I confess that I’m fascinated by a series of grifts that have been reported on recently with respect to Spotify royalties. Let’s go through some of them, and explore whether they hold up.
The 30-Second Get-Rich-Quick Track
This comes from a JP Morgan finance analyst who claimed in an FT piece that someone could create a 30 second track (that being the cut-off when you start to get a payment from Spotify), upload it to the service, and then program their phone to play that single track on hard rotation. The suggestion was that you would earn $1,200 a month in royalties.
Worth grabbing an old phone, hooking it up to Wi-Fi and put it in a shoebox somewhere? And much easier than burning vast amounts of energy on your bitcoin mining farm?
A BBC report suggests not, based on a post from Spotify CEO Daniel Ek who said that it’s not how their royalty system works.
While it’s certainly the case that you’d probably be breaking Spotify’s terms and conditions against artificially inflating play counts, I suspect that the real reason is that Spotify uses the Big Pool method to attribute payments. In essence, all Spotify’s rights revenues go into a big pool and they then get divided up against the overall listening model. That means any listening I personally do – even streaming one single song 24/7 – is going to get vastly watered down by the overall millions who are listening to vast quantities of Taylor Swift, BTS or Harry Styles. Even though my account would be streaming 86,000 “tracks” a month, unless I can get a lot of friends to do likewise, it’s not going to help me much.
Spotify’s website also notes: “The royalty payments that artists receive might vary according to differences in how their music is streamed or the agreements they have with labels or distributors.”
Swedish Criminal Gangs Money Laundering Cash via Spotify
This was reported in the Swedish Svenska Dagbladet newspaper, and an AFP version of the story appeared in The Guardian. The idea here is that gangs use the money from illegal activities to pay for “false” Spotify streams (we assume botnets doing this streaming), of songs published by artists with gang ties.
So the gangs convert the money to cryptocurrencies, then pay the botnets to stream specific artists. This in turn delivers revenues which are now completely legitimate. The money has been laundered.
The suggestion is that Swedish gangster rap is a particular genre where this is prevalent. The bonus for the gangs is that if the songs are pushed high enough up the charts by the fake listens, they get discovered by real listeners, only increasing the payouts.
The suggestion in the piece is a million streams pays around 40,000-60,000 Swedish kronor (£2,800-£4,300).
To begin with, that’s a completely different scale of payouts compared to the grift above where less than 100,000 streams equated to $1,800 theoretically. But even assuming the numbers are right, this does seem to require:
- Getting rap acts on board who surely need to be given at least some of the cash
- Ensuring that Spotify doesn’t spot the dodgy botnets doing all the fake streaming
- That if you’re converting the money to cryptocurrencies it’s not just as easy to convert it back to partially launder it
It feels like quite a complex scheme to launder some ill-gotten gains.
In a statement to Podnews, Spotify said it had not found “any data or hard evidence that indicates that the platform is being used at scale in the fashion described.”
White Noise Podcasts
Unlike the other two grifts mentioned here, this feels like it was a real one, because it was Spotify who reportedly identified it, and Spotify who has since closed the door on it.
Initially coming from a report by Ashley Carmen in Bloomberg, this is more about people using “podcasting” platforms like Spotify for Podcasters (formally Anchor) to make significant sums via “white noise” podcasts.
Lots of people use sounds like waves, static or other sounds to fall asleep to, concentrate on work or whatever. So enterprising creators have created podcast series featuring these sounds. These so-called white noise and ambient podcasts deliver around 3 million hours a day of consumption according to the Bloomberg piece based internal documents seen by them.
And because Spotify has been algorithmically favouring speech content – i.e. podcasts – these kinds of titles get a big push.
Creators who make these titles earn money via advertising that Spotify sells in them, especially the case with some of the premium ad formats that Spotify was allowing these titles to be part of. Spotify realised that they were paying around €35m in revenues to these creators when they could be directing traffic to their own equivalent audio!
In other words, if I want to hear the sound of waves crashing along the shore, why play a “podcast” that will pay out revenue to creator, when Spotify can direct listeners its own “rights free” recordings of waves crashing?
Subsequent reports suggest that from October 2023 will no longer allow white noise podcasters to participate in their Ambassador Ads programme. They can, however, still gain revenues from regular ads.
Of course, there is still the case that if I’m putting wave noises on to get me to sleep at night, I’m not really hearing any mid-roll ads during the podcast, so not an amazing deal for the advertiser. (To be fair, lots of people get to sleep with podcasts, although they might rewind in the morning to get back to what they last remember hearing).
So most of these grifts are suspect and aren’t clearly likely to work very well. I suspect that much more likely to work is putting inexpensively “produced” AI-generated music onto Spotify and trying to game the system over the long-term. “Frank Sinatra” singing a personalised Happy Birthday to Adam? “Abba” singing Anti-Hero? “Elvis Presley” singing Ever Loser Wins, the lyric version of the theme to Eastenders (actually sung by Nick Berry). Or just about anything you care to imagine. I suspect that this is the area that real spoils are going to be made.