What “ghost artists” tell us about the music industry in 2019

Have you heard the song Moonbeams by Greg Barley? No? How about Stairs and Steps by Charlie Key?

These two artists have only released four songs between them but have amassed over 40 million views on Spotify alone. That seems particularly impressive given that neither has any marketing campaign or social media profile whatsoever — — no Facebook page, no Twitter profile, no website, nothing. So what’s the deal with these spectacularly successful, strangely reclusive artists?

The fact is that both Barley and Key are “ghost artists”, also referred to as “fake artists”: they don’t actually exist in the real world. First reported by Music Business Worldwide in 2017, a ghost artist’s sole purpose is to pad out easy listening playlists on music streaming sites. Their songs appear on first-party Spotify playlists with titles like Peaceful Piano, Deep Focus, Sleep, and Ambient Chill that attract millions of listeners.

But this is not just an isolated curiosity — in total, more than 50 ghost artists account for 2.85 billion streams on Spotify alone. Based on the standard industry estimation of $.004 per stream, if Spotify were paying the usual royalty rate for these streams, it would have cost $11.4 M. Of course the suspicion is that Spotify has acquired the rights for these songs at a significant discount, although this hasn’t been definitively verified.

Music Business Worldwide did manage to track down an enigmatic Swedish duo, Andreas Romdhane and Josef Svedlund, who created the music behind at least 50 ghost artists. Many of the other artists are pseudonyms for another Swedish music factory: Epidemic Sound, which boasts on its website that it offers “unlimited use” of its catalog and charges “no royalty fees”.

Fake artists tell us something important about how the music industry has changed. The move from physical to digital media has drastically reduced the margins on each song and album which is sold. Streaming platforms have reacted in a similar fashion to other industries in these circumstances: Faced with razor thin margins in retail, supermarkets responded by introducing own-brand products to cut costs on the production side. But until recently, music was a leisure activity where cost was not the primary determinant of sales. Do we really want a music listening experience akin to Aldi value-saver marmalade?

In an excellent podcast series on the digitalization of music, musician Damon Krukowski lamented that in the age of streaming, the economic imperative is to create music which can scale. To understand the precise dynamics of this, you need to understand Spotify’s “service-centric licencing model”. At first blush, this process seems pretty common sense. The total pot of revenue generated throughout Spotify is divided by the total number of streamed songs to calculate the per-stream rate (typically around $.004). The per-stream rate is then multiplied by the number of plays for each artist to calculate what they are owed.

However, this system tends to disadvantage artists that have a small, passionate following. To illustrate this, imagine that Spotify has only 10 users who each pay $10 and that there are five artists on the platform: Katy Perry, Ed Sheeran, Charlie Key, Ariana Grande and Bjork. User 5 pays $10 a month and listens to nothing other than Bjork. In this case, you might imagine that she would receive $10 in revenue. In fact, however, in the simplified example of the service-centric licencing model outlined below, she would only receive $8.36 because her plays are diluted into the overall pool of streams. The 323 streams of Charlie Key make this dilution effect even greater by reducing the per-stream rate.

This is probably what streaming services like Spotify are trying to take advantage of by putting ghost artists on prominent first-party playlists. As these playlists are intended to relax or even send the user to sleep by design, there is a good chance that they will remain playing for a significant amount of time with very few skipped tracks. This is how the likes of Charlie Key racks up millions of streams. Adding ghost artists to prominent streams means that less streaming revenue goes to the major artists and labels — or in the words of one music executive, the goal is to “water down our beer”

At Utopia Music, we envisage a music industry that marries the convenience and accessibility offered by digitization with a passion and appreciation for quality music. For this reason, we want to help provide artists and the wider industry with a larger and more reliable revenue stream. To do this, we are using cutting edge technologies like blockchain to track what music is being played globally in real time and properly compensate artists for their creative work. Find out more here .

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