A pioneering new artificial intelligence-powered app or feature debuts nearly every day, shocking the world with its capabilities. Spotify, which has already implemented an AI DJ feature, is looking to shake up the streaming market with a a personalized AI playlist builder. Analysts are already asking: could this be a game changer for Spotify’s core business as the company’s stock nears all-time highs again?

Spotify’s AI playlist tool, which is still in a beta mode will initially be available for premium subscribers in the United Kingdom and Australia and will work on Android and iOS devices. The feature would help users curate a personalized playlist based on the artists, tracks, and genres that AI would recommend.

To create the playlist, the listener needs to provide prompts that refer to places, activities, colors, animals, movie characters, and emojis! Spotify, however, advises that using a combination of genres, moods, artists, or decades would lead to better recommendations.

The feature helps the listener create a custom playlist based on any number of different requirements. For instance, a listener can create a playlist based on the prompt “relaxing music to listen to with my kid” or “beats to get over my breakup” and AI would come up with matching answers. The feature looks like it will be a fantastic way to explore new music within genres and categories that you love.

How to Create an AI Playlist on Spotify

To create the AI playlist (if it’s available in your region yet), head to the “Your Library” section on the screen and follow the following steps:

  • Tap the “+” button at the top-right corner of the app and select “AI Playlist.”
  • The user can then type their command or select from any of the suggested prompts.
  • Spotify would then offer some tracks based on the prompts. The user can then manage the selection of songs and can also delete tracks.
  • The user can also refine the playlist by adding more prompts
  • Finally, the user needs to tap “Create,” and the playlist will be saved in the “Your Library” section.

According to Spotify, “While it’s designed to be fun, the tool is still in beta and won’t produce results for non-music-related prompts, like current events or specific brands. We also have measures in place around prompts that are offensive—so please prompt responsibly!”

For the AI playlist, Spotify would use LLMs (large language models) to understand the listener’s requirements and club it with their history and preferences to come up with a personalized playlist.

AI has Been the Buzzword Among Top Companies

Just about every single tech company (and many in other verticals) is implementing AI into their products as fast as humanly possible. It’s no secret why. Businesses that successfully launch interesting AI products and features generally drive quite a bit of interest from the world and positive stock performance often follows.

Naturally, AI has become a buzzword among leading companies and is increasingly featuring in earnings calls. Data compiled by FactSet showed that 179 of the 500 S&P 500 companies used the term “AI” in their earnings calls between December 15 2023 and March 14, 2024.

The figure is more than three times the ten-year average and the second highest since 2014. The highest (181) was in Q2 2023 when advanced generative AI changed the tech world forever. The AI euphoria culminated in May 2023 when Nvidia became a $1 trillion company, but the hype was far from over.

The spike in sales of AI chips helped Nvidia’s market capitalization skyrocket to $2 trillion company earlier this year as it continued its rally from last year. It is now the third largest US company after Microsoft and Apple, even though its earnings are paltry in comparison. Notably, one of the reasons Apple stock has underperformed tech peers is because it is seen as wanting in its AI endeavors.

The iPhone maker too did a course correction and its CEO Tim Cook finally used the “golden words” during the fiscal Q1 earnings call earlier this year. The company teased more announcements about its AI initiatives for later this year. Apple will likely reveal more at WWDC, which is scheduled to take place June 10 through June 14.

As for Spotify, the stock is up nearly 100% in the past 6th months as it continues to dominate the streaming market, potentially boosted by its AI features. The stock fell marginally at open this morning, however, so investors may not be as interested in Spotify’s AI endeavors as the company had hoped.

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Will This Feature Boost Spotify to All-Time Highs?

The AI playlist is expected to come up with better recommendations for Spotify users which could help fuel its popularity. Spotify is offering the AI recommendation functionality to premium subscribers only and if it gains popularity among listeners, more users might pivot to the premium plan.

Currently, Spotify’s premium plans start at $10.99 per month for individuals while a dual plan costs $14.99. The family pack is priced at $16.99 and can be used by up to 6 accounts. Spotify’s profits could rise if more users choose the premium subscription to gain access to the AI playlist. No wonder Goldman Sachs expects AI to boost earnings of S&P 500 companies by 30% by 2030.

All said, currently the AI playlist is in beta mode and Spotify will expand it to more geographies and add more features. While a section of the market which includes Tesla CEO Elon Musk believes that AI is a “dangerous” technology, some features like Spotify’s AI playlist are only making life a bit easier (and fun) for many.