Spotify and Merlin signed a licensing agreement for an upcoming AI covers tool. Independent labels and distributors got the option to opt in.
Spotify and Merlin have signed a licensing agreement for an upcoming tool that will let fans create covers and remixes of tracks using AI. Labels and distributors represented by Merlin have the option to participate — participation is voluntary.
Merlin is the digital licensing partner for independent labels and distributors. It negotiates with streaming platforms on behalf of the indie sector and represents 15% of the global recorded music market: more than 30,000 labels and distributors from 70+ countries.
What the tool is
The tool is not launched yet — Spotify is preparing it for release. The mechanics: a fan picks a track by an artist in the system, generates a cover or remix with AI and pays for it — the tool will be a paid add-on to Premium subscriptions.
The artist gets a mention in song credits and compensation. Spotify stresses that every creation drives listeners back to the original work.
"This agreement with Merlin ensures participating artists are credited and compensated, and that every creation drives listeners back to the original work"
— Charlie Hellman, Global Head of Music, Spotify
What it gives Merlin's members
The deal opens a new revenue stream for the indie sector. Fan-made covers are monetised, and every creation drives listeners to the artist's original — working as both revenue and promotion.
This is already the second deal
- October 2025 — Spotify announces AI collaboration: Sony Music Group, Universal Music Group, Warner Music Group, Merlin and Believe
- May 2026 — first deal for the tool: Spotify × Universal Music Group
- August 2026 — Merlin joins the deal, the digital licensing partner for independent labels and distributors
Source: Spotify Newsroom, August 4, 2026.