Spotify has signed Merlin, the licensing body for more than 30,000 independent labels, to its upcoming AI remix and covers product, adding to an earlier deal with Universal Music Group. The tool will let fans make AI covers and remixes only of artists who opt in, with credit and compensation built in. Spotify’s pitch: “real artists, not fake artists.”

Key Takeaways

• Merlin joins Universal Music in backing Spotify’s AI remix tool
• The deal adds 30,000+ independent labels to the product
• Only artists who explicitly consent will be included
• It launches as a paid add-on, creating artist revenue
• A research preview will reach a subset of users first

What Spotify Announced

The news came on an earnings call. During its second-quarter call Tuesday, Spotify confirmed it signed Merlin, a licensing partner for independent labels and distributors, to its upcoming AI-powered remix and covers product.

It’s the second major partner. The deal follows an earlier agreement with Universal Music Group and brings more than 30,000 labels from Merlin’s network into the product, which will let fans make covers and remixes of songs by artists who agree to participate.

The rollout will be gradual. Spotify said a research preview of the fan remix and covers product would initially be made available to a subset of users, and that it wouldn’t require a full music catalog to get started, though it didn’t give a launch date.

The “Three C’s” Approach

Consent is the cornerstone. Spotify co-CEO Alex Norström emphasized the AI capabilities will follow the three C’s: consent, credit, and compensation, with artists in control of whether their music is included.

Compensation is built in. Spotify’s global head of music, Charlie Hellman, said the Merlin agreement ensures participating artists are credited and compensated, and that every creation drives listeners back to the original work.

It’s a new revenue stream. The tool will launch as a paid add-on for Premium users, with participating talent receiving a share of the extra revenue, positioning it as a way for artists to earn from fan creativity rather than lose out to it.

Real Artists, Not Fake Ones

Spotify drew a sharp line against rivals. Co-CEO Gustav Söderström told investors the product will be about real artists, not fake artists, distinguishing it from the controversial AI startups used to generate fully artificial songs.

Söderström framed it as necessary. He argued that normal generative music will happen with or without Spotify, but that this product would not happen without it, and needs to exist so existing artists can participate.

Spotify sees it as unique. Söderström called the remix and covers tool incredibly exciting because no one else can really do this, betting that a licensed, consent-based model is something AI music startups can’t easily replicate.

The Backdrop: AI Music Everywhere

The launch comes amid a flood. AI-generated music has swamped streaming services, with rival Deezer recently noting that more than 50% of daily track uploads were AI-generated, up from 10% in January 2025.

The industry has been organizing. Last October, Merlin joined Universal, Warner, Sony, and Believe in establishing principles for artist-first AI music products, including opt-in, fair compensation, and protecting the artist-fan relationship.

Spotify is building guardrails first. By securing partnerships with major rights holders before launch, the company is establishing the legal and financial framework before opening the tool to fans, unlike unlicensed AI tools that have drawn lawsuits.

Why It Matters

This could be the industry’s first widely-accepted AI music tool. By baking consent, credit, and compensation into the model from day one, Spotify is trying to build something labels and artists will actually embrace, rather than fight in court.

The strategy is defensive and offensive at once. It protects Spotify legally while creating a new revenue stream, letting the company monetize generative AI without alienating the music industry that supplies its entire catalog.

But success hinges on the details. The open questions are how many artists opt in, how compensation is structured, and whether fans embrace the feature, and those specifics, still unannounced, will determine whether this becomes a meaningful revenue stream or a niche experiment.

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