Spotify Co-CEO on AI music licensing, the live ticketing opportunity, and why 90% subscription revenue enables a low-regret product

Summary

Gustav Söderström, co-CEO of Spotify, spoke at South by Southwest as the company marks its 20th anniversary. The conversation covered four distinct fronts: AI-driven personalization, generative music licensing, live ticketing, and the structural reasons Spotify behaves differently from ad-supported platforms.

AI personalization

Consumers now interact with near-AGI-level intelligence through ChatGPT and Claude, which makes the experience of legacy media services increasingly untenable. Spotify is building what Söderström calls the world's first truly intelligent agentic media system, starting with AI DJ, then prompted playlists, and now a taste profile feature that lets users see and edit in plain English how Spotify understands them musically. Users can open their taste profile, tell Spotify they want classical music on their homepage every day, and the algorithm adjusts. User-directed algorithms produce lower regret, which aligns with a subscription model where users vote monthly with their wallets.

Subscription economics

Close to 90% of Spotify's revenue comes from subscriptions. When a user takes control and slightly lowers their own engagement, Spotify doesn't lose money because it doesn't monetize engagement directly. An ad-supported model at the same revenue scale would face nearly impossible pressure to maximize time-on-platform. Users of unnamed ad-supported platforms report regretting 70% of their time spent there. On Spotify, that figure is below 3%.

Generative music and licensing

Most working musicians already use AI tools privately, regardless of what they say publicly. The opportunity Söderström sees isn't net-new AI-generated music but unlocking existing IP by letting artists voluntarily authorize fan-driven remixes and covers in exchange for compensation. He draws the analogy to how Spotify navigated piracy by taking the slow, licensed route rather than the permissionless one. The same logic applies here, with the business model still to be determined.

Artist payouts

Spotify has paid out over $70 billion to the music industry in total, with $11 billion in 2024 alone, more than any single entity in music industry history according to Söderström. The per-stream figure draws criticism but reflects a different user behavior pattern. Spotify users stream three to four times more per user than users on Apple Music or Amazon. No platform pays per stream; all pay roughly 70% per user. More usage divided by the same dollar pool produces a lower per-stream number, not lower total artist compensation.

Live ticketing

Spotify has sold over $1.5 billion in tickets, and the volume is growing. Stream count functions as a natural anti-scalping mechanism, making it hard to fake genuine fandom. The company already advises artists on which cities to tour based on streaming geography; selling tickets extends that data application. As personalized content makes individual media experiences more isolated, demand for shared physical experiences increases. Taylor Swift's Eras Tour and the long tail of indie artists are both growing simultaneously.

Video podcasting

Joe Rogan's insistence on video as a condition of his deal pushed Spotify into a market one or two orders of magnitude larger than audio-only podcasting. Before 2025, adding video to a podcast on Spotify actually reduced creator earnings because dynamic audio insertion ads couldn't run against video. Spotify resolved this by paying video podcasters out of the premium subscription pool, decoupling creator economics from ad load and bringing major video shows onto the platform.