Spotify said it plans to roll out an artificial intelligence tool allowing users to make covers and remixes of songs from Universal Music Group's artists.
Shares of the Swedish music streaming company climbed 15% on Thursday to $497.47. The company's shares are still down 15% year to date.
The tool is expected to be powered by generative AI technology "opening up additional revenue streams and new ways to drive discovery", Spotify said.
It introduces a creation model where artists and songwriters can directly share in the value generated through AI-driven licensed covers and remixes on the Spotify platform.
The new tool will launch as a paid add-on for Spotify Premium users.
It is part of an expanded partnership between the streaming company and the UMG record label, which represents a host of artists, from Taylor Swift to Kendrick Lamar.
The company also said it would reserve two concert tickets for some artists' top fans to buy tickets before the general sale.
Spotify has drawn criticism and even calls for boycott in recent years for low payouts to musicians, though the company insisted it paid $10bn in royalties in 2024 - ten times more than in 2014.
The streaming platform pays roughly between $0.003 and $0.005 of royalties per stream.
Earlier this year Spotify has raised monthly subscriptions to €12.99 a year for an individual plan and €18.99 for premium duo.
Spotify has relied on price increases in recent years to drive growth.
The company had 713 million monthly active users at the end of the period.
