Spotify Uses “Ghost Artists” to Minimize Royalty Payouts, New Report Alleges

Spotify has long presented itself as a champion of artists and democratized music, a platform where artists and listeners connect within a frictionless, meritocratic ecosystem. But behind the polished image lies a troubling reality: the Perfect Fit Content (PFC) program, a secretive initiative revealed in Liz Pelly's forthcoming book, Mood Machine: The Rise of Spotify and the Costs of the Perfect Playlist, which suggests profit is the utmost priority in the platform's playlisting ecosystem.

The program, according to Pelly's reporting in Harper's Magazine, is designed to embed low-cost, royalty-free tracks into Spotify's most popular mood- and activity-based playlists. Produced by a network of "ghost artists" operating under pseudonyms, the tracks are commissioned with the intent to reduce the company's royalty payouts to artists, per Pelly.

Piloted in the 2010s, the PFC initiative has since infiltrated hundreds of Spotify playlists, according to Pelly's investigation. The deals are said to typically pay the program's artists modest upfront fees while Spotify and its partners retain all rights to the music, thereby recognizing substantially more profit by promoting the reach of ghost tracks on its platform.

The program's effects extend beyond the individual musicians who relinquish ownership of their intellectual property. Once celebrated as avenues for artistic discovery, playlists have become tools for cost-cutting while musicians who are attempting to make a livable wage off their craft are pushed aside in favor of disposable, low-cost content.

The revelations about PFC echo similar controversies surrounding Spotify's "Discovery Mode" program, in which artists trade royalty cuts for a boost in algorithmic promotion. Both initiatives seemingly exemplify the platform’s willingness to engineer its ecosystem in ways that benefit the company's bottom line at the expense of musicians.

"Spotify had long marketed itself as the ultimate platform for discovery—and who was going to get excited about 'discovering' a bunch of stock music?" Pelly explained. "Artists had been sold the idea that streaming was the ultimate meritocracy—that the best would rise to the top because users voted by listening. But the PFC program undermined all this."

You can read Pelly's full report here.