Spotify and Universal Music Group have come upon a licensing agreement that will allow fans to create AI-generated covers and remixes of songs, with artistes and songwriters receiving a share of the revenue the tool generates.
The announcement was made at Spotify's Investor Day event, where it formed one of two significant music industry announcements. The other was a new 'Reserved' feature that holds back concert tickets for subscribers identified as superfans of a given artiste.
The licensing deal covers both recorded music and music publishing rights, and will enable Spotify to launch a generative AI tool through which fans can produce their own versions of tracks from participating artistes. Those whose music is used will collect royalties on any AI-generated remixes or covers created through the platform.
Artistes will be able to opt out of the programme entirely, meaning only those who actively choose to take part will have their work made available for fan remixing.
The tool will be offered as a paid add-on for existing Spotify Premium subscribers, creating what the company describes as an additional income stream for artistes and songwriters on top of their standard streaming royalties. Spotify has not confirmed a launch date, a price, or whether remixes created through the tool will be shareable with other users on the platform.
The announcement has its roots in a deal struck in October last year, when Spotify said it intended to build "artiste-first AI music products" in partnership with all three major labels — Universal Music Group, Sony Music Group, and Warner Music Group — as well as indie licensing agency Merlin and independent music company Believe. At the time, Spotify was careful to describe the arrangement as an intention-to-license rather than a formal licensing agreement.
Universal Music Group is the first of those rights holders to move from that earlier commitment to a signed deal. Whether Spotify will wait until its other partners reach the same stage before launching the tool, or proceed with Universal Music Group as its launch partner, has not been confirmed.
India: Spotify's next frontier
Beyond the AI licensing deal, Spotify's Investor Day also shone a spotlight on one of its most consequential growth stories — India. The company declared itself the leader in audio streaming in the country, and placed India on equal footing with the US as one of its largest markets by monthly active users, while also noting that it commands some of the highest levels of brand affinity across all its markets globally.
The numbers tell a striking story. Subscriber count is now seven times higher than when Spotify last presented at an Investor Day, and in 2025 alone, the platform added three times as many net subscribers as it did in 2022. Looking ahead, Spotify gestured at a future where it could have more than 150 million subscribers in India — a figure grounded in the country's 1.4 billion population and rising consumer spending.
Crucially, Spotify sees the low penetration of its paid tier not as a problem but as an opportunity. Fewer than 10 per cent of its Indian users are currently on Premium but there is enough runway for growth.
Spotify has been adapting its approach to suit local conditions. It has deepened local entertainment partnerships and built out payment integrations tailored to how Indians transact — most notably UPI Autopay, which the company said now accounts for over 90 percent of new Premium intake in the country, at an effective cost significantly lower than credit card processing. On the product side, Spotify has also introduced a new tier called Premium Platinum, priced at roughly double its Standard Premium offering. Early signals have been encouraging: just a few months after launch, and with minimal marketing behind it, more than 7 per cent of Indian subscribers have already moved onto this higher-value plan.
Remaining questions
Coming back to AI, a few questions remain open. It is not yet clear which specific artistes and songwriters have opted in to the AI remixing programme, nor whether the resulting AI covers and remixes will be shareable between users on the platform.
Spotify co-chief executive Alex Norstrom said the tool was designed around three principles: consent, credit, and compensation. "What we're building is grounded in consent, credit, and compensation for the artistes and songwriters that take part," he said, adding that the company had navigated previous technological shifts alongside Universal Music Group's leadership.