Why Spotify’s fake artists problem is an Epidemic. Literally.

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MBW’s revelations about Spotify repeatedly adding ‘fake artists’  to its key playlists have been the talk of the global music business this week.

Yet one nagging question has been raised time and again in response, both by those up in arms about the news and by those who reckon it’s a lot of fuss about nothing: what exactly does Spotify have to gain by feeding its listeners these pseudonymous artists?

Today, MBW can reveal the source behind a swathe of these fictitious performers: Stockholm-based production music company Epidemic Sound.

But we can also confidently, finally, suggest what might be in it for Spotify.

The answer was beautifully described to us by one livid record label exec yesterday as “watering down our beer”.

No surprise, he’s British.


On Monday (July 10), MBW discovered that Swedish production duo Andreas Romdhane and Josef Svedlund (pictured), better known as Quiz & Larossi, had made the music behind at least eight of the 50+ fake artists.

After our story, we were told that their contribution to the practice was small fry compared to another Swedish company: Epidemic Sound.

A big giveaway: Spotify’s ‘related artists’ feature links a handful of composers who are represented by Epidemic to many of the fake acts revealed by MBW in our initial list of 50.

These include: Jeff Bright Jr, Greg Barley, Lo Mimieux, Charlie Key, Amity Cadet, Benny Treskow and Mia Strass.

Fictional artists we hadn’t previously noticed, now believed to be pseudonyms of Epidemic’s composers, include Tonie Green, Sigimund, Julius Aston and Grobert.

Before this next bit, we’re going to repeat an important caveat from our previous story: the quality of output recorded by these figures is not under question.

They have won rave online reviews from fans – especially classical music fans – desperate to find out who they really are.

These are, undoubtedly, fake artists. But their music is obviously written and performed by people. Evidently, very talented people.

Actual, real-life Epidemic composers likely to be behind at least some of the above names include Peter Sandberg, Gavin Luke and Rannar Sillard.


So what’s the problem?

It’s two-fold. The first bit, we can be pretty certain of.

Like many production houses before it, Epidemic Sound outright buys copyrights from artists.

In the company’s own words: “We pay upfront for the tracks, i e. we acquire the financial rights.”

Epidemic tells would-be clients that they will receive a “one-time compensation” for each track with “no royalties” because “payment [to artists] is never based on usage”.

That explains why the firm further admits: “Regrettably we’re not able to work with members of collecting societies (BMI, ASCAP etc.) at the moment.”

Once an artist has signed that contract and taken that check, their music is the property of Epidemic Sound.


We know for a fact that Epidemic-owned songs, under fake artist names, are being added to Spotify playlists with uncommon regularity.

As a result, they are collectively racking up hundreds of millions of streams.

We don’t know what Spotify is paying Epidemic Sound for the rights to these songs.

However, we have a strong suspicion that it’s considerably less than what Spotify would pay for non-production music – and is either based on a single upfront payment, or a low-cost renting/subscription model.

Again, in Epidemic Sound’s own words: “[Our] fixed fee subscription model give broadcasters, TV networks and online content platforms unlimited access to our library without traditional rights restrictions and limitations.”

One really odd thing.

In its ‘fake artists’ denial, Spotify said: “We pay royalties – sound and publishing – for all tracks on Spotify.”

Epidemic Sound’s brand tagline? Hand-picked, royalty free music.

[Whatever Spotify is paying Epidemic Sound, the latter company has now told MBW: ‘When we distribute our tracks via streaming services we pay the composer upfront for the track and, in addition, we split all revenues from Spotify 50/50 with our composers.’ Epidemic has also confirmed, however, that it owns 100% of the rights to this music.]


So, then… “watering down our beer”.

As eloquently explained by analyst Mark Mulligan through here, Spotify licenses music on a ‘service-centric’ basis.

In layman’s terms, that means that for each payment period, it pools every stream on its platform – and then pays out based on the total percentage of plays that each artist banks.

(This is why, even if you pay $9.99 a month and play nothing but Bill Withers, he will only ever see a sliver of your cash. Your money gets pooled with everyone else’s before being distributed – and today’s biggest hits take the lion’s share.)

So what would happen if Spotify was able to secure a significant discount on a tranche of fake artists – perhaps “hand-picked royalty free” artists – and then promote them so heavily they end up with hundreds of millions of streams?

Bingo. It would inevitably reduce the playcount share of every other artist, and every other label, on its service.

“Watering down our beer.”

Geddit?


The second part of ‘why this might sound a bit… y’know’ is something that both Spotify and Epidemic Sound strongly deny.

What if Spotify directly commissioned Epidemic Sound and/or its clients to create music – which then got a direct free pass on to Spotify’s first-party playlists?

As we’ve demonstrated, it’s a system that would appear to be in Spotify’s economic interests.

For a company which has fought tooth and nail to reduce the percentage of its revenue being paid to labels in the past year, it would certainly be a handy method to secure some margin relief by stealth.

Especially with playlists like ‘Deep Sleep’, which are designed to be send you into a cosy slumber – and could then continue to play for hours on end as you snooze.


Many indicative factors around this story seem more than a little strange.

For starters, why are the fake artists created by Epidemic clients seemingly waltzing onto Spotify playlists with millions of followers each and every time – when real life artists and labels bemoan the Swedish company’s rigorous pitching and curation process?

Almost every single fake artist we’ve identified – and we’re way above 50 now – has attracted millions of streams via playlist inclusion.

In fact, we can’t find any fake artists that haven’t been included on Spotify’s first-party playlists.

As one US music publishing industry insider told Variety: “These playlists have been marketed as being highly curated by experts. Doesn’t this put [Spotify’s] entire credibility and integrity in question?”


In addition, a point we’ve made over and over: surely it can’t be coincidence that all of this music is completely exclusive to Spotify?

If you were a rights-holder looking to make the most of your recorded music, even under a pseudonym, wouldn’t you want it being played everywhere from Apple Music to iTunes to YouTube to TIDAL?

This seems to indicate some form of exclusive relationship between Epidemic and Spotify for these tracks. And that smells like a direct deal.

Funnily enough, that’s another question for Spotify: Didn’t you guys come out and say you didn’t do artist exclusives?

Or does that only apply when the artists in question are actually in the land of the living?


Earlier today, MBW contacted Oscar Hoglund, co-founder and CEO at Epidemic Sound.

Hoglund (pictured) – a very successful producer in his own right – confirmed that Epidemic is behind many of the fictitious artist names on Spotify that MBW had identified.

We promised him we’d run his statement in full, so here goes.

“It is correct that some of the composers on your list work with Epidemic Sound. The music that they produce was not commissioned by Spotify and these are certainly not ‘fake artists’ – that term is offensive.

“These are professional composers, who earn a living by creating quality music. As is often the case with songwriters and indeed mainstream pop artists, some composers choose to work under their real names whilst some prefer to use pseudonyms.

“The tracks are of a very high quality, and as a result, are picked up by the curators at Spotify for their playlists.”

“Epidemic Sound has been making music for almost ten years. Our tracks generate more than 10 billion views per month on YouTube and Facebook alone. Consequently, we receive many requests for our music to become available via streaming platforms.

“12 months ago we started to distribute some of our music via Spotify. This is a great platform for composers as it increases their income and gives them the recognition they deserve.

“The tracks are of a very high quality, and as a result, are picked up by the curators at Spotify for their playlists. We, and our composers, are proud that the songs feature on these playlists.”


Only one last point to make from us before we put this all to bed.

We got to wondering if there might be any direct relationship between Spotify and Epidemic Sound in existence.

Then we found one. A very intriguing one.

In 2014, Epidemic Sound raised $5m from a fellow Swedish company, Creandum – ‘the leading Nordic venture capital firm investing in innovative and fast-growing technology companies’.

Epidemic Sound recently doubled its valuation to $45m.

In 2007, Creandum – whose homepage proudly carries a photo of Daniel Ek – became the first institutional investor in another Swedish company, Spotify.

Spotify was recently said to be valued at $13bn.

To be clear: there is no proof that Spotify, which lost $600m in 2016, could be reducing the percentage of revenue it pays out to content partners by filling popular playlists with fictitiously-named production music.

There is also no proof that its investors simply love the cool, crisp taste of watered down beer.Music Business Worldwide

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  • Dana Longnecker Drury

    Indie artists have so much stacked against them and now the streaming platforms are loaded up with fakes so these companies can avoid paying royalties! If this goes across all streaming platforms, it could put all legitimate artists and labels out of business, leaving only fake artists and illegitimate music left…

    • Alecca

      According to the article, the music created by Epidemic Sound is of highest quality, also explaining later why it is picked up by the Spotify editors. So this tells us two things: Make high quality music only! That matters a lot. And mastering is vital and can make a difference between getting onto a playlist or not according to my own experiences.
      So we should stop moaning about this and instead focus on making high quality music, which would make Spotify more likely to spend royalty on. But this doesn’t take away the fact that Spotify need to find alternatives to cut down royalty. Otherwise if Spotify continues to bleed, there will be no Spotify any longer. And that would not be found. I heard that Soundcloud is a risk of dying, and this could happen to Spotify to. I’d rather see some Epidemic Songs on the playlists and Spotify gets better finances rather than Spotify would go bankrupt. And if you as an artist make good music in highest quality, in a style that has a potential, your music has a chance to get exposure, trust me. By the time your music will be discovered, if it has potential. Regardless of fake artists or not. It is the good content that matters, not how many Epidemic artists on the playlists. And if Epidemic content is good, and it’s a good deal for Spotify, so just accept it. It is like in any other business, the one who can provide the best stuff for the best price who win the competition. If you have a sweet product and sell it for a lower price than your competitors, your apple will be sold. That’s market.

      • Dan

        Why are so many people willing to give Spotify the benefit of the doubt here? There is plenty of high quality music that isn’t on these playlists because Spotify would actually have to pay for that high quality music. Stop blaming musicians for the failures of the people with all the money who are controlling things!

        We made a deal that apples will be picked at a certain price and some people are secretly picking apples for less. The solution is not to pick more cheap apples.

        • Edwin Joassart

          We give them benefit of the doubt because : “there is no proof that Spotify, […], could be reducing the percentage of revenue it pays out to content partners”. And before they’re proved guilty, they’re not!

          • Dan

            So since some record companies screwed artists over in the past it’s OK for Spotify to screw us too?

          • Apparently. Chic eyeglasses apparently fit as well on the disingenious.

        • Anna Valandar

          You and every other person only wanting to pay just a few bucks for limitless music are the reason Spotify has to think like this.

        • Jeff Meacham

          I have the benefit of being a simple end user of Spotify. I am not a streamofile, a technologofile, a blockchainofile, a conspirofile, a musicalartistjusticeofile, or any other -ofile. I pay $10/month for access to music I enjoy. When I decide that’s not worth it, or there’s a better platform, I will quit. The rest of you can spend your time negotiating royalties. I’d love to help, but I’m focused instead on listening to great music.

      • jfu222

        You must be joking. Their music is not “quality” stuff and Epidemic has been BUTCHERING the music industry for years. They are leading the charge in the devaluation of music publishing and the erosion of performance royalties for composers.

        • Anna Valandar

          Tell me this: how would you calculate performance royalties in the age of the internet? Per view? Let say, you use music for your youtube vid and your vid goes viral, and suddenly collects 100mil. views, how will ANYBODY be able to pay royalties?
          So you gotta compose it yourself to avoid future possible bankruptcy, but if your not a musician, what do you do? Use super crappy music? No. You use services like Epidemic Sound.

          Also, lets keep in mind that these composers are obviously not forced to work with them. They are free to join a collecting society and collect their royalties. There must be something in their deal with Epedemic Sound that makes it worth their while….

          • jfu222

            To be fair the reason why this problem even exists is because of an antiquated and disjointed (global) royalty system. That’s created a space for companies do to all sorts of (shady) things that ultimately hurt the composer. We are in a state of transition Anna. They were saying the EXACT same thing you stated about royalties on cable tv when it first came out …cable paid NOTHING …now look at it. Do you really think the internet is not the future of most visual content? Royalties exist because they are transmitted via a medium …whether that’s tv, film, radio,…it doesn’t matter. It’s just another medium. And for the record youtube does pay royalties in addition to their monetization program. Companies like Epidemic dangle a carrot of “up front cash” so they can take the writers share of royalties and then offer the music to clients as “hassle free” …so what happens when the internet catches up to the royalty system? All of those composers are out of luck and even worse it creates a trend (which is happening) for NETWORKS to insist on a direct performance license so they don’t have to pay PRO annual fees…basically it is threatening the royalty income stream for ALL composers …not just a few Epidemic composers who went for the quick cash. It’s an absolute race to the bottom.

        • vintermann

          That accusation was leveled at Naxos too, and Folkways Records before it. Both operated on the principle of “buying out” works whole or in part. They used it ideologically, to subsidize more niche music at the expense of that which sold well.

          Classical musicians used to hate Naxos, said what you’re saying now that they’re murdering us. But eventually, Naxos built up such a big catalog that everyone has found something in there that isn’t recorded anywhere else, which they really loved (or needed, as part of studies etc.) So now they’re grudgingly accepted.

          Folkways, of course, is a treasure trove. If it was a physical place it’d be an UNESCO world heritage site.

          Production music libraries are not so different. There too, musicians trade the dream of the gravy train, income in perpetuity, for predictability. I suspect that one day, archives of production music from earlier decades will be appreciated just like Naxos and Folkways (go listen to it, there’s a lot of it on Spotify). There’s a room for this financing model today too.

    • While this and pretty much all of the laws surround copyrights and paying musicians are complete bs and need to be updated, don’t lose faith. The live show is where most musicians have made a good chunk of their money always (and hopefully forever more), so even if you don’t feel like you can help in this arena going to live shows, throwing money in the bucket, buying merch and albums when you’re vibing is a HUGE help. No matter what these companies do, we indie artists have more avenues than ever to circumvent them. But yes we need to fix.

    • > fake artists and illegitimate music

      If this music didn’t serve just fine for the listeners, they’d have hit fast-forward. They didn’t, so it is.

      If an indie artist literally can’t outdo muzak, it’s hard to see how that isn’t a problem with the indie artist.

      (and, y’know, I’m the guy who spends money at Bandcamp.)

      • Dan

        They can’t outdo muzak because the muzak is specifically being requested by Spotify to add to playlists that they curate instead of other real songs that they would have to pay more money for. And they’re lying about it.

        • If the muzak wasn’t up to scratch, people would be hitting fast forward. They’re not.

          • Dan

            No one said the music was bad, we’re mad that Spotify is making shady deals to avoid paying royalties to musicians.

          • I’m waiting for the searing MBW expose on Kevin Spacey as a FAKE ACTOR!! because he’s paid by Netflix to be in House Of Cards, instead of Netflix getting its content from Hollywood as God intended.

            Of *course* Spotify is going to produce its own content, i.e. become a label.

          • Anna Valandar

            You did read the party where Epidemic says they pay their artists 50% of the royalties they receive from Spotify, right? What Indie Lable artist can claim 50% of their Spotify-Royalties? Why are Epidemics Artists somehow less real than ones who signed with a lable?

      • vintermann

        Well, this proves the music is adequate. I still think competitors have a legitimate grievance if the music is fast-tracked to the official playlists.

  • Great investigative journalism and reporting! Well done Tim!

    • Jeoff Harris

      Yeah, I was pretty pissy about the earlier articles, but this is much more thorough. Got some things to think about.

      And I’m halfway through your book, Ari! Thanks for being a boss.

  • Aero

    As a mere Spotify enduser, I would be more than happy to pay more if the royalties ended up going to the artists that I listened to. Will still buy CDs and Vinyl at a gig though.

    Have found so much new music through Spotify but would like the model to change to ensure that the right people end up getting what they deserve.
    Not sure what the answer is to padded playlists other than to not listen to them but the average user will not really care and just wants some background noise to sleep or study to.
    Was unaware of the ‘service centric’ model; the ‘user centric’ model described in the link seems fairer unless anyone knows to the contrary?

    • Thank you for supporting musicians!!!

    • vintermann

      WiMP (which was bought out and became Tidal) commissioned a study on impact of a user centric model from “Sky & Scene”, a study group at the University of Oslo. They concluded that the model would make very little difference for the big record companies – Sony would make the same, Universal and WMG & EMI ever so slightly less, and Phonofile (a big Nordic label) slightly more.

      Predictably, only Sony of the big international labels were positive to it.

      I would also be willing to pay more for a user-centric model. I would have subscribed to Youtube Red if they went for a user-centric model (as initial reports said they would) but they didn’t. The incumbents that benefit from the current key fight tooth and nail against any changes.

  • Dave Lombardi

    “…gives them the recognition they deserve”? How does that work for artists going by pseudonyms?

    • Knowles222

      and want to use pseudonyms. As the verge article insinuates.

  • This is pathetic. The listeners have literally proven that this music is just as good for their purposes as what the labels put out – because if it wasn’t, they’d have hit fast forward. We’re talking about live-action A/B testing!

    If the labels literally can’t outdo muzak, it’s time to get better A&R departments.

  • vintermann

    “But their music is obviously written and performed by people. Evidently, very talented people.”

    Well, I listened to some of it, and I think at least a few of the piano pieces are programmed. You can’t tell a high-quality physically modeled piano from the real thing these days, and the precise dynamics and timing stand in contrast to how simple these pieces are. If you are this mechanically precise as a pianist, why do you never use more than one finger in your right hand?

    But there is also programmed piano music on spotify (labeled as such) that is really good.

  • jon

    Still trying to understand what’s wrong with Epidemic or Spotify here.

    Epidemic finds a way to make the music industry even remotely resemble a standard business model. Somehow that’s awful and they should stick to 360 contracts that offer measly royalties like every label ever?

    What even does this have to do with Spotify? Innuendo and assertions based on barely any evidence?

    • They’re not giving even more free money to the labels, as God clearly intended.

  • Cospe

    I make music for Epidemic Sound.

    In the past, I pitched songs for major record labels and publishers.
    Lots of work for free, because “that’s how the industry works”.

    If I got lucky one of my songs got pitched to an artist. Then they get 50%, a co-producer gets 25% and I am left with 25% of which my publisher wants half.
    Then the label pitches the song to radio stations and Spotify curators, music supervisors etc.

    Epidemic give me money up front for each song, and then 50/50 of the streaming revenue.

    I get to make my own music, with my own style, with me as an artist.

    Whats wrong with that?

    Sincerely
    Cospe

    • Tim Ingham

      Thanks Cospe.

  • megaboy

    Well now, let’s not conflate the issues here. The first is: consumers rule and who cares if the music is done by real musicians or algo’s: if consumers love it….there’s no stopping it…kind of like comparing “real athletes” to e-sports competitors,,,if consumers love em—that’s the world we live in.

    Then there’s the notion of Spotify gaming their own top playlists. Yeah and surprised? Would it be better to just let labels “sponsor” their way to game the lists or do you really think it’s all about honest curation? by Spotify.

    Spotify’s job is to delight consumers..users…us and they are doing a really good job at that. Artists deserve a fair shake…100….but @ 70% of streaming revenue now where does that go? 80-90-100? That’s what happened to promoters in the 70’s and 80’s and now what? An oligopoly…and that’s good?

    So, if users @ Spotify love what they hear….Spotify’s job is to rationalize more of it….they are supposed to be a for profit corporation vs. the BBC or NPR. (both of which are precious public resources)

    So, watering down the beer?….No. Actually inventing “lite” beer which in the spectrum of beer drinking…has its place. Not my choice..but it is my wife’s:)

    • Catherine Cathy Shapiro

      Hold on, I care. If the music is made by a real artist? Absolutely! That person should get paid. If these people are nothing but ghosts, though…how can you trust anything you purchase from one of these music services?! it’s not just watering things down. That’s equivalent to Fake News, and should not be allowed.

  • R__W

    Does Epidemic Music make money? Or is it just pennies via the streaml subsidized via VC capital.

  • csgmiike

    Ethereum based SingularDTV and several other blockchain (ethereum based or not) based platforms are attempting to shake all of this up and put the artists in control, things are changing.

  • Hessel van Oorschot

    Hi Tim, a well balanced article. Thank you.

    I do understand why Oscar (Epidemic) is offended by the term fake artists but I also understand news sources like MBW have to use “strong language” these days to get noticed.

    To the defense of Spotify, they have to figure out a more healthy business model. Paying hundreds of millions a year to major labels for access to hit repertoire (even if none of these tracks are being played) is not healthy.

    So as long as Spotify can offer their customers a fun mix of hit repertoire and quality alternative recordings I don’t see the problem.

    And creating a quality mix for popular playlists should not be as black & white as hit repertoire vs “production” music. We (Tribe of Noise) and similar music companies representing independent artists out there are more than willing to curate and offer good quality music for all kinds of streaming music services.

    And don’t be surprised if major labels are paying attention to this trend as well.

  • Paul Absol

    To be honest, I’m not sure if I understand this superficial drama…

    So we have a streaming service, which in a way redefined playlisting. Playlists become extremely popular way of consuming music. Every user can create their own playlist. No-one is going to prison if they add or not-add a certain song. They don’t need to explain themselves why they created a certain playlist the way they did.

    But that’s not all. Just for suggestion/editorial purposes/general enjoyment, the streaming service itself creates playlists as well. They are obviously very popular, because they are coming from a familiar source (service’s editors) and don’t require user’s time or effort to create. Millions of people stream those playlist, millions of people like/love/enjoy them. If they don’t they can create always their own… Clear.

    Now as I understand, here’s the interesting bit… the streaming service adds songs that are specifically targeted to be on those playlists, but they don’t come from Sony/Universal/Warner/Indie (either label or publisher).

    And?

    And people still enjoy those songs. As MBW argued in their articles, they have millions of streams… because people liked/listened to them.

    So what the ‘livid label people’ mean by ‘watering down the beer’ is – if a playlist doesn’t have certain number of songs from catalogue of UMG/SMG/WMG etc. it’s fake, bad, scandalous… I believe they forget that users can always create their own playlists if they don’t like the content of the Spotify’s. It is not a secret that the royalties in the streaming model are paid on competition (/logic) basis – the popular song earns more than the unpopular song. This level of fuss/drama/outrage would be understandable if the streaming service swap the content of a major artist’s album with some other content, still displaying as the original. But it’s not happening and it will not happen because people/users/fans would figure it out in a moment and would stop listening.

    It seems like the major labels once again forget about their mistakes with downloads that gave birth to piracy and yet again put the ego and the dream to rule on top of everything. Why can’t we work with and appreciate the technology that works for us and for everyone? And if you think it doesn’t, the problem isn’t in this story, but in industry’s greed to milk one of the greatest successes of our industry to the maximum, even if it rips it off.

    @mbw everyone appreciates your detective skills and understands it’s a story of the month, due to its little thrill of excitement, but please please please… spare us another article about the very same thing again – everyone gets it. I promise.