In a shocking report by Sweedish newspaper Svenska Dagbladet dated September 5, 2023, it has been revealed that organized criminal networks, with ties to drug trade and violence, have been exploiting a loophole in Spotify’s streaming model, for the purpose of money laundering. The newspaper substantiates these allegations by citing protected sources, including four verified members of criminal gangs based in Sweden and an anonymous police informant.
According to the article, the police unit associated with the anonymous police informant asserts that “Spotify has become a criminal tool” and suspects that these criminal groups are funneling money from illicit activities such as drug trafficking, robberies, fraud, and assassination missions through the platform, resulting in potentially millions of laundered funds each year.
In Sweeden, one million streams pays about 40,000 to 60,000 kronor (£2,800 to £4,300) according to the Guardian which also reports that in 2022, “Sweden registered 90 blasts and another 101 cases of attempted bombings or preparations for bombings, as well as 391 shootings, 62 of them fatal, according to police data.”
The modus operandi reportedly involves converting proceeds from criminal endeavors into Bitcoin through clandestine dealings with cryptocurrency traders found on Facebook. These ill-gotten cryptocurrencies are subsequently used to purchase fabricated music streams for artists affiliated with criminal networks, and the earnings from these fake streams are collected.
One anonymous law enforcement source is quoted as saying, “Spotify has become an ATM for them,” highlighting the direct link between these activities and the associated violence.
19 year old Nils Kurt Erik Einar Gronberg, popularly known as Einar, was Sweden’s most streamed artist on Spotify in 2019 and released three chart-topping albums, winning several Swedish Grammys and other music awards.
He was shot multiple times outside an apartment building on October 21, 2021 in the southern Stockholm suburb of Hammarby Sjöstad.
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The article further indicates that this practice is particularly prevalent within the Swedish “gangster rap” music scene, with connections to rappers allegedly involved in criminal activities.
The report comes after a French study from France’s Centre National de Musique reported that up to 3% of music streams on services like Spotify are known to be fraudulent. However, this number represents only the detected “fake streams” and does not encompass undetected instances.
Svenska Dagbladet reached out to Spotify for comment, and the platform, through its Nordics-based communications manager, stated that they have no evidence of money laundering occurring via Spotify. They emphasized their commitment to combating manipulated streams, claiming that less than one percent of all streams on Spotify have been identified as tampered with.
Music Business Worldwide released a statement from Spotify saying, “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.”
Spotify
This report underscores the growing concern within the music industry regarding streaming fraud and the need for measures to combat it. Music industry leaders, including Universal Music Group’s Sir Lucian Grainge and Sony Music Group Chairman Rob Stringer, have called for changes in royalty payout models to address this issue. Additionally, a global task force comprised of music companies has been formed to tackle streaming fraud.
Deezer, a prominent music streaming service, has also outlined its strategy to combat fraudulent streaming activity on its platform, emphasizing the urgency of addressing this problem within the industry.
