IMPEL CEO Sarah Williams, one of the industry professionals who’s weighed in on a bombshell report about fake Spotify streams’ alleged role as a money laundering tool for criminals in Sweden. Photo Credit: IMPEL
Music industry organizations including IMPEL and the IMPF are reacting to a bombshell report about Spotify’s alleged role as a money laundering tool for “criminal networks.”
Svenska Dagbladet just recently published an in-depth Swedish-language piece on criminals’ alleged use of Spotify – and particularly fraudulent streams on the Stockholm-headquartered platform – to launder money. According to the report, “crime proceeds” are converted into Bitcoin, which is then used to purchase artificial streams for tracks associated with the culprits.
Assuming these streams aren’t flagged by Spotify, the works at hand then rack up royalties, climbing the charts and generating genuine streams as well as further compensation in certain instances, per the report. “Successful rappers, with links to crime” are said to have started labels to collect the involved income.
“In Swedish gangster rap,” the outlet elaborated, “strict authenticity requirements have been set – you have to live as you rap in order not to be a fraud. Artists have been backed by the networks in order to live up to the authenticity requirement and get ‘back,’ i.e. patronage.
“The networks have then been allowed to use the rappers for their own purposes, such as money laundering. Therefore, rappers have become hard currency in the underworld,” Svenska Dagbladet explained.
As initially mentioned, several industry organizations have reached out to Digital Music News with responses to the shocking report – and comments about the need to stop the disconcerting alleged trend.
Independent Music Publishers’ E-Licensing (IMPEL)
“IMPEL is glad to see Svenska Dagbladet shining a light on the role of organised crime in the business of fraudulent streams,” said IMPEL CEO Sarah Williams. “Challenging as it is, we can’t turn away from our shared responsibility for tackling this issue. Organised crime has many victims and as an organisation dedicated to securing value for the song, we do not want to see songwriters and publishers included in that list.
“Equally, as an organisation whose mission is also efficient, swift royalty payments for rightholders, we don’t want the industry to be blown off this course by the problem caused by these bandits. The quicker the pay out, the easier it is for bad actors to take the money out of reach of legitimate stakeholders. So, we need solutions.
“At the moment, various industry players and groupings are looking for suspicious patterns in the data and trying to tackle the problems that they reveal. It’s very welcome but we must avoid an a[d] hoc approach.
“We need comprehensive, integrated initiatives that attack this multi-headed hydra from all angles. We also need transparency from and co-operation between DSPs. Whilst streaming has created opportunities for criminals to siphon off huge sums, the wealth of data created by the digital industry is also our friend in this fight, provided we use it collectively,” concluded the almost five-year IMPEL head.
Independent Music Publishers International Forum (IMPF)
“Reports that suggest streaming fraud is funnelling significant revenue towards the activities of organised crime are incredibly disturbing and increase pressure on streaming platforms to stamp out the practice as a matter of urgency,” the IMPF reacted.
“Fraudulent streams have been a growing problem for some time now, with the recent French Study (Centre National de Musique) estimating they could make up 3 % of all streams – a figure that represents only those streams which the services can actually detect.
“Not only are independent publishers and legitimate music companies suffering financial damage as a result, but the suggestion that this issue is aiding and abetting violent criminals means it must become a critical priority for streaming services.”
Spotify
Responding to the Svenska Dagbladet report in a statement, a Spotify spokesperson said in part: “Manipulated streams are a challenge for the entire industry and a problem that Spotify is working hard to combat. It is important to know that Spotify does not make any payments directly to artists, but to rights holders and distributors. It is equally important not to misunderstand the extent of the problem with manipulated streams. Thanks in part to the fact that our payouts are not real-time, our systems detect and address anomalies before they reach material levels.
“We have also improved the identification of artificial streams and developed faster measures to take as soon as we become aware of them. For example, we can withhold payouts, adjust down streaming statistics and completely suspend users from the platform. There is always more work to do, but our automated processes and manual monitoring are market leading – less than one percent of all streams on Spotify have been determined to be tampered with.”
