Spotify has denied claims that users can repeatedly listen to their own uploaded 30-second song in order to receive monthly royalty payments.
As BBC News reports, finance analysts at JP Morgan had previously claimed that subscribers to the streaming service could make $1,200 (£960) a month by listening to their track on repeat for 24 hours a day.
The apparent trick suggested that Spotify’s royalty payment structure could be manipulated. However, the music platform’s CEO Daniel Ek has now said this is not how the app’s royalties function.
The theory was first reported in the Financial Times. Yesterday (September 11), Julian Klymochko, founder of Canadian-based investment company Accelerate, tweeted a screenshot of the article in question.
“According to 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,” he wrote.
In response to the post, Ek said: “If that were true, my own playlist would just be ‘Daniel’s 30-second Jam’ on repeat!
“But seriously, that’s not quite how our royalty system works.”
A label owner replied to Ek, writing: “It’s not how your royalty system works directly, but the 30-second cutoff for receiving payout has trended songs to be shorter and shorter, and the ‘TikTok part’ is usually always at 31 seconds in.”
Ek then explained: “Yes, some songs have gotten shorter. However, most popular songs are still around 4 minutes.”
Per the Financial Times‘ article, JP Morgan executives estimate that as much as 10 per cent of all streams are fake. It comes amid concerns that artificial streaming – through which devices can play selected songs on a loop – is affecting the music industry.
Spotify currently has two tiers of royalties, with artists being paid once a month. This figure can vary “according to differences in how their music is streamed or the agreements they have with labels or distributors”, per the streamer’s official website.
“Contrary to what you might have heard, Spotify does not pay artist royalties according to a per-play or per-stream rate,” it states.
Recently, Universal Music Group and Deezer announced that they would be joining forces to launch a music streaming model aimed at generating larger royalties for artists. With this approach, acts will be paid more if subscribers actively choose to listen to their tracks.
Spotify, Apple Music and other major platforms could be forced to revise their own models as a result.
Last summer, Warner Music Group became the first major label to adopt a fan-powered royalties system through which funds are distributed to artists based on how many individual users listen to their material.
The UK’s competition watchdog launched a market study into the fairness of streaming back in October 2021.
It came after the UK government called on a number of key music industry figures to help consider streaming reforms in response to the DCMS Committee’s report on the economics of streaming.
MPs stressed the need for a “complete reset” of the music industry to address the “pitiful returns” that musicians receive.
The likes of Radiohead, Elbow and Nadine Shah gave evidence to the DCMS. In April 2021, over 150 artists – including Paul McCartney, Kate Bush, Damon Albarn, Chris Martin, Noel Gallagher and Wolf Alice – signed an open letter to then-Prime Minister Boris Johnson asking for help to reform the streaming economy.
Additionally, AIM published research into an alternative streaming system that was modelled on the UK market.
Meanwhile, it was reported last week that criminal gangs were using Spotify’s royalties system to launder money they had made through drug deals.
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