New report claims Spotify has become ‘criminal tool’ for money laundering

For most users, Spotify is just a platform to access millions of songs, create playlists, and enjoy the gift of music anytime, anywhere. While this is the intent and purpose of the digital streaming service, it appears that some unsavory characters of found a use for the platform that is far more sinister and even criminal in nature.

One of the biggest areas of contention and intrigue for music streaming is the royalty payouts and the ability to manipulate streams in order to collect a paycheck. Reports of artists and individuals uploading silence or white noise and then streaming for extended periods of time to extract payments. Now it seems that criminal gangs are utilizing Spotify as a means for money laundering as revealed in a bombshell new report from the Swedish newspaper, Svenska Dagbladet, which collects insights from gang members as well as police sources on the issue. According to anonymous sources, Spotify has become a sort of ATM for gang-related activity in which illegally obtained cash is converted to Bitcoin and then used to buy fake streams on Spotify. From there, various gangs and associations collect the royalty streams while boosting an artist, a practice that is most common in gangsta rap genres.

“I don’t want to sell people out, this is very sensitive. It’s about more than buying streams. If you’re a network and you want to attract kids and you have a rapper who’s going big, that’s half the job for you. It is very good for recruiting purposes.” – Anonymous source

This report follows up on a study by the Centre National de Musique which claims that up to 3% of streams on Spotify are fraudulent, but that doesn’t account for fake streams that aren’t picked up by the platform’s detection systems. While Spotify did not speak directly with Svenska Dagbladet, it did issue a statement regarding the report and fake streams on its service:

“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 streaming statistics down 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. In order not to make it easier for someone trying to manipulate the system, we do not share details about specific methods.

“We are one of the few streaming services that publish information about our measures to combat manipulation of streams in industry studies. We are members of the Music Fights Fraud Alliance where several players in the industry work together to combat fraud on various platforms, and we provide artists with educational materials that show the damage that manipulation of streams brings.”

Image credits: Spotify