Spotify is padding out listeners’ playlists using “ghost artists” to reduce its royalty costs, a new report has claimed.
According to Liz Pelly’s findings in Harper’s Magazine, the ghost artists are appearing on all sorts of popular playlists from jazz and classical to lo-fi hip-hop. It effectively lowers the amount of royalties Spotify pays genuine musicians while increasing their overall profit margins.
This practice is known as “Perfect Fit Content” (PFC) and was introduced to Spotify’s editors in 2017. It was designed to maximise profit by partnering with numerous production companies, mostly based outside the US.
Pelly notes that when the news of this issue first broke, a Spotify spokesperson claimed the allegations were “categorically untrue, full stop”, and denied the company was creating its own fake-artist tracks.
“But,” she continued, “while Spotify may not have created them, it stopped short of denying that it had added them to its playlists.”
The report also acknowledges research by music writer David Turner, who used analytics to show Spotify’s “Ambient Chill” playlist had been wiped of artists like Brian Eno, Bibio, and Jon Hopkins. Instead, it featured tracks from Epidemic Sound, a Swedish company offering a subscription-based library of production music, including stock material usually used for adverts and TV programmes.
One former employee said of the practice: “Some of us really didn’t feel good about what was happening. We didn’t like that it was these two guys that normally write pop songs replacing swaths of artists across the board. It’s just not fair. But it was like trying to stop a train that was already leaving.”
The report claims that the practice is reducing the royalties paid to legitimate artists. Meanwhile, payments are going to the PFC partners, who also create material for hundreds of artist profiles, most of which are entirely empty and have been found to generate inconclusive searches.
By 2023, several hundred playlists were reportedly being monitored by the team responsible for PFC. Over 150 playlists, including “Ambient Relaxation,” “Deep Focus,” “100% Lounge,” “Bossa Nova Dinner,” “Cocktail Jazz,” “Deep Sleep,” “Morning Stretch,” and “Detox,” consisted almost entirely of PFC.
“Many of the playlist editors — whom Spotify had touted in the press as music lovers with encyclopedic knowledge — are uninterested in participating in the scheme,” the report continues. “The company started to bring on editors who seemed less bothered by the PFC model.”
Another source claimed the company’s attitude seemed to be: “If the metrics went up, then let’s just keep replacing more and more, because if the user doesn’t notice, then it’s fine.”
Spotify’s royalty payments have been in the spotlight throughout 2024. In August, it was reported that CEO and founder Daniel Ek earned more money from the platform in the past 12 months than any other artist ever has. He also outraged the internet earlier this year when he claimed the cost of making content was “close to zero”.
They also caused controversy by demonetising all tracks that have been streamed less than 1,000 times in the last 12 months.
Spotify, however, is continuing to rake in the cash. Ek said after the streamer’s Q3 earnings were released that the company has “never been in a stronger position”.
