- 13 Jul 17
The world-dominating streaming device is rumored to avoid payroll royalties by enlisting producers to create music under made-up artists names .
Spotify has reportedly reached an agreement deal with Sony Music earlier this week, which is the second licensing deal they have landed since Universal Music Group. Spotify is believed to have to pay a smaller amount of royalties rate when the new deal is put into effect. Yet, Sony Music has declined to comment on the validity of the report, probably due to the 'fake artists' controversy.
The Sweedish company made headline once again since it is accused of paying producers flat fees (plus expenses) to create music under false names to avoid paying royalties.
Could this be another number of the company in effort to reduce payroll royalties?
The accusation made towards Spotify first surfaced on a report from World Music Business in August last year, which the company has denied to give any comments on. But an article from Vulture last week has made this the talk of the global music business again.
Spotify released a statement to Variety in response to such serious accusation, "We pay royalties – sound and publishing – for all tracks on Spotify, and for everything we playlist. 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.”
However, the accusation does not stop there.
Music Business Worldwide reported they have identified more than 50 “fake artist” tracks from ambient, piano, smooth jazz, yoga mix playlists that have garnered a total of 520 million streams. Most of the 50 "fake artists" have ties with the Epidemic Sound.
These acts, with names like Deep Watch, Piotr Miteska, Antologie, Bon Vie, Benny Bernstein and the 2 Inversions, who have garnered more than 75 million Spotify streams to date on Spotify playlists, all of which were produced Stockholm-based producers named Andreas Romdhane and Josef Svedlund.
All of this music is completely exclusive to Spotify. The recorded music under a pseudonym is not played on any other streaming device.
The MBW report insinuated that there may be a direct deal between Epidemic and Spotify for these tracks.
As mentioned in the MBW report, playlists like "Deep Sleep" can be played for hours, which racks up plays and royalties payment. This practice could help the company escape the high volume of royalties paid to A-list artists on every listen.
Certain top-performing artists and tracks were paid only a flat fee and not increasing royalties in this system, this financial decision would definitely save a whole lot of money.
Universal Music, which has signed a licensing deal with Spotify, has not responded to Variety's request for comment.
One indie music publishing exec talked to Variety, “The problem is musicians are already feeling like Spotify is underpaying them, and this creation of knockoffs doesn’t help that perception.”
“These playlists have been marketed as being highly curated by experts,” the music producer continued. “Doesn’t this put their entire credibility and integrity in question? It’s hard enough for an artist to get on these playlists without competing against Spotify’s own generic music.”
If Spotify is planning to negotiate a deal with Warner Music - the last of the "Big Three" - any time soon, they are walking a tightrope right now with all these conspiracy stories spiralling everyday.