Spotify denies allegations it uses 'fake' artists to cut royalty costs

From Engadget - July 10, 2017

Music Business Worldwide stands by its original reporting and argues that if these artists were, in fact, not contracted by Spotify to create the music, we'd be able to see their music on other services, like YouTube and Apple Music. The author also points out that the allegedly Spotify-created tracks have generated more than 520 million streams, which would amount to more than $3 million in royalty payouts. The author quotes a "senior music executive" who says that the strategy, if true, is designed to lower the amount of music on playlists from "legitimate" labels, thereby saving Spotify a ton of money over having to pay royalties to label-backed artists.

Spotify's original statement said that the company pays royalties "for all tracks on Spotify, and for everything we playlist. We do not own rights, we are not a label, all our music is licensed from rightsholders and we pay them -- we do not pay ourselves." While the statement seems unequivocal, there's still room for interpretation, depending on how the company defines a "rightsholder."


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