A Bulgarian scam cost music platform Spotify a potential $1m in royalties in 2017. That’s the verdict of sources in a report from Music Business Worldwide. The Bulgarian operation is as yet unidentified, and could well be an individual rather than a group. It allegedly uploaded a number of third-party playlists, created numerous fake Spotify accounts to improve their play counts, and “earned” money from Spotify’s percentage-based pay scheme.
Not a single law broken
An executive from a top music label first realised what was going on in September of last year in the music platform’s regular revenue roundups, which are sent out to members of the industry. It was too late to do anything about it at that point, however. Nicholas Crouch, fraud prevention expert from Scams.info, tells us the really crazy part: they didn't break a single law! Eventually, Spotify traced the two playlists back to an operation running out of Bulgaria. The tracing took place with ISRC codes (a world-wide system capable of identifying music and music videos).
The two playlists shot up Spotify’s international playlist charts, which monitor the playlists that bring Spotify the highest revenues. The playlist included approximately 500 songs with just 1,200 listeners each. The majority of tracks were around 30 seconds, which was cause for suspicion, as that’s the minimum duration a song needs to be played before its considered a valid statistic by Spotify.
Doing the math
The 1,200 followers may have been genuine listeners, streaming for hours at a time. The most likely scenario, however, is that a scamming operation created 1,200 premium Spotify accounts and set the 500 tracks to play on a continual, random loop. That many accounts at $9.99 per month each might seem expensive ($12,000), but the payouts were considerably more.
Spotify’s average payout per play is $0.004. If there are 500 30-second songs playing on an automatic loop around the clock for a whole month, that’s a total of 72 million plays. That would earn the Bulgarian operation $415,000 per month.
Working towards a solution
That’s just for a single playlist. The other one that aroused suspicion was generating similar numbers. There could well be others that have yet to be uncovered. Sources from Music Business Worldwide believe that the operation was taking place for months before Spotify was notified of the discrepancies. Spotify acted after being notified by deleting the majority of the tracks on the playlists. The company said that it’s improving how it detects and removes tracks. It would be a nightmare for them to take it to the extreme, however, by manually screening each of the 20 million tracks in its database. It seems that there’s no clear way of achieving this consistently and thoroughly. It isn't even as though it's the only problem that the site has been forced to confront over the past 12 months.
Until Spotify finds a solution, an industry of streaming scam artists will continue to boom. Streaming and copyright entertainment lawyer John Seay told Quartz in 2016 that such scams will likely only increase, and it’s debatable whether it will cost thousands of dollars or millions. He cited click fraud as then being a new tactic for scammers attempting to boost their bank balance with untitled dollars. The Bulgarian Spotify scam isn’t so much original as it is easy and scalable.
