Spotify has been forced to deny allegations that it pays producers to create songs under fake names that are placed on its in-house playlists in a bid to reduce the amount of royalties it has to pay on tracks from legitimate artists.
The allegations first surfaced last year but a recent article from entertainment website Vulture has shone the light even more brightly on the music streaming service. The articles allege that Spotify pays producers an upfront flat fee to provide music under pseudonyms that have no, or very little, internet presence outside of Spotify.
“We do not and have never created 'fake' artists and put them on Spotify playlists. Categorically untrue, full stop,” a Spotify spokesperson told Billboard. “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.”
Music Business Worldwide, which originally fired the allegations at Spotify last year, compiled a list of 50 artists that it believed to be fake. These 50 ‘artists’ amounted to over 520m streams, which would equal more than $3m in royalty payouts under traditional right-holder rules.