Spotify is bringing independent labels into its upcoming fan-made covers and remixes product through a new licensing agreement with Merlin, expanding a generative AI project that had initially been announced with Universal Music Group.
The agreement, announced August 4th, gives artists on labels covered by Merlin’s Spotify deal the option to participate. Spotify says those who join will be credited and compensated when fans create licensed covers and remixes from their music.
The product will launch as a paid add-on rather than a standard feature included automatically with Spotify Premium. No public launch date or final price has been announced.
“This agreement with Merlin ensures participating artists are credited and compensated,” Spotify music chief Charlie Hellman said in the August 4th announcement. Spotify also says creations will direct listeners back to the original music.
For independent artists, the deal is significant for another reason. Spotify is not treating AI-generated derivatives as something to sort out after users make them. It is trying to secure permission before the product launches and build the original rightsholders into the transaction.
Merlin Brings Independent Labels Into the Product
Merlin gives Spotify access to a very different part of the recorded-music business than its initial Universal deal.
The digital licensing organization represents independent labels and distributors from more than 70 countries and says its membership accounts for roughly 15% of the global recorded-music market. Its network includes companies such as Domino, Epitaph, Ninja Tune, Sub Pop and Warp.
TechCrunch puts the broader network at more than 30,000 labels, making the agreement a substantial expansion of the repertoire that could eventually be eligible for Spotify’s new product.
Eligible does not mean automatically included.
The Spotify-Merlin agreement gives artists on covered labels the option to participate. Merlin CEO Charlie Lexton framed that choice as central to the deal, saying the organization wanted its members’ artists to have an opportunity to join while gaining another potential revenue stream.
That opt-in structure is particularly important in the independent sector, where labels, distributors and artists operate under widely different rights arrangements. A licensing agreement between Spotify and Merlin creates the framework, but it does not mean every recording represented somewhere in Merlin’s network becomes available for fan remixing.
Spotify Is Building a Paid AI Add-On
The product itself is more ambitious than a conventional remix button.
Spotify says fans will be able to use generative AI to create covers and remixes from music whose rightsholders have agreed to participate. The company has repeatedly described the project around three principles: consent, credit and compensation.
Unlike ordinary Spotify listening, access will require an additional paid product. Spotify has not disclosed how much the add-on will cost, when it will become broadly available or exactly which markets will receive it first.
During Spotify’s second-quarter earnings call, executives said a research preview would initially reach only a subset of users. TechCrunch reported that the company does not need every label or catalog licensed before beginning that limited test.
Spotify co-CEO Alex Norström described the model as a legal route into interactive AI music, with artists choosing whether their work enters the available catalog and receiving attribution and compensation when it does.
Co-CEO Gustav Söderström drew an even sharper distinction during the call, describing the project as being about “real artists, not fake artists.”
That positioning separates the product from services centered on generating entirely new songs from text prompts. Spotify’s pitch begins with existing music and the artists and songwriters behind it.
Universal Music Was the First Major Partner
Universal Music Group established the first major rights framework for the project on May 21st.
The UMG agreement covered participating recorded music and publishing rights, while confirming that the product would use generative AI and operate as a paid Premium add-on.
Spotify has since expanded that framework in different directions.
| Partner | Rights Side | Role in the Product |
|---|---|---|
| Universal Music Group | Recorded music and publishing | First major licensing partner |
| Merlin | Independent recorded music | Expands participation across independent labels |
| Kobalt | Music publishing | Adds participating independent songwriters |
The different agreements reflect a basic complication behind fan-made covers and remixes. A commercially released track can contain at least two major layers of copyright: rights in the sound recording and rights in the underlying composition.
Licensing a label’s master recording does not automatically clear the song written by composers and controlled by publishers. A product designed to let listeners transform commercial tracks therefore needs permission from more than one side of the music business.
Kobalt Adds Songwriters to the Licensing Structure
Nine days after announcing the Merlin agreement, Spotify added Kobalt to the project.
Kobalt is an independent music publisher rather than a recorded-music label network, making its August 13th agreement important to the composition side of the product.
The Kobalt deal allows participating songwriters to make their works available for fan-created covers and remixes. Spotify says those songwriters can directly share in the value generated by the new feature.
“Covers and remixes begin with the song,” Hellman said when the agreement was announced.
Kobalt CEO Laurent Hubert also described the tools as AI-powered and said the agreement was built around ethical training, compensation and guardrails.
Together, the three partnerships show Spotify assembling permissions from different directions. UMG provides a major-label foundation spanning recordings and publishing. Merlin expands the eligible independent recorded-music catalog. Kobalt brings another large group of independent songwriters and compositions into the framework.
Spotify has not published a complete list of songs that will be available when the product opens to users.
Sped-Up Tracks Already Complicate the Remix Economy
Fan-made transformations are not new to streaming culture, even if Spotify’s licensed creation tool is.
Sped-up, slowed-down, pitched and otherwise altered versions of existing songs have become embedded in social platforms and short-form video. Some are officially released by rightsholders after an unofficial version gains traction. Others appear as unauthorized uploads that can compete with the original recording for streams.
Merlin’s own content rules illustrate one part of that tension. Its content policy says royalties may be withheld from sped-up, slowed-down, reverbed or other altered tracks unless the member also controls and delivers the original recording.
Those rules govern delivered content and should not be confused with Spotify’s upcoming covers and remixes product. They do, however, show why altered versions of existing recordings already create rights and monetization questions for independent music.
Spotify is approaching the problem differently by building transformations inside a licensed environment. Participating music would enter the feature with permission attached rather than appearing later as an independently uploaded derivative recording.
Several important product details remain unknown. Spotify has not explained how long fan creations can be, which transformations will be available, whether creations can leave Spotify or what restrictions will apply to how closely a remix can reproduce the source material.
Those decisions will determine how different the finished feature feels from the remix behavior already happening elsewhere online.
Compensation Details Are Still Missing
Spotify has been clear about the principle of paying participating artists and songwriters but much less specific about the economics.
The company says the paid add-on will create an additional revenue stream and that creators will share in value generated by licensed covers and remixes. It has not published a payment formula.
That leaves several practical questions unanswered. Spotify has not said whether compensation will depend on the number of fan creations, listening activity generated by those creations, subscription revenue from the add-on or some combination of those factors.
Recording and composition rights may also be paid through different structures. Artists, labels, songwriters and publishers can all have financial interests in the same piece of music, and Spotify has not publicly detailed how revenue will be divided among them.
For independent artists deciding whether to participate, those details could matter as much as the creative tools themselves. Consent determines whether the music enters the system. The eventual economics determine what saying yes is worth.
Spotify Wants Fan Remixes Inside the Rights System
The larger strategy is not simply about adding another AI feature to Spotify.
Fan behavior has already moved beyond passive listening. People make edits, mashups, sped-up versions, covers and other transformations whether music companies provide an official tool or not.
Spotify is trying to bring some of that activity inside a product where permission and payment are established before the remix is created.
At its May Investor Day, the company described covers and remixes as part of the future of music on the service, with consent, credit and compensation built into the model from the start.
The Merlin agreement makes that ambition more relevant to independent music. A system built only around major-label catalogs would leave a substantial part of modern recorded music outside the experiment. Merlin gives thousands of independent labels and their artists a route into the same product without requiring universal participation.
Whether listeners will pay extra to make licensed covers and remixes remains an unanswered business question. So does the extent to which participating artists will view fan transformations as useful discovery rather than competition with their original recordings.
Spotify has not announced when the full product will launch.
What it has assembled is the beginning of a rights structure: Universal for a major-label foundation, Merlin for a broad independent recorded-music network and Kobalt for another major piece of independent publishing.
The creative tool is still coming. The licensing system around it is already taking shape.