In its first-quarter earnings call, streaming music service Spotify talked in more detail about how AI advances are impacting its business. On the positive side, the company offered an update on the user adoption of its new AI DJ feature, which offers personalized music selections introduced by a realistic-sounding DJ voice powered by AI. But other AI advances have the potential to cause harm — including the use of AI to create music that clones the voices of existing artists without their consent, leading to copyright concerns and further complications for streamers like itself.
The latter issue recently made headlines when a song that used artificial intelligence to clone the voices of Drake and The Weeknd was uploaded to a number of streaming services, including Spotify, Apple Music, Tidal, YouTube, and Deezer.
Spotify and others quickly took the track down but faced criticism from publishers like Universal Music Group, which asked which “side of history” did “stakeholders in the music ecosystem want to be on: the side of artists, fans, and human creative expression, or the side of deep fakes, fraud, and denying artists their due compensation?”
On the Q1 2023 investor call, Spotify was asked how it intended to approach this sort of problem going forward.
In response, Spotify CEO Daniel Ek called the issue complex and fast-moving and didn’t seem to have a proposed solution at this time.
“First off, let’s acknowledge that this is an incredibly fast-moving and developing space. I don’t think in my history with technology I’ve ever seen anything moving as fast as the development of AI currently is at the moment,” he said.
Ek noted that Spotify had to balance two objectives, including being a platform for allowing innovation around creative works, and one that needs to protect existing creators and artists. Both roles it takes very seriously, he said.
“We’re in constant dialogue with the industry about these things. And it’s important to state that there’s everything from…fake tracks from artists which falls in one bucket to…just augmenting using AI to allow for expression, which probably falls in the more lenient and easier buckets,” Ek continued.
“These are very, very complex issues that don’t have a single straight answer…But we’re in constant discussion with our partners and creators and artists and want to strike a balance between allowing innovation and, of course, protecting artists,” he added.
When later pushed as to what material impact AI developments could have on the business, Ek admitted that the progress in AI is both “really cool and scary” and that there is a risk to the wider ecosystem.
“I think the whole industry is trying to figure that out and trying to figure out [AI] training…I would definitely put that on the risk account because there’s a lot of uncertainty, I think, for the entire ecosystem,” he said.
Meanwhile, the company is benefiting from the use of AI in other areas, Ek stressed.
For example, Spotify’s recently launched AI DJ feature has been gaining traction.
The feature is still in its early days, having only begun rolling out to Spotify users ahead of its product launch event Stream On in March, where the company also introduced a revamped, video-focused user interface, powered by algorithms and machine learning, and new tools for artists and podcasters, among other things.
Though limited to the North American market and still in beta, the AI DJ is now reaching “millions” of active users every week, Spotify reported, representing more than 25% of user consumption on days that they use the DJ feature.
That’s solid traction for the still experimental new feature and also a positive indication of the benefit of Spotify’s investment in AI technologies.
The CEO also spoke to AI’s potential to help people create music without having to understand how to use complicated music production tools. He envisioned artists instructing the AI to make a song sound “a little more upbeat,” just using a voice command, for example, or telling the AI to “add some congas to the mix.”
“That has the chance I think, to meaningfully augment that creative journey that many artists do,” he noted.
Ek also felt it was important to stress the difference between something like an AI-powered feature like the DJ and the concerns around AI in creating fake tracks.
“I do think it’s important to kind of separate AI DJ from the AI conversation. So AI DJ, in and of itself — I think we’ve had nothing but positive reactions from across the industry. I think the AI pushback from the copyright industry or labels and media companies…it’s really around really important topics and issues like name and likeness; what is an actual copyright; who owns the right to something where you upload something and claim it to be Drake, and it’s really not; and so on. And those are legitimate concerns,” Ek said.
“And obviously, those are things that we’re working with our partners on trying to establish a position where we both allow innovation but, at the same time, protect all of the creators that we have on our platform,” Ek said.
The company reported its Q1 revenue was up 14% year-over-year to €3.04 billion, and its ad revenue was up 17% year-over-year to €329 million. Spotify hit a new milestone with the news it has reached 500 million users, but its premium subscriber portion fell to a ratio of 40% paid-to-free listeners, with 210 million premium subscribers and 317 million on the ad-supported plan.
