The shady world of Spotify
By Craig Evans
A report, published on Music Business Worldwide this week, has claimed to unearth evidence that Spotify is now producing its own records and including them on some of it’s more well-followed playlists under fake artist alias’s.
Sound shady? it is, and here’s how it works.
Spotify goes to a producer and pays them a set fee to produce a piece of music, thus keeping ownership over the master recordings. Then they list these tracks on Spotify under fake names and present the copyright as belonging to the artist. Then they take these tracks and put them into their well-followed playlists resulting in them getting hundreds of thousands and in one case millions of streams.
At least five tracks were identified as having been produced by the Swedish company and placed onto fitness and ‘chillout’ playlists.
This news comes only a week after it was claimed that the company is punishing artists that sign exclusive agreements with other streaming platforms. Spotify is heading towards an IPO next year and despite three years of growth in its user base its net losses have gotten worse and not better.
It’s subscription cost is incredibly low and thus what it pays out to artists is incredibly low royalties… but it’s still almost 55% of the companies turnover that goes back to major labels.
Rivals Spotify, Apple and Tidal are now in a bitter battle to be the network to release ‘big name’ material exclusively through their platforms, thus encouraging users to make them their streaming product of choice.
A leaked internal memo from Universal has shown that it’s a practice that some of the major labels are looking to clamp down on as anecdotal evidence has emerged showing that Spotify in particular has been down-grading its promotion of content that was exclusively premiered through Apple Music for example.
For the artists like Frank Ocean or Katy Perry for example, there is a significant financial incentive to partner with a streaming platform for a limited term of exclusivity, but this practice has led to an increase in piracy around exclusive releases.
In the New York Times this week a number of executives at two major record labels claimed that Spotify had told them that music which had benefited from exclusivity on other networks would not receive the same level of promotion when it did then arrive with Spotify. This may have included demoting their content in search results, knocking it off of favourable playlists and not displaying their content on promotional areas of the application.
Spotify received Rise by Katy Perry a week later than rivals Apple and only ended up reaching number 25 in the UK charts, these shady practices are being blamed for such poor first month sales. Spotify have of course declined comment on the issue.