Spotify denies allegations that it uses ‘fake artists’ to save on paying royalties

Last year, Spotify came under fire for allegedly using “fake artist” accounts to help cut back royalty costs. Spotify denied the claims, but the source of the original reports — Music Business Worldwide — has now continued to call out against the company.

“We were told that [CEO] Daniel Ek’s company was encouraging and even paying producers to create tracks under untraceable pseudonyms — within specific musical guidelines — which were then being drafted into key first-party playlists,” Tim Ingham wrote for MBW.

MBW‘s argument is if these artists were legitimate, their content would be seen on other platforms like YouTube or Apple Music. “Put it this way: if an act on Spotify has millions of streams from just a couple of tracks, but no other internet presence whatsoever, wouldn’t that strike you as odd? writes Tim Ingham for MBW. “No Facebook, no Twitter, no ReverbNation page, no homepage, no SoundCloud?”

Furthermore, the site says these allegedly Spotify-created tracks have generated more than 520 million streams, which would amount to over $3 million in royalty payouts.  MBW says that according to a “senior music executive,” the reported strategy is to introduce these label-free artists, saving Spotify from paying significant royalties to label-backed artists.

Some of the artists MBW refers to are Peaceful Piano, Piano In The Background, Deep Focus, Sleep, Ambient Chill and Music For Concentration. Vulture later stood with MBW on these allegations.

Spotify’s original statement regarding the accusations was that it pays royalties “for all tracks on Spotify, and for everything we playlist.” The company added, “we do not own rights, we’re not a label, all our music is licensed from rightsholders and we pay them — we don’t pay ourselves.”

“We do not and have never created ‘fake’ artists and put them on Spotify playlists,” Spotify told Engadget more recently in response to MBW‘s latest article. “We do not own any rights to songs. We license all music on Spotify and pay royalties to rights holders.”

Via: Engadget