The Spotify Scam - this is how criminals made millions with Spotify

Imagine if there was a foolproof method of generating millions of clicks practically at the push of a button. With such a high number of clicks, it's easy to build up a regular income as a musician on Spotify and gain notoriety at the same time. But what if the millions of clicks don't actually come from real users? In this article, we take a look at one of the biggest Spotify Scams that the company has had to deal with since its inception.

This is how the basic concept of Spotify works

Before we dive in to this specific case, let's first take a look at how Spotify works. Basically, musicians earn money on the mega-platform through the number of streams on their own music. The exact amount depends on whether they are premium subscribers or "normal" subscribers and in which country the stream was generated (where the listener is). For example, 1,000 hits in the USA would generate an average of 3.97 US dollars in 2018. From this example, you can see that—especially with fewer streams—there is little return for new musicians or bands.

Accordingly, it seems tempting to artificially push up the number of your own streams; to create a hype around one's own song and to cleverly undermine the entire concept. Not without reason, the songs in this particular scam were just a little more or even less than a minute long, in order to be able to generate as many streams as possible within the shortest possible time. But how exactly did this method work and what was the process behind it?

The scam: Automated streams of your own music

Many rip-off artists created their own playlists for this purpose, which were filled with numerous short songs. The duration was just over the minimum length for payouts, which is 30 seconds on Spotify. So the automation began. The goal: Play the songs with new premium accounts as often as possible, over and over again, in succession. Probably the most famous playlists that worked according to this trick were "Soulful Music" and "Music from the Heart". According to insiders, the scam was mainly controlled from the Bulgarian region.

But is it even worth signing up for new Spotify Premium accounts to access the same music over and over again? In the case of the big scam, there were more than 1,200 new subscriptions whose accounts were used for the same songs over and over again. For this reason, we calculated how this strategy pays off in practice:

• Cost: 9.99 euros per premium account per month.
• Revenue: at least 0.003 euros per stream. We calculate with a song duration of 40 seconds.

Based on this song duration, 90 streams per hour are possible. This results in hourly revenues of 0.27 euros per account. If we extrapolate this to a day, it is already 6.48 euros that are generated by the automated playback of the songs. On a monthly basis, an account alone can generate almost 200 euros in revenue for the respective musician.

If we assume 1,200 purchased premium accounts as described, the costs of just 12,000 euros per month are offset by an enormous turnover of over 233,000 euros. Without even one natural click, this results in monthly profits of over 220,000 euros.

How was the scam uncovered?

The scam continued undetected for a whole four months until the monstrous click numbers were discovered and the associated playlists were blocked. Since then, very close attention has been paid to ensuring that the accounts exhibit natural user behavior and are not active in continuous operation. But even today, this strategy is still used to create artificial hype for new releases or to artificially push new musicians. So far, there has been no real progress in slowing this trickery.

Due to the lack of attention at the time, streaming providers like Spotify have now reacted with new monitoring processes. The platforms analyze very precisely how many streams each account generates from a song per week and how many other users have streamed the song. The number of further downloads of the respective account is also tracked. If there are a disproportionate number of short song streams, there is a threat of closer scrutiny.

What are the legal consequences of streaming fraud?

For music lovers who use Spotify in their free time, on the way to work or on the weekend, the new safeguards are harmless. As a rule, you will not notice whether your profile is checked or not. The aim of the new procedure is simply to detect streaming fraud more quickly and stop it immediately. If fraud is detected, action will be taken more quickly.

As soon as the action is demonstrably fraudulent, the music can be permanently removed from the platforms. In this case, Spotify also no longer has to pay out the remuneration earned up to that point. Depending on the terms of use and individual agreements with the platform, however, legal consequences may also be threatened in a case such as the aforementioned major scam. If, for example, it is clearly stated that only clicks of real accounts with natural user profiles are evaluated and automated streams are clearly prohibited, there is a threat of high damages.

The calls for a new billing model are getting louder

However, since minor fraud and artificial manipulation can never be completely ruled out, many musicians have been calling for a new billing model for several years. This way, especially the big stars benefit from high payments. For new musicians, however, at most a small pocket money remains. For this reason, the "Fair Share" initiative is calling for a completely new concept.

This provides for the revenue to be divided between the artists after deducting the operating costs for the respective platforms, irrespective of the volume of streams. Only the clicks of premium subscribers count here. Clicks from ad-supported accounts are not included in this calculation. Even though this model would mean lower payments, especially for larger artists, musicians like Sarah Connor, Helene Fischer and Marius Müller-Westernhagen support this approach. However, there is no change in sight.

How to respond to obviously fake accounts

Therefore, it is more important to be attentive as a user and to act quickly in case of possible fraud. Fraud on the scale seen so far not only harms the platform itself, but above all the musicians and bands, who will earn even less from their music in the future. For this reason, you should always pay attention to the following warning signs or even report them:

• Playlists with short songs only
• Friends playing the same song on continuous loop
• Unknown artists with many millions of streams

Our tips for earning an honest dollar on Spotify

Even if the current payment model makes it difficult for new musicians to celebrate their first successes, Spotify can be very worthwhile for you as a musician. Our article on Spotify marketing shows you in detail what a successful marketing mix on the platform looks like and how you can achieve more awareness. The following tips will also help you to work on your own first successes with Spotify and to expand the number of your streams fairly:

1. Create real sympathy. This will bolster your own fan base in the long run, to whom you can also sell CDs or with whom you will fill small halls for your first concerts.
2. Spotify is one platform among many. Therefore, opt for other channels as well and make sure that your music gains universal relevance among your target audience.
3. Create your very own style of music. If you want to start a band or are looking for fellow musicians, the many personals for musicians here at mukken are guaranteed to help you.
4. Make your music as unique as possible. With a modern style that is not comparable to other artists, you don't need to rely on generic 30-second songs.
5. Be open to exciting collaborations. Most of the time, it's the first contacts with other already-experienced musicians that lead to a successful start for you.

More reading tips for you

• Everything you need to know about marketing on Spotify
• Branded as a YouTube cover guy - Leroy Sanchez
• Music streaming services compared - the differences
• The music industry in numbers - here's how the market has changed

Matching personals for musicians - here at mukken!

Would you like to get in touch with new musicians yourself and discuss topics such as Spotify fraud or marketing on Spotify? Then you'll find exactly the right musicians for exciting projects here at mukken. We connect you with people who are burning for a lively exchange and love music as much as you do. Take a look at our other articles to learn more about the music industry. You'll learn more about how to market yourself musically, get lots of details about your favorite instruments, and pick up valuable tips for your music career.