Last week, Spotify was accused of paying producers to create songs under fake names and putting those songs onto premium playlists like “Deep Sleep” or Peaceful Piano,” allowing the company to save money that would otherwise be spent on royalty checks to real artists. These tracks have reportedly racked up over 500 million streams, which, by Spotify’s standard royalty rates, would be worth about $3 million.
The streaming giant quickly denied the allegations, with a spokesperson for the company claiming, “We do not and have never created ‘fake’ artists and put them on Spotify playlists. Categorically untrue, full stop. 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.” But even if Spotify isn’t commissioning exclusive music for their playlists, they could well be paying extremely low royalty rates to license anonymous background music from these so-called “fake” artists.
One of said artists is Peter Sandberg, a 27-year-old composer in Sweden who creates tracks for Spotify playlists under numerous pseudonyms. But, as he tells The New York Times, he thinks the term “fake” is unfair. “I’m a composer trying to find a way to grow and spread my work,” he wrote in an email relayed through an intermediary. “And to be called fake is not something I appreciate.” Sandberg, like many of these artists, is represented by Epidemic Sound, a Swedish company that makes background music for TV, films, as well as background music for YouTube and Facebook videos. Spotify and Epidemic Sound both count the European venture capital firm Creandum as an investor.
Jonathan Prince, Spotify’s global head of strategic initiatives, says that they need Epidemic’s library because of the demand created by unexpected popularity of their mood-based playlists like “Peaceful Piano,” which has 2.9 million followers. “We’ve found a need for content,” he said in a recent interview. “We work with people who are interested in producing it.”