Spotify, the music streaming giant, is quietly building a significant developer tooling business alongside its core music streaming service. The company's open-sourced project, Backstage, has gained massive traction since its launch in 2020, with over 2 million developers across 3,400 organizations, including Airbnb, LinkedIn, Twilio, and American Airlines, adopting the platform.

Backstage helps companies build customized internal developer portals (IDPs), bringing order to their infrastructure chaos by combining all their tooling, apps, data, services, APIs, and documents in a single interface. The platform's popularity is evident in its adoption rate, with the Cloud Native Computing Foundation (CNCF) reporting that Backstage was one of its top 5 projects last year in terms of velocity and activity.

Spotify is now doubling down on its dev tools business play, offering premium tools and services on top of the core Backstage product. The company started selling premium plugins in 2022, such as Backstage Insights, which displays data related to active Backstage usage within an organization. Additionally, Spotify announced Spotify Portal for Backstage in beta, a fully managed SaaS product that provides a "Backstage in a box" experience for customers lacking the resources or inclination to set everything up themselves.

Tyson Singer, Spotify's head of technology and platforms, explained that the company discovered various customer profiles, including small companies, that see the same problems as larger enterprises. Having a hosted version of Backstage makes everything easier for these customers. The fully managed SaaS product is now edging toward general availability in the coming months, with design partners and customers like the Linux Foundation and Pager Duty already on board.

Spotify also teased a couple of new premium Portal plugins at KubeCon, including AiKA ("AI knowledge assistant"), a chatbot initially developed internally for its own employees. AiKA is used by 25% of Spotify's workforce weekly to query the company's collective knowledge base, providing instant answers to questions and motivating employees to keep their documents up-to-date. An alpha version of AiKA is set to launch for third parties imminently, which should bolster Backstage's stickiness as a premium product in the long run.

Backstage isn't the only home-grown developer product Spotify is looking to monetize. The company announced Confidence, an A/B experimentation platform, 20 months ago, which has remained in stealth ever since. While Spotify is being selective about the customers it lets in the door, the company will have more to say about Confidence later this year, with potential synergies between Confidence and Portal in the form of a plugin that brings simple feature-flagging functionality into Portal.

Spotify's efforts to create a developer tooling side-hustle on top of its day job as an online music emporium are a response to its past experience with Helios, a container orchestration platform that was eventually open-sourced but lost out to Google's Kubernetes. By open-sourcing Backstage and offering premium tools and services, Spotify aims to ensure that Backstage becomes the industry standard IDP and that its own developers aren't forced to transition to something else that comes along.

In conclusion, Spotify's expansion into the developer tooling business with Backstage marks a significant shift in the company's strategy. By offering premium tools and services on top of its open-sourced platform, Spotify is poised to create a healthy business that complements its core music streaming service. As the company continues to build on its momentum, it will be interesting to see how its dev tools business evolves and impacts the industry as a whole.