April 13, 2024

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Spotify refutes the claim that a 30-second trick leads to wealth

Spotify’s CEO has refuted the notion that users can exploit the platform’s royalty system by repeatedly listening to their own 30-second tracks to accumulate significant monthly earnings. This claim, initially put forth by JP Morgan financial analysts, suggested that Spotify subscribers could amass $1,200 per month by incessantly streaming their 30-second song 24/7. The implication was that Spotify’s royalty structure could be manipulated for financial gain.

However, Daniel Ek, the CEO of the streaming service, has firmly contradicted this theory, explaining that it does not align with how Spotify’s royalty system functions. While the idea initially appeared in the Financial Times and was subsequently discussed on social media, Ek emphasised that such a strategy would not lead to substantial earnings.

This debate has raised concerns about artificial streaming practices, where devices are used to play specific tracks repeatedly in a loop. JP Morgan executives estimated that as much as 10% of all music streams are artificially generated, which could be detrimental to the music industry’s integrity.

Recent reports even suggest that criminal organisations have exploited Spotify’s royalty system to launder money obtained through illicit drug transactions. Spotify’s website clarifies that they operate with two tiers of royalties, and artists receive payments on a monthly basis, but the actual amount can fluctuate based on various factors.

Spotify’s royalty payments are not calculated on a per-play or per-stream basis, contrary to popular belief. Instead, the payments artists receive can differ based on factors like how their music is streamed and the specific agreements they have with labels or distributors.

In response to these concerns and the evolving landscape of music streaming, Universal Music Group and Deezer have announced plans to launch a joint music streaming model. This model aims to provide higher royalties to artists, particularly when users actively select and listen to their music. Consequently, this initiative could put pressure on platforms like Spotify and Apple Music to reconsider and potentially adapt their own royalty models in response to the changing industry dynamics.