Spotify Technology Pitches AI Add-Ons, Video and New Verticals for Growth

AI and add-ons are central to Spotify’s growth strategy: The company is developing conversational, AI-powered features and plans to monetize heavier usage through paid add-ons, following the success of its audiobook add-on business, which reached €100 million in annual recurring revenue.

Spotify is expanding beyond audio: Video podcasts, music videos and potential new verticals such as fitness are key growth areas. Podcast video grew 50% year over year, while songs with videos were 24% more likely to be streamed or saved.

The company is pursuing broader reach and new content formats: Spotify is targeting 1 billion monthly active users by 2030, with emerging markets expected to drive much of the growth, while exploring rights-holder-approved AI remixes and covers with artist opt-in.

Co-CEO, Chief Product Officer and Chief Technology Officer Gustav Söderström outlined the company’s strategy for using artificial intelligence, expanding into additional media formats and monetizing highly engaged users during an investor conference appearance. Söderström, who became co-CEO alongside Alex Norström in January after serving as Spotify’s chief product and technology officer, described AI as the next major technology shift for the company. He compared the opportunity with earlier shifts including broadband, smartphones and connected devices, which Spotify sought to use to expand its position.

“The job for me and Alex… is to be able to understand technology deeply, try to understand what it means for Spotify, for the business model, reposition the company to turn it into a tailwind, and then ride it,” Söderström said.

Söderström said Spotify has been rebuilding its product to become what he called “the first truly intelligent media service.” He said consumers increasingly expect to interact conversationally with digital services, including asking questions about artists, songs, touring schedules and music credits without leaving the platform.

Spotify has added music videos and capabilities intended to answer questions about bands, producers, samples and live performances, he said. The company believes its access to licensed and proprietary information, combined with broader real-time information, can support a more interactive user experience.

The executive also said AI is changing the economics of software by introducing inference costs that rise with usage. Spotify’s existing experience managing per-stream content costs, particularly in its free tier, could help it manage that transition, according to Söderström.

He pointed to audiobooks as an example of Spotify’s approach. The company includes about 15 audiobook listening hours in Premium and offers additional listening hours as add-ons for heavier users. Söderström said the audiobook add-on business had reached €100 million in annual recurring revenue after about a year, exceeding the company’s expectations.

Spotify plans to apply a similar model to AI-powered features, he said: offering a baseline amount of functionality in free and paid tiers while allowing users with greater usage needs to pay for additional access. Free access is intended to broaden Spotify’s potential market. Premium subscriptions can bundle additional content and features. Add-ons are designed to monetize users with higher engagement and potentially higher average revenue per user.