In its first-quarter earnings call, music streaming service Spotify spoke in more detail about how AI advances are impacting its business. On the bright side, the company offered an update on user adoption of its new AI DJ feature, which offers personalized music selections introduced by a realistic-sounding AI-powered DJ voice. But other AI advances have the potential to cause harm, including using AI to create music that clones the voices of existing artists without their consent, leading to copyright issues and further complications for streamers like him.
The latter topic recently made headlines when a song that used artificial intelligence to clone the voices of Drake and The Weeknd was uploaded to various streaming services, including Spotify, Apple Music, Tidal, YouTube, and Deezer.
Spotify and others quickly removed the track, but faced criticism from publishers such as Universal Music Group, who asked which “side of the story” stakeholders in the music ecosystem wanted to be on: the side of artists, fans, and human creative expression. Or on the side of deep forgeries, fraud, and denial of artists’ due compensation?
In the Q1 2023 investor call, Spotify was asked how it intended to address this type of issue in the future.
In response, Spotify CEO Daniel Ek called the problem complex and fast-paced and did not appear to have a proposed solution at this time.
“First of all, let’s recognize that this is an incredibly fast moving and developing space. I don’t think in my history with technology I’ve seen anything move as fast as the development of AI right now,” he said.
Ek noted that Spotify had to balance two goals, including being a platform to enable innovation around creative work, and one that needs to protect existing creators and artists. Both roles are taken very seriously, he said.
“We are in constant dialogue with the industry about these things. And it’s important to note that there’s everything from…artist red herrings falling into a bucket to…just increasing the use of AI to enable expression, which probably falls into the most forgiving and easy buckets,” Ek continued.
“These are very, very complex issues that don’t have a single straight answer… But we are in constant discussion with our partners, creators and artists and we want to strike a balance between enabling innovation and of course protecting artists.” he added.
When later asked what material impact AI developments could have on the business, Ek admitted that progress in AI is “really cool and scary” and that there is a risk to the broader ecosystem.
“I think the whole industry is trying to figure that out and trying to figure out (AI) training… I would definitely put it on the risk account because I think there’s a lot of uncertainty for the whole ecosystem,” he said.
Meanwhile, the company is benefiting from the use of AI in other areas, Ek emphasized.
For example, Spotify’s recently launched AI DJ feature has been gaining traction.
The feature is still in its early days, having only started rolling out to Spotify users before its Stream On product launch event in March, where the company also unveiled 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, AI DJ now reaches “millions” of active users each week, Spotify reported, accounting for more than 25% of user consumption on days 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 talked about the potential of AI 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,” simply by using a voice command, for example, or telling the AI to “add some congas into the mix.”
“That has the opportunity, I think, to significantly argue that creative journey that many artists take,” he said.
Ek also felt it was important to emphasize the difference between something like an AI-driven feature like the GM and concerns about AI creating false tracks.
“I think it’s important to separate the AI GM from the AI conversation. So AI DJ, itself, I think we’ve had nothing but positive reactions from across the industry. I think the rejection of AI by the copyright industry or by record companies and media companies…it’s really about really big issues and issues like name and likeness; what is a real copyright; who owns the right to something where you upload something and claim it’s Drake, and actually he’s not; etc. And those are legitimate concerns,” Ek said.
And obviously those are things that we’re working on with our partners to try to establish a position where we allow for innovation but at the same time protect all of the creators that we have on our platform,” Ek said.
The company reported that its first-quarter revenue increased 14% year-over-year to €3.04 billion, and its advertising revenue increased 17% year-over-year to €329 million. Spotify reached a new milestone with the news that it hit 500 million users, but its share of premium subscribers fell to a 40% ratio of paid to free listeners, with 210 million premium subscribers and 317 million on the plan with advertising.