Spotify’s primary income sources are advertisements and subscriptions, but the company has also been secretly developing a developer tooling business over the past few years. Its open-source project, Backstage, has gained significant traction, with over 2 million developers across 3,400 organizations, including prominent companies like Airbnb, LinkedIn, Twilio, and American Airlines, adopting it since its release in 2020.

Backstage is designed to help companies create customized “internal developer portals” (IDPs), streamlining their infrastructure by combining tooling, apps, data, services, APIs, and documents into a single interface. This allows users to monitor Kubernetes, view cloud costs, or check CI/CD status, all within one platform.

The Cloud Native Computing Foundation (CNCF) accepted Backstage as an incubating project in 2022, and it has since become one of the top 5 projects in terms of velocity and activity. This momentum has led Spotify to expand its offerings, with various premium tools and services on the horizon.

Oven-baked

While the core Backstage product is available for free, along with an array of open-source plugins, Spotify has started selling premium plugins, such as Backstage Insights, which provides data on active Backstage usage within an organization. In 2024, Spotify announced Spotify Portal for Backstage, a premium, fully managed SaaS product that offers a simplified, “out-of-the-box” solution for companies lacking the resources to set up and manage their own Backstage instance.

The Portal product is nearing general availability, with design partners and customers like the Linux Foundation and Pager Duty already on board. According to Tyson Singer, Spotify’s head of technology and platforms, the hosted version of Backstage makes it easier for companies of all sizes to adopt the platform, regardless of their complexity or resource constraints.

Spotify also showcased a couple of new premium Portal plugins at KubeCon, including AiKA, an AI-powered knowledge assistant chatbot initially developed for internal use. AiKA has seen significant adoption within Spotify, with 25% of the workforce using it weekly to query the company’s collective knowledge base.

AiKA’s success has motivated employees to keep their documents up-to-date, as it relies on internal documents and data to provide accurate responses. An alpha version of AiKA is set to launch for third parties soon, which should enhance Backstage’s stickiness as a premium product.

Growing confidence

In addition to Backstage, Spotify has been developing another home-grown developer product, Confidence, an A/B experimentation platform announced about 20 months ago. Although it has remained in stealth mode, Confidence has garnered a few paying customers, with Spotify being selective about the companies it allows to use the platform.

According to Singer, Spotify will share more information about Confidence later this year, with potential synergies between Confidence and Portal in the form of a plugin that brings feature-flagging functionality into Portal.

The development of Backstage and Confidence stems from Spotify’s experience with its own container orchestration platform, Helios, which was eventually replaced by Google’s Kubernetes. This led to a realization that having a product replaced by an external one can result in significant migration costs. As a result, Spotify is working to ensure that Backstage becomes the industry standard IDP, and its developers are not forced to transition to another platform.

By open-sourcing Backstage in 2020, Spotify aimed to prevent this issue, and the premium offerings that follow are designed to guarantee its longevity. Singer emphasized that the company is building a healthy business on top of Backstage, rather than just covering costs, and that there is significant value trapped within Spotify that can be leveraged.