Experts believe that you could game the Spotify royalty system and make a lot of money – but turns out it’s not so simple.
According to analysts at JPMorgan, if someone uploaded their own 30-second track to Spotify, and then programmed their phone to listen to it on repeat 24 hours a day, they would receive $1,200 a month in royalties.
Executives estimated that as much as 10% of all music streams are ‘fake’, generated by streaming farms, where numerous devices run services like Spotify on loop, as reported by the Financial Times,
However, Daniel Ek, the streaming giant’s CEO, has denied these claims, saying ’that’s not quite how our royalty system works’.
‘If that were true, my own playlist would just be “Daniel’s 30-second Jam” on repeat!’ said Mr Ek in a social media post.
The music streaming giant, created in 2008, works on a simple financial model where subscribers pay Spotify £10.99 a month to listen to ad-free music online.
In a statement on its website, Spotify said: ‘Contrary to what you might have heard, Spotify does not pay artist royalties according to a per-play or per-stream rate.
‘The royalty payments that artists receive might vary according to differences in how their music is streamed or the agreements they have with labels or distributors.’
The streaming giant has been plagued by amateurs, bots and white noise soundtracks that generated about $900mn in royalties last year, according to Goldman Sachs.
Recently, Swedish Newspaper Svenska Dagbladet reported that criminal gangs were using Spotify’s royalty system to launder money made through drug deals.
To address ‘bad actors’ misusing the platform, Spotify updated its royalty system this week.
As part of the new model, streams of songs from professional artists will be given double the weight of streams from non-professionals when calculating royalty payments. The move is expected to reduce the money flowing towards random uploads.
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