“We pay royalties – sound and publishing – for all tracks on Spotify.”

Spotify has denied creating fake artists to fill popular playlists in an attempt to keep royalty costs down.

The allegations were first made by Music Business Worldwide last year, when the site claimed that the streaming service was asking producers to create music to specification and paying them a flat fee to own the track outright.

These tracks – which MBW alleged were being used to bulk up numbers on ambient, chillout and piano playlists – are said to be owned by Spotify so that the company could circumvent royalty payments on playlists that have millions of subscribers.

The claims were brought to wider attention by a feature published by Vulture last week (July 5), which picked out acts called Deep Watch and Enno Aare as examples of ‘fake artists’ that had racked up two million and 15 million streams despite having no public profile.

In a statement given to Billboard last week (July 7), Spotify refuted the allegations made by both MBW and Vulture. “We do not and have never created ‘fake’ artists and put them on Spotify playlists,” the company said. “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.

“We do not own this content – we license it and pay royalties just like we do on every other track.”

In a piece published yesterday (July 9), MBW challenged Spotify’s statement, citing anonymous sources in the music business who claimed that the practice has been going on for a “long time.”

“We’ve been told that third-parties are involved, and at least some of the people behind the fake artists agree to insanely low margins, which obviously has a financial benefit to Spotify,” said one source. “The labels hate it.”

Another source said: “What we can be sure of is that this strategy is designed to lower the share of music on playlists from legitimate labels – major and indie – that are investing substantial resources to develop quality artists and music, so that Spotify can lower its content costs and lessen the influence of the labels.”

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