What happened

Spotify has reportedly been systematically promoting non-existent or low-cost artists, referred to as "ghost artists," to fill certain playlists - notably in genres such as ambient, sleep, "focus" and lo-fi hip-hop -  with cheaper music.

Specifically, Spotify created an internal programme called Perfect Fit Content (PFC) in which employees listed music produced by specially commissioned production companies - including Epidemic Sound, Firefly Entertainment, Hush Hush LLC and others - on the app's curated playlists.

The aim of PFC is to unobtrusively manipulate users of the Spotify app into listening to low quality music produced by entities listed under fake or pseudonymous names - some of it reputedly AI-generated - and thereby reduce the percentage of royalties paid to actual artists.

The practice reportedly began around the mid-2010s and became a significant profitability scheme for Spotify by 2017. Investigations revealed many of the fake artists accumulated millions of streams.

Why it happened

By flooding popular playlists with low cost generic music, Spotify allegedly algorithmically diminishes the overall share of streams that go to established artists, thereby lowering their royalty rates during negotiations with record labels. 

The practice is seen as part of a broader trend where streaming services seek to optimise costs and maximise revenue in an oversaturated music streaming market.