Holy crap – you’ll want to buckle your seat belts for this one.
Remember back to last July when I reported on Spotify’s use of fake artists to source music content without having to pay performance royalties? Well it turns out some enterprising crooks in Bulgaria may have flipped the script on the streamer with a different royalty fraud. Stay with me on this one since it’s a little complicated.
According to an in-depth Music Business Worldwide investigation, Spotify paid out about $1M in royalties for music which was played on two unusual playlists. What made these playlists, called Soulful Music and Music From The Heart, so weird is that they were filled with hundreds of short songs (like :30-40 seconds long) that nobody has ever heard of.
Yet these playlists were being played non-stop on a couple thousand Spotify accounts.
All the songs on these playlists were tied to the same ISRC (royalty code) which was owned by an unknown entity in Bulgaria. Per their normal operating procedure Spotify paid royalties on these plays, and the money eventually made its way to the Bulgarian scammers.
So what does this mean? First of all Spotify overpaid on royalties by about $1M – and that’s just for the two fake playlists we know of. And second, this situation proves how easy it can be to manipulate the system by creating fake accounts and even fake listening, which puts Spotify’s entire audience metrics in question.
I guess when it comes to royalties shadiness what goes around comes around.