What happened
Spotify announced during its Q2 earnings call that Merlin, a licensing partner for independent labels and distributors, has joined Universal Music Group (UMG) in supporting the company's upcoming AI music product. The deal brings more than 30,000 labels from Merlin's network to a tool that lets fans create covers and remixes of artists' music with their consent.
Why it matters
Spotify is positioning itself as offering the first legal way for artists to participate in AI music creation—unlike controversial startups that generate fully artificial songs. Co-CEO Alex Norström emphasized the model includes artist consent, credit attribution, and direct compensation. As AI-generated tracks flood streaming services (more than 50% of daily uploads on Deezer are AI-created, up from 10% in January 2025), Spotify's artist-approved approach may appeal to rights holders concerned about unauthorized use.
What to watch
A research preview will be made available to a subset of users, though Spotify did not specify a launch date. The tool will launch as a paid add-on, creating an additional revenue stream for participating artists.
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Spotify's expansion of its AI music product reflects a strategic effort to differentiate itself in a market flooded with AI-generated content. Deezer's recent observation that more than 50% of daily uploads are now AI-created—up from 10% in January 2025—illustrates the scale and speed at which AI music is overwhelming streaming services. Rather than compete on volume, Spotify is betting on legitimacy: building a tool that requires artist consent, provides attribution, and ensures compensation.
The addition of Merlin to the project significantly expands reach beyond UMG's catalogs. Merlin's network of more than 30,000 independent labels gives the tool access to a much broader pool of artists, many of whom lack the bargaining power to negotiate directly with Spotify or major AI startups. Co-CEO Alex Norström's emphasis that "we want artists to be consenting" and "drive the compensation for this" signals that artist interests are central to the product's positioning. By framing this as "the first legal way" for artists to participate in the AI music trend, Spotify frames its competitors' tools as unlicensed.
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