Has Spotify Been Creating Its Own Music To Avoid Paying Royalties To Artists?

It has never been easy for artists to earn a living making music, and it has only gotten harder as consumers have shifted from purchasing physical recordings to streaming music on digital platforms like Spotify. These difficulties have been exacerbated by Spotify’s efforts to increase profitability, such as the company’s recent move to cut off payments for artists with under 1,000 yearly listeners, but according to a new report by Liz Pelly in Harper’s Magazine, the company has taken other, more troubling measures, allegedly going so far as to fill playlists with its own music to avoid paying royalties to real artists.

Per Pelly’s reporting, Spotify launched a program in 2017 to produce Perfect Fit Content, or PFC, as a way to increase revenue by promoting songs commissioned by the company and attributed to fake artists and labels over other music. The program began with Spotify’s recognition that many listeners use the platform not to stream specific artists, but to have something playing in the background while doing other things. Playlists like Ambient Chill, Lo-Fi House, and Chill Instrumental Beats have become increasingly popular, leading the company to question, “Why pay full-price royalties if users were only half listening?” as Pelly puts it.

Spotify began working with production companies to produce PFC—companies like Hush Hush LLC—and allegedly encouraged playlist editors to lean on this content rather than songs for which the company had to pay higher artist royalties. When some editors were reluctant to participate, the company brought in new editors to curate mood and activity playlists like Ambient Relaxation, Deep Focus, Bossa Nova Dinner, Cocktail Jazz, Deep Sleep, and Morning Stretch that were predominantly comprised of PFC. Pelly notes that Spotify denies encouraging playlist editors to privilege PFC over other content and that staffers were discontented with the program, but the company does not deny commissioning or promoting PFC.

Related: Why Is The Price Of Spotify Premium Going Up?

To be fair, the practice of creating cheap background music to avoid paying licensing fees is nothing new. Retail stores, hospitals, and other businesses that play background music have long relied on so-called “muzak” and “elevator music” for just this purpose, and with so many influencers and companies on social media trying to avoid the complications of licensing music for their content, there is a huge market for affordable, generic stock music.

Also, some legitimate artists have received employment opportunities from production companies to produce PFC, but the arrangements between these artists and the production companies are often characterized by an imbalance of power and exploitation. Pelly connected with one musician who called the creation process “brain-numbing” and “pretty much completely joyless” grunt work, adding, “You’re just a piece of furniture.” He seemed to not fully understand how the program worked, saying, “I just record stuff and submit it, and I’m not really sure what happens from there.”

A different musician told Pelly “the creative process was more about replicating playlist styles and vibes than looking inward,” while another said they stopped making PFC because “it felt unethical, like some kind of money-laundering scheme.”

Rather than owning the master or publishing rights, these artists get paid a small upfront fee and the companies buy the songs outright. “I’m selling my intellectual property for essentially peanuts,” one artist said. Some PFC tracks garner millions of streams, but the composers go uncredited and uncompensated as Spotify rakes in the profits.

Pelly highlights how the very notion of PFC distorts our understanding of music’s purpose, writing, “This treatment of music as nothing but background sounds—as interchangeable tracks of generic, vibe-tagged playlist fodder—is at the heart of how music has been devalued in the streaming era.” She goes on to point out how it also primes listeners to accept music created by generative-AI. As machine learning models become more advance, it is only a matter of time until they are able to replace the human artists altogether.

In the context of musicians’ ongoing struggle to share in the revenue of the streaming platforms profiting off their creativity, there is something disturbing about Spotify supplanting real artists with its own music and assuming listeners won’t know the difference. As the music industry continues to search for a path toward sustainability in an increasingly digitalized world, such programs benefit corporations like Spotify but subtract from the already meager royalties paid to real artists trying to earn a living off their work.

Read Liz Pelly’s full report in Harper’s Magazine here.