Spotify is using ghost artists to minimise royalty costs, new report claims

A new report has alleged that Spotify is filling listeners’ playlists with “ghost artists” to minimise royalty costs.

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Per Liz Pelly’s findings shared in Harper’s Magazine, popular playlists ranging from jazz and classical to lo-fi hip-hop are being padded out with material by ghost artists, effectively decreasing the amount of royalties Spotify pays genuine musicians while increasing their overall profit margins.

Known as “Perfect Fit Content” (PFC), the practice was introduced to Spotify’s editors in 2017 and engineered to maximise profit by partnering with a collection of production companies, largely located outside the US.

Pelly’s report noted that when the issue first came into public view earlier this year, a Spotify spokesperson claimed the allegations were “categorically untrue, full stop”, and denied the company was creating its own fake-artist tracks.

NME has reached out to Spotify for a comment.

“But,” she continued, “while Spotify may not have created them, it stopped short of denying that it had added them to its playlists.”

The report also nodded to findings by music writer David Turner, who used analytics to show Spotify’s “Ambient Chill” playlist had been wiped of artists like Brian Eno, Bibio, and Jon Hopkins in favour of tracks from Epidemic Sound, a Swedish company that offers a subscription-based library of production music, including the kind of stock material largely used in the background of adverts and TV programmes.

One former employee said of the practice: “Some of us really didn’t feel good about what was happening. We didn’t like that it was these two guys that normally write pop songs replacing swaths of artists across the board. It’s just not fair. But it was like trying to stop a train that was already leaving.”

Consequently, it’s claimed that fewer royalties are being paid out to legitimate artists, while payments go to the PFC partners, who create material to be shared under hundreds of artist profiles, most of which are entirely empty and generate inconclusive searches upon further inspection.

By 2023, several hundred playlists were reportedly being monitored by the team responsible for PFC. Over 150 playlists, including “Ambient Relaxation,” “Deep Focus,” “100% Lounge,” “Bossa Nova Dinner,” “Cocktail Jazz,” “Deep Sleep,” “Morning Stretch,” and “Detox,” were nearly entirely made up of PFC.

“Many of the playlist editors — whom Spotify had touted in the press as music lovers with encyclopedic knowledge — are uninterested in participating in the scheme,” the report continued. “The company started to bring on editors who seemed less bothered by the PFC model.”

Another source claimed the attitude in-house seemed to be: “If the metrics went up, then let’s just keep replacing more and more, because if the user doesn’t notice, then it’s fine.”

Although Spotify has historically denied the claims, CEO Daniel Ek received widespread backlash following his claims that “content” costs “close to zero” to make earlier this summer.

The comments were quick to spark a response from across the online community, with countless music lovers and musicians coming forward to criticise the CEO for being “out of touch”.

“I for one don’t make ‘content’. I make music,” wrote KT Tunstall. “It’s *possible* to make music cheaply, but you still need equipment. And making music the way I make it also employs other people and takes time, so yes. It’s such a completely fucking myopic thing for him to say.”

Similar comments were shared by The Future of Music Coalition – who wrote at the time: “It actually can still be expensive to make records, especially if you care about paying your collaborators fairly” – and Primal Scream bassist Simone Marie Butler who wrote: “Fuck off you out of touch billionaire.”

Following the backlash, Ek went on to share another update apologising for dismissing the struggles faced by musicians and using the “reductive” label of “content”.

In the first quarter of 2024, the number of premium subscribers rose by 14 per cent to 239million, and Spotify announced record profits of over €1billion (£860m). Since then, it has also been reported that it has begun to remove Russian artists who are in support of the war in Ukraine from the streaming platform.

The new findings emerge after a site parodying Spotify Wrapped has been taken down at the request of Spotify‘s legal team.

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