Money for nothing
February 25, 2018 12:06 PM Subscribe
The Great Big Spotify Scam. Music Business Worldwide tells how two playlists swindled the Spotify's royalty pool in at least one million Dollars - legally.
The process was simple (and detailed more thoroughly in the article): a (allegedly) Bulgarian individual uploaded 400 songs barely clocking over the 30 seconds Spotify requires before paying royalties and created two playlists. Then acquired 1200 Premium accounts (with a market cost of 12k monthly) that played continuously those playlists throughout the whole day, meaning a total of 60k plays monthly for a single account, or 72 million for the 1200 accounts, making a potential monthly payout of $288k - or even more, if bots were used to skip after 31 seconds. With the scam running for at least four months before it was caught by major labels due to it's success (as it was beating a lot of major-backed playlists in the popularity charts), it may have returned anything around 1.1 and 1.6 millions.
This approach is not new: indie band Vulfpeck released Sleepify in 2014, an album of silent, 30 second snippets designed to be left to play on loop while their fans were asleep and meant to finance their upcoming tour, paying out slightly over $20k before being removed from the service.
According to musically.com, the Music Managers Forum believes this should re-ignite the discussion around royalties on streaming platforms, particularly moving towards user-centric models, where each users' subscription is funneled and split between the holders of the music they listen rather than a royalty pool that calculates how much each individual stream pays out.
The process was simple (and detailed more thoroughly in the article): a (allegedly) Bulgarian individual uploaded 400 songs barely clocking over the 30 seconds Spotify requires before paying royalties and created two playlists. Then acquired 1200 Premium accounts (with a market cost of 12k monthly) that played continuously those playlists throughout the whole day, meaning a total of 60k plays monthly for a single account, or 72 million for the 1200 accounts, making a potential monthly payout of $288k - or even more, if bots were used to skip after 31 seconds. With the scam running for at least four months before it was caught by major labels due to it's success (as it was beating a lot of major-backed playlists in the popularity charts), it may have returned anything around 1.1 and 1.6 millions.
This approach is not new: indie band Vulfpeck released Sleepify in 2014, an album of silent, 30 second snippets designed to be left to play on loop while their fans were asleep and meant to finance their upcoming tour, paying out slightly over $20k before being removed from the service.
According to musically.com, the Music Managers Forum believes this should re-ignite the discussion around royalties on streaming platforms, particularly moving towards user-centric models, where each users' subscription is funneled and split between the holders of the music they listen rather than a royalty pool that calculates how much each individual stream pays out.
It's a side effect of low volume users and high volume users being thrown into one big pool of money. If the system included directly allocating royalties on a per user basis it would be entirely immune to this attack but the labels would probably see a reduction in revenue. Labels basically use this feature of the royalty pool anyway to make sure they see the lion's share. They're just pissed someone figured it out and are doing it better.
posted by Talez at 12:28 PM on February 25, 2018 [10 favorites]
posted by Talez at 12:28 PM on February 25, 2018 [10 favorites]
I bet the same thing is happening with Amazon’s kindle unlimited program.
posted by schadenfrau at 12:31 PM on February 25, 2018 [3 favorites]
posted by schadenfrau at 12:31 PM on February 25, 2018 [3 favorites]
I suspect you're right, schadenfrau. It doesn't take much browsing through new releases on Kindle Unlimited to find works such as I'm on This time I remember my surprise when I got acquainted with the notes of one "average", authored by one "francescaadr leonafed."
posted by skymt at 12:40 PM on February 25, 2018 [8 favorites]
posted by skymt at 12:40 PM on February 25, 2018 [8 favorites]
Reminds me of Todd Snyder's Talkin' Seattle Blues
Now, to fit in on the Seattle scene
You've gotta do somethin' they ain't never seen
So thinkin' up a gimmick one day
We decided to be the only band that wouldn't play a note
Under any circumstances
Silence
Music's original alternative
Roots grunge
posted by DingoMutt at 12:41 PM on February 25, 2018 [3 favorites]
Now, to fit in on the Seattle scene
You've gotta do somethin' they ain't never seen
So thinkin' up a gimmick one day
We decided to be the only band that wouldn't play a note
Under any circumstances
Silence
Music's original alternative
Roots grunge
posted by DingoMutt at 12:41 PM on February 25, 2018 [3 favorites]
but the labels would probably see a reduction in revenue.
The musically link goes a bit into the details of that, and the details are a bit murkier than that.
But I would expect that with a user-centric model (that I've been defending for years) if there was a risk of the Ed Sheerans, the Beatles and the Taylor Swifts seeing a substancial drop in their bottom line, they'd remove the tracks immediately until they cut a deal where they'd get a massive upfront payout (which could theoretically increase the operating costs, and instead of, say, 30% of the subscription going to pay for service maintenance and the rest to distribute for the artists, it could go 50/50). And i'm not even sure if that's not happening already.
posted by lmfsilva at 12:55 PM on February 25, 2018
The musically link goes a bit into the details of that, and the details are a bit murkier than that.
But I would expect that with a user-centric model (that I've been defending for years) if there was a risk of the Ed Sheerans, the Beatles and the Taylor Swifts seeing a substancial drop in their bottom line, they'd remove the tracks immediately until they cut a deal where they'd get a massive upfront payout (which could theoretically increase the operating costs, and instead of, say, 30% of the subscription going to pay for service maintenance and the rest to distribute for the artists, it could go 50/50). And i'm not even sure if that's not happening already.
posted by lmfsilva at 12:55 PM on February 25, 2018
Wow
Look what you can do when you read the syllabus
posted by entropone at 1:37 PM on February 25, 2018 [31 favorites]
Look what you can do when you read the syllabus
posted by entropone at 1:37 PM on February 25, 2018 [31 favorites]
Nothing in the rule book says an elephant can't pitch
posted by chavenet at 1:46 PM on February 25, 2018 [5 favorites]
posted by chavenet at 1:46 PM on February 25, 2018 [5 favorites]
I bet the same thing is happening with Amazon’s kindle unlimited program.
It does, that’s why there are so many six page “books” on Amazon.
posted by corb at 1:50 PM on February 25, 2018 [5 favorites]
It does, that’s why there are so many six page “books” on Amazon.
posted by corb at 1:50 PM on February 25, 2018 [5 favorites]
Spotify's revenue model has always been terrible[*] for indie artists; perhaps events like this will lead them to a model that is better not just for the corporation but for artists as well.
[*]: Really, really terrible: see infographic here.
posted by splitpeasoup at 2:39 PM on February 25, 2018 [1 favorite]
[*]: Really, really terrible: see infographic here.
posted by splitpeasoup at 2:39 PM on February 25, 2018 [1 favorite]
So, let's do the math:
1200 premium accounts, costing $12k/month, playing 31 second tracks 24/7 causes Spotify to pay out $288k/month.
Taking the average real track length to three and a half minutes, we can divide $288 by seven and get $41.1k/month.
There's 168 hours in a week. If someone plays music all day at work, assuming a 40 hour work week, that's 23.8% of the week, that costs $9,700-ish a month in royalties.
Mucking around with the numbers, it looks like if you listen to Spotify for more than a third of the day, every day (or roughly half your waking hours), you cause them to pay out in royalties more than you pay for a premium subscription. This ignores their operating costs and the free trials that are so easy to get.
How do they make any money?
posted by krisjohn at 3:16 PM on February 25, 2018 [8 favorites]
1200 premium accounts, costing $12k/month, playing 31 second tracks 24/7 causes Spotify to pay out $288k/month.
Taking the average real track length to three and a half minutes, we can divide $288 by seven and get $41.1k/month.
There's 168 hours in a week. If someone plays music all day at work, assuming a 40 hour work week, that's 23.8% of the week, that costs $9,700-ish a month in royalties.
Mucking around with the numbers, it looks like if you listen to Spotify for more than a third of the day, every day (or roughly half your waking hours), you cause them to pay out in royalties more than you pay for a premium subscription. This ignores their operating costs and the free trials that are so easy to get.
How do they make any money?
posted by krisjohn at 3:16 PM on February 25, 2018 [8 favorites]
I’d venture that the overwhelming majority of paid subscribers aren’t listening nearly that much.
posted by Itaxpica at 3:34 PM on February 25, 2018 [5 favorites]
posted by Itaxpica at 3:34 PM on February 25, 2018 [5 favorites]
Huh. Ok, revised: I bet it USED to happen with Amazon’s kindle unlimited program, and then Amazon closed that little loop hole by announcing they’d only pay for pages read the first time they’re read. No reread money for scammer accounts.
So if I’m correct, a scammer would have to publish a massive amount of new titles (pages) per month to make it profitable (or even worthwhile). Based on quick googling, like 12.5k new pages per month just to break even per month?
That’s a clever fix.
posted by schadenfrau at 3:50 PM on February 25, 2018 [1 favorite]
So if I’m correct, a scammer would have to publish a massive amount of new titles (pages) per month to make it profitable (or even worthwhile). Based on quick googling, like 12.5k new pages per month just to break even per month?
That’s a clever fix.
posted by schadenfrau at 3:50 PM on February 25, 2018 [1 favorite]
1200 premium accounts, costing $12k/month, playing 31 second tracks 24/7 causes Spotify to pay out $288k/month.
Taking the average real track length to three and a half minutes, we can divide $288 by seven and get $41.1k/month.
There's 168 hours in a week. If someone plays music all day at work, assuming a 40 hour work week, that's 23.8% of the week, that costs $9,700-ish a month in royalties.
Mucking around with the numbers, it looks like if you listen to Spotify for more than a third of the day, every day (or roughly half your waking hours), you cause them to pay out in royalties more than you pay for a premium subscription. This ignores their operating costs and the free trials that are so easy to get.
Sure, if someone listens to Spotify for 56+ hours a week, then they only break even on that subscription. That's far from the typical use case.
posted by kafziel at 3:50 PM on February 25, 2018 [1 favorite]
Taking the average real track length to three and a half minutes, we can divide $288 by seven and get $41.1k/month.
There's 168 hours in a week. If someone plays music all day at work, assuming a 40 hour work week, that's 23.8% of the week, that costs $9,700-ish a month in royalties.
Mucking around with the numbers, it looks like if you listen to Spotify for more than a third of the day, every day (or roughly half your waking hours), you cause them to pay out in royalties more than you pay for a premium subscription. This ignores their operating costs and the free trials that are so easy to get.
Sure, if someone listens to Spotify for 56+ hours a week, then they only break even on that subscription. That's far from the typical use case.
posted by kafziel at 3:50 PM on February 25, 2018 [1 favorite]
Out office has a Sonos speaker that people connect their Spotify accounts to. I'm sure 56+ hours a week is more common than you'd think.
posted by 922257033c4a0f3cecdbd819a46d626999d1af4a at 3:55 PM on February 25, 2018
posted by 922257033c4a0f3cecdbd819a46d626999d1af4a at 3:55 PM on February 25, 2018
This approach is not new: indie band Vulfpeck released Sleepify in 2014, an album of silent, 30 second snippets designed to be left to play on loop while their fans were asleep and meant to finance their upcoming tour, paying out slightly over $20k before being removed from the service.
Can I just jump in to say that Vulfpeck's other (funk/soul) albums are all total bangers, and you should all go listen to them all right now. You'll end up listening to them all day, on repeat, and it won't because of a scam.
posted by His thoughts were red thoughts at 4:51 PM on February 25, 2018 [9 favorites]
Can I just jump in to say that Vulfpeck's other (funk/soul) albums are all total bangers, and you should all go listen to them all right now. You'll end up listening to them all day, on repeat, and it won't because of a scam.
posted by His thoughts were red thoughts at 4:51 PM on February 25, 2018 [9 favorites]
I recognize some of the names/artists on those Bulgarian playlists.
posted by aielen at 5:54 PM on February 25, 2018 [1 favorite]
posted by aielen at 5:54 PM on February 25, 2018 [1 favorite]
Sure, if someone listens to Spotify for 56+ hours a week, then they only break even on that subscription. That's far from the typical use case.
finally I win one against capitalism
posted by AFABulous at 10:37 PM on February 25, 2018 [6 favorites]
finally I win one against capitalism
posted by AFABulous at 10:37 PM on February 25, 2018 [6 favorites]
Sure, if someone listens to Spotify for 56+ hours a week, then they only break even on that subscription.
----
Sounds like overbooking.
posted by filtergik at 2:24 AM on February 26, 2018
----
Sounds like overbooking.
posted by filtergik at 2:24 AM on February 26, 2018
It also depends on what they stream for 56+ hours a week. If it's Sheeran or Taytay, then Spotify will be writing their label a hefty check, so that they don't take their ball and go home. If it's your regular jobbing indie bands or distressed-inventory back catalogue, they'll get the regular rate. And if it's algorithmic playlists, part of the mix will be ambient piano-and-synth noodling from some dude in Stockholm who was paid a flat rate for it as a work for hire, which is pure profit.
posted by acb at 4:43 AM on February 26, 2018 [1 favorite]
posted by acb at 4:43 AM on February 26, 2018 [1 favorite]
How do they make any money?
They spent USD$369 million they didn't have last year. Source
posted by Ogre Lawless at 6:04 AM on February 26, 2018 [2 favorites]
They spent USD$369 million they didn't have last year. Source
posted by Ogre Lawless at 6:04 AM on February 26, 2018 [2 favorites]
I've also noticed a number of "Spotify Studios" recordings, or something like that — basically they are bringing artists, mostly mid-tier ones from what I can tell, into a recording studio to do exclusives. These get listed as "Spotify Sessions" at least when they are individual tracks.
I'm a bit murky on how royalties work exactly, but I think even if the artist did one of their standards, or a cover (and many, if not most, of the Spotify Sessions tracks are covers) which is presumably available on another album, I think Spotify then only has to pay songwriting royalties plus, I assume, whatever compensation it took to get the artist into the studio in the first place.
Anyway, people I know who are more into the music business than I am have suggested that it can be a win-win for artists who are off-contract with labels, and it might be a way for artists to basically retroactively screw a label if they got a bad no-digital-revenue deal in the past, by getting new content in front of listeners on terms that might be more favorable than an old record company deal.
posted by Kadin2048 at 6:41 AM on February 26, 2018
I'm a bit murky on how royalties work exactly, but I think even if the artist did one of their standards, or a cover (and many, if not most, of the Spotify Sessions tracks are covers) which is presumably available on another album, I think Spotify then only has to pay songwriting royalties plus, I assume, whatever compensation it took to get the artist into the studio in the first place.
Anyway, people I know who are more into the music business than I am have suggested that it can be a win-win for artists who are off-contract with labels, and it might be a way for artists to basically retroactively screw a label if they got a bad no-digital-revenue deal in the past, by getting new content in front of listeners on terms that might be more favorable than an old record company deal.
posted by Kadin2048 at 6:41 AM on February 26, 2018
Just finished reading this related article The Problem with Muzak concerning Spotify's sponsored playlists and algorithms
posted by abhardcastle at 7:34 AM on February 27, 2018
posted by abhardcastle at 7:34 AM on February 27, 2018
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posted by lmfsilva at 12:18 PM on February 25, 2018