During Tuesday’s Q4 2025 earnings call, Spotify executives laid out a broad vision of AI’s role in the music industry, including plans to let fans create AI-generated remixes and covers of artists’ work — provided the music industry develops and finalises appropriate licensing frameworks.
Co-CEO Gustav Söderström described Spotify as the technology partner the music industry needs to manage the transition to the AI era, telling investors that Spotify sees itself as “the R&D department of the music industry”. The streaming giant has built the technology to support AI-based derivative works but is waiting for rights holders to finalise licensing structures so that artists can earn money from these fan creations.
AI tools awaiting a legal framework
According to The Hollywood Reporter, executives are pursuing a plan that would let artists use their existing catalogues to create covers or remixes through AI — presented as an untapped revenue opportunity. The initiative follows partnerships Spotify announced in October 2025 with major music companies including Sony, Universal, Warner and others to develop “artist-first” AI products.
Fellow co-CEO Alex Norström said in the official statement on those partnerships: “Technology should always serve artists, not the other way around.” Within this framework, Spotify has committed to four principles: up-front licensing agreements, opt-in choice for artists in using AI tools, creating new revenue streams, and strengthening the connection between fans and artists.
The in-house “Honk” coding tool and engineering transformation
Internally, Spotify has also deployed an AI coding agent called “Honk”, which uses Anthropic’s Claude model and automates large-scale code changes across thousands of software repositories. The company says Honk produces more than 650 pull requests a month that are merged into production, saving engineers 60–90% of the time needed for manual migrations.
Niklas Gustavsson, Spotify’s chief architect and VP of engineering, said Claude “has consistently delivered the best performance on large code transformation and rewriting projects”, which is why it became the company’s model of choice. The tool lets engineers describe the changes they want in plain language without writing specialised scripts.
Strong financial performance backs AI investment
The AI-focused strategy was announced alongside record financial results. Spotify reported Q4 revenue of €4.5 billion, operating income of €701 million and a gross margin of 33.1%. Monthly active users reached a record 751 million, and premium subscribers grew 10% year on year to 290 million. Söderström concluded: “The whole industry will benefit from this paradigm shift, but we believe the players who embrace it and move faster will benefit the most.”
