Spotify, the Swedish music-streaming giant, announced its third-quarter results on the 22nd. Monthly active users (MAU) totaled 788 million, and revenue reached about €4.97 billion (on the order of €5 billion, not ¥500 million).
In its earnings briefing, Spotify described a future in which people listen to music and podcasts through AI agents such as ChatGPT, and said it expects operating profit of €820 million in the fourth quarter.
An era of leaving the search and selection to AI
Play something that matches my running pace. Find a podcast related to something I recently discussed with AI. It would be helpful to have an audiobook pick up where I left off and recap only the key points. Spotify envisions people making requests like these simply by talking to an AI assistant, without opening an app.
Until now, the norm has been to open an app, search for an artist and put together a playlist yourself. That point of entry could shift into conversation. Spotify sees this change not as a threat but as a tailwind, aiming to become a media service people can use through any AI agent.
In remarks to investors, co-CEO Gustav Söderström explained, in effect, that “agents are good at taking over chores people would rather avoid, but entertainment is the opposite.” No one wants a song summarized, after all. Music is not something people delegate because it is a hassle; listening and enjoying it is the point. If AI takes care of only the effort, people may end up spending more time listening.
Spotify's choice to partner with outside AI
Spotify is said to be the first music service to integrate with Meta's AI assistant, Muse. Integrations with ChatGPT and Claude are also available. While other companies hesitate to support AI agents or keep their distance, Söderström's position is that Spotify should jump in and ride the wave of growth.
Some companies are closing the doors
Differences in approach are also emerging over how to handle agents. Amazon, for example, blocked Meta's Muse from shopping on its platform. When issues such as access controls, security, privacy and commercial control are at stake, major companies are likely to keep shutting out external agents.
Retail is a field where AI could make purchases on people's behalf, potentially sidestepping ads and pathways into a company's own app. With music, however, the value of playback remains the same regardless of how people access it. This difference may help explain why Spotify is more willing to open its doors.
Listening history makes for personalized recommendations
Another focus for Spotify is using AI to make the experience more personal. The company describes its current service as “an intelligent media service wrapped in an agent,” available both in the app and through other agents. In other words, it has become something users can talk to, ask questions of and give instructions to—not just click on.
Spotify has offered some concrete examples: reviewing listening history all the way back to 2008, track by track, to pick out true favorites; adjusting the tempo up or down; sorting by key and BPM; and then blending tracks to match a runner's cadence, creating an ideal running playlist. The company says its ability to handle requests at this level of detail is a strength other media services lack.
The foundation is years of accumulated history, including plays, skips and discoveries of new music. That makes it easier to offer recommendations that feel like the listener, rather than the bland lists a general-purpose AI with no knowledge of their tastes might produce.
Data stays put; Spotify handles the curation
One concern is whether personal listening data could be passed to AI agents. Söderström said explicitly that Spotify does not send listening data to partners. The agent relays a request to Spotify, which then interprets it on its own systems and decides what to play.
Even as the point of entry expands to external AI, Spotify keeps the intelligence behind curation and its accumulated data in-house. It can broaden convenience without surrendering control of the service. This design could prove vital for streaming services in the AI era.
Will AI investment translate into profit?
The question is how this AI strategy will show up in the numbers. Spotify forecast fourth-quarter operating profit of €820 million, above analysts' estimate of €813.4 million. The company expects AI features to help user numbers grow over the holiday season, and its share price rose more than 3% in premarket trading.
Spotify already offers AI DJ, which plays personalized music mixes with spoken commentary, as well as prompt-based playlists that select music when users describe their mood and tastes in writing. As investment in AI continues, the market is focused on profitability.
Comparing forecasts and outlook
Spotify reported third-quarter operating profit of €672 million, almost exactly in line with analysts’ forecast of €671.8 million. Revenue was €4.97 billion, slightly below the expected €4.98 billion. In other words, judged by the numbers alone, the third quarter came in as expected.
Spotify’s fourth-quarter outlook is mixed across metrics. It expects 818 million MAUs, slightly below the market forecast of 819 million—a difference of less than one million. Meanwhile, premium subscribers are expected to increase by 10 million to 316 million, beating the forecast of 314.7 million. The figures highlight growth in paying listeners more than growth in free users.
Spotify says it has built a strong business with growth that is accelerating sustainably, and that there is room for further growth ahead. If AI agents become a gateway to music, people may open the app less often. But if the service that best understands listeners’ tastes continues to be chosen, that should show up in the form of more paid subscribers.
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