music. He stated, « Our products are about real artists, not fake artists, » underscoring the importance of genuine artist involvement in the remixes.
According to Söderström, the covers and remixes tool is part of a broader AI initiative at Spotify. He mentioned that AI-driven features like the DJ function have reached approximately 25% of active users, while a new feature called Prompted Playlists has been rolled out to 14 million users from the initial 100 million. Additionally, Spotify has developed the Large Taste Model, a recommendation system based on an open-source framework that continues to evolve using Spotify’s listening data.
While there is no confirmed launch date or pricing for the covers and remixes tool, Söderström indicated that Spotify would release it « when it’s ready. » He acknowledged that additional work is required before the tool can scale into a significant revenue generator, but he expressed optimism about the strong momentum surrounding the product.
In summary, Spotify’s strategic position in the music streaming industry, bolstered by its vast user base and ongoing partnerships with independent and major labels, sets the stage for its forthcoming AI-powered covers and remixes tool. The company’s focus on consent, credit, and compensation aims to create a fair and profitable environment for artists, reflecting a commitment to integrating innovation within the established music ecosystem. As Spotify navigates the complexities of licensing and artist participation, it remains poised to launch a product that could redefine user engagement with music in the digital age.
