Merlin signs Spotify licensing deal for AI fan-made covers and remixes

Spotify has signed a licensing agreement with Merlin for its upcoming fan-made covers and remixing tool, pulling the independent sector into a feature that until now had only Universal Music Group attached. The deal was announced on Tuesday, August 4, 2026, and lets fans build covers and remixes of songs from participating Merlin members’ artists and songwriters.

Merlin is the digital licensing partner for independent labels and distributors, so this is the agreement that decides whether the indie catalog shows up in the tool at all.

What the Merlin agreement adds to Spotify’s covers and remixes tool

The tool launches as a paid add-on for Spotify Premium users. Spotify says it “will create an additional revenue stream for participating artists,” and the press release frames the Merlin agreement as giving artists on labels under Merlin’s Spotify deal “the option to participate.” Opt-in, not automatic enrollment.

Universal Music Group struck the first deal for the tool in May. Spotify and UMG both described it as “powered by generative AI technology.” Spotify has since leaned on a three-word framing for the whole initiative: consent, credit and compensation.

Which rightsholders have actually signed

Spotify first laid out this plan in October 2025, naming Universal Music Group, Sony Music Group, Warner Music Group, Merlin and Believe. At the time it called the arrangement an intention to license, not a set of signed contracts.

Ten months later, two of those five have announced deals. UMG in May, Merlin in August. That pace tells you something about how contested the terms are.

What indie artists should read before opting in

The opt-in language matters more than the announcement. If your distributor sits under Merlin’s Spotify agreement, participation is a decision you make, and right now you are being asked to make it without a published rate.

Spotify has not released a launch date, a price for the add-on, a per-generation payout, or a credit mechanism for the original songwriter. Its co-CEO Alex Norström pitched the UMG version as a controlled alternative to unlicensed AI, and the same questions were open then.

The indie sector has been here before from the other side. Merlin’s former CEO Jeremy Sirota left the organisation for Suno earlier this year, and Merlin has separately licensed independent catalog to Udio. Independent rights are now the swing vote in three separate AI music products at once, which is a real negotiating position as long as the terms get published.