SPOT
No all-access pass required
Spotify is basically saying: no, we don’t need the entire music universe to sign on before we launch. Co-CEO Gustav Söderström said the company can roll out its AI music product as a public research preview, then use the data to figure out what listeners actually want.
That’s a very Spotify move. Launch a thing, watch how people use it, then tune the machine like a DJ nudging the EQ instead of spending two years in label negotiation purgatory.
Merlin gives it a real runway
On Tuesday, Spotify and Merlin announced a deal for the streamer’s upcoming fan-made covers and remixing tool. Merlin’s network spans roughly 30,000 labels, which gives Spotify a decent-sized sandbox for testing the feature without waiting for every rights holder on earth.
The pitch is pretty straightforward:
- fans get to make new versions of songs,
- participating artists get credit and compensation,
- Spotify gets to see whether this is a fun novelty or the next engagement engine.
Charlie Hellman said the idea is to make sure independent artists aren’t left holding the empty metadata bag while listeners remix their work into oblivion. In other words: AI, but with receipts.
The money part is a little less shiny
Then there’s the earnings backdrop. Spotify reported Q2 EPS of $3.03, missing the $3.29 estimate, while revenue rose 14% year over year to $5.554 billion, also a hair short of expectations.
The problem is pretty familiar at this point: spending. Higher marketing and AI costs pressed on margins, and management said monthly active user growth should slow in Q3 as the company leans harder into monetization and paid conversions instead of pure user-count bragging rights.
Big picture
Spotify is trying to become less of a growth-at-all-costs app and more of a profitable music platform with AI on top. If the Merlin rollout works, it could give Spotify a cleaner way to expand into AI-generated music without immediately picking a fight with every rights holder in the industry.