While Some Cry ‘Fake,’ Spotify Sees No Need to Apologize
While Some Cry ‘Fake,’ Spotify Sees No Need to Apologize
By BEN SISARIO JULY 14, 2017
A year ago, Apple stirred controversy by striking special
deals with some of pop music’s biggest stars. Now Spotify is under fire for
dealings with artists who, in a sense, do not exist at all.
For the last week, the music industry has been buzzing
over the accusation that Spotify’s playlists are dotted with hundreds of
supposedly “fake” artists, with names like Amity Cadet and Lo Mimieux, who are
racking up tens of millions of streams yet have no public profile — no Facebook
page, no Twitter feed, not even a face.
Spotify has also been accused of secretly controlling the
rights to these songs — atmospheric, wordless tracks on mood-focused playlists
with titles like “Deep Sleep” and “Peaceful Piano” — an arrangement that, if
true, would allow the company to reduce the amount of money it pays in
royalties to record labels and “real” artists.
The reality, however, may be more complicated.
Spotify denies that it owns the rights to the music under
question, although the company may well pay lower royalty rates for these
tracks than it does for more standard pop fare. And the pseudonymous creators
of the tracks — real composers and producers, whose work appears under numerous
made-up names — do not want to be called fake.
Peter Sandberg, a 27-year-old composer in Sweden who has
created a number of tracks on these playlists, called the term unfair.
“I’m a composer trying to find a way to grow and spread
my work,” Mr. Sandberg wrote in an email relayed through an intermediary, “and
to be called fake is not something I appreciate.” (Mr. Sandberg, who records
music under his own name as well, does have a social media presence, making him
a less anonymous figure than many of the other creators of this music.)
For Spotify, the issue could damage its already strained
relationships with artists and record labels as the company prepares to go
public. Streaming may now contribute a majority of the revenue for the record
business, but many artists still have doubts about the format’s underlying
financial model.
The suggestion that Spotify’s system is unfair would
exacerbate the problem.
“Generally, folks are excited to see growth in the
legitimate digital marketplace,” said Kevin Erickson, the national organizing
director of the Future of Music Coalition, an advocacy group. “To the extent
that artists will have lingering questions about whether they are going to
meaningfully share in that growth, incidents like this will add to their
skepticism.”
The idea that Spotify was commissioning its own music was
first reported last summer by the online publication Music Business Worldwide;
the issue gained renewed attention after an article last week in Vulture. Since
then, Music Business Worldwide has been listing dozens of what it says are fake
artists on Spotify whose work has generated more than 500 million streams.
Many of these tracks, it turns out, were made by a small
group of professional producers and songwriters in Sweden, some of whom have
worked with pop stars like Kelly Clarkson and the Pussycat Dolls. About 50 of
these composers, including Mr. Sandberg, are represented by Epidemic Sound, a
Swedish company that specializes in music for television and film. (Spotify and
Epidemic Sound share an investor, the European venture capital firm Creandum.)
Oscar Hoglund, the chief executive of Epidemic Sound,
said in an interview that as part of an effort to “soundtrack the internet,”
his company also supplies background music for YouTube and Facebook videos,
which he said had garnered 10 billion views.
The company has put nearly 1,500 songs on Spotify, Mr.
Hoglund said, but has no role in placing the songs on the service’s playlists.
Jonathan Prince, Spotify's global head of strategic
initiatives, said in an interview that the unexpected popularity of its
mood-based playlists — “Peaceful Piano” has 2.9 million followers — has created
a demand for more of that material, which the company has actively worked to
satisfy.
“We’ve found a need for content,” Mr. Prince said. “We
work with people who are interested in producing it.”
By Spotify’s standard royalty rates, 500 million streams
would be worth about $3 million — money that the company could theoretically
save if it owned the material that generated those streams.
That amount may be minuscule for a company that last year
had $3.3 billion in revenue. But as Spotify readies itself for a public
offering, it has made lowering content costs a priority.
“These guys are in a big fight with the music business
right now over how much they pay creators,” said Matt Pincus, the chief
executive of Songs Music Publishing, whose roster includes Lorde and the
Weeknd. “The more controversies they have that have a moral underpinning to
them, the more of a problem they will have in the bigger fight.”
This spring, Spotify signed a new licensing deal with
Universal Music, which agreed to a lower royalty rate in exchange for more
control over how its music appears on the service. Spotify may be close to
signing a similar deal with Sony.
As some in the business see it, the “fake” controversy could
endanger future deals, although many labels, big and small, have protections in
their licensing contracts that forbid Spotify from owning content or
deliberately driving customers to lower-cost songs.
Mr. Prince did not deny that the songs may cost Spotify
less to play. But he said that the placement of all songs on its playlists was
determined only by their popularity among listeners.
“This is a marketplace, and not all content is priced the
same,” he said. “These are legit deals between us and labels that everyone
feels comfortable with.”
If Spotify has arranged a lower royalty rate for these
tracks, those 500 million streams could cost it much less than $3 million. For
some musicians, that may still be plenty.
Mr. Hoglund, the Epidemic Sound chief, said that his
company typically purchased the rights to music from its composers for a flat
fee, but that for music on Spotify it split additional royalties evenly with
its composers.
Mr. Sandberg, who said he was “born and raised” in the
Swedish city of Uppsala and started out wanting to be a concert pianist, added
that he was “quite pleased” with his Spotify earnings. Some of his tracks there
are listed under his own name, and some under pseudonyms (which he did not
reveal).
“A lot of big composers, writers and filmmakers have used
pseudonyms,” he said. “Why shouldn’t I?”
A version of this article appears in print on July 15,
2017, on Page B1 of the New York edition with the headline: ‘Fake’ Stars On
Spotify? The Reality May Differ.
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