Opinion.
One of our editors asked us to look into Spotify’s business practices. It did not take long to find the rot. Spotify ghost artists are filling your curated playlists, a class action lawsuit alleges the recommendation engine runs on “modern payolaIllegal payment made to radio stations to play specific songs. Modern versions use indirect mechanisms like reduced royalty rates in exchange for algorithmic promotion.,” and the per-stream payout to actual musicians hovers around a third of a cent. The world’s largest music streaming platform has become remarkably efficient at one thing: making sure as little money as possible reaches the people who make the music.
Spotify Ghost Artists and the Perfect Fit Content Program
In January 2025, music journalist Liz Pelly published an investigation in Harper’s Magazine titled “The Ghosts in the Machine,” based on her book Mood Machine: The Rise of Spotify and the Costs of the Perfect Playlist. What she documented was specific and structural.
Since 2017, Spotify has operated an internal initiative called Perfect Fit Content (PFC). The company commissions tracks from a network of international production companies. These tracks are produced by anonymous musicians working under pseudonyms, then inserted into the platform’s most popular mood and activity playlists. “Ambient Relaxation,” “Cocktail Jazz,” “Bossa Nova Dinner”: these playlists are now largely composed of Spotify ghost artists. Thousands of PFC tracks have accumulated millions of streams.
The purpose is financial. By replacing licensed music from real artists with work-for-hire content, Spotify reduces its royalty obligations. A commissioned track costs a fraction of what a genuine artist’s song would generate in royalty payments. The Spotify ghost artists program lets the platform retain more of the revenue pool while listeners believe they are hearing curated selections from real musicians.
Spotify’s official response was to call these reports “categorically untrue, full stop.” The internal documents and employee testimony Pelly obtained tell a different story.
Discovery Mode: The New Payola
If Spotify ghost artists represent the supply side of the extraction, Discovery Mode is the demand side. Launched in 2020, the program offers artists and labels a proposition: accept a reduced royalty rate, and Spotify will boost your tracks in its algorithmic recommendations.
In November 2025, a class action lawsuit filed in Manhattan described this arrangement as “modern payola.” The central allegation is straightforward: listeners are never informed when a track has been promoted through Discovery Mode, creating the false impression that recommendations are neutral and personalized when financial incentives are quietly driving the algorithm.
The structural trap is elegant in its cruelty. An independent artist who opts into Discovery Mode accepts lower pay per stream in exchange for visibility. An artist who does not opt in watches their music sink in the algorithm relative to tracks from competitors who did. Either path costs the artist money. Both paths benefit Spotify.
Traditional payola (paying radio stations to play specific songs) was banned in the United States after congressional hearings in 1960. Discovery Mode achieves a functionally similar result through a different mechanism: instead of paying for placement upfront, artists pay with their future royalties. The Recording Academy has publicly questioned whether this distinction is meaningful.
The 1,000-Stream Floor and the Audiobook Trick
In April 2024, Spotify introduced a minimum threshold: tracks must reach 1,000 streams in a rolling twelve-month period to generate any royalties at all. Below that line, the money those streams would have generated is redistributed upward to more popular tracks.
Spotify framed this as an anti-fraud measure designed to “deter artificial streaming.” The practical effect is that roughly two-thirds of Spotify’s catalog, predominantly independent and emerging artists, was cut off from the royalty pool entirely. The redistributed amount was approximately $46 million per year, shifted from small artists to large ones.
Then there is the audiobook bundle. In late 2023, Spotify reclassified its Premium subscription as a “bundle” of music, podcasts, and audiobooks. This was not a product improvement so much as a legal maneuver. Under U.S. copyright law, bundled services pay lower mechanical royalty rates than standalone music services. The National Music Publishers’ Association estimated that this reclassification would cost songwriters approximately $150 million per year in lost mechanical royaltiesPayments owed to songwriters and music publishers each time a song is reproduced, performed, or distributed by a streaming service..
Spotify simultaneously raised subscription prices. The individual plan went from $10.99 to $11.99. The price went up; the songwriter’s share went down. That is not a coincidence. It is a business model. We have written about this pattern before: platforms that sell back features that were once free while extracting more from the people who create value. Spotify is not an exception to the rule of platform enshittificationThe gradual degradation of online platforms as they shift loyalty from users to advertisers: first attracting users with a good product, then extracting value from them, then abandoning them entirely in favor of revenue.. It is one of the clearest examples.
The Numbers, Compared
Spotify pays artists between $0.003 and $0.005 per stream. At the midpoint, an artist needs roughly 250 streams to earn a single dollar. A million streams, a milestone most musicians will never reach, generates about $4,000 before the label and distributor take their cuts.
Now consider the alternatives.
Qobuz pays an independently audited average of $0.01873 per stream: roughly five times the Spotify rate. The French streaming service generates average revenue of $121.13 per user per year, compared to an industry average of $22.38. This gap is partly structural. Qobuz has no free tier. Every stream comes from a paying subscriber. The audio quality is also superior, with a catalog of over 100 million tracks in CD quality (16-bit/44.1kHz) and more than 250,000 in true high-resolution (24-bit/192kHz). Spotify finally launched lossless audioAudio format that preserves all original sound information without compression loss, typically at 24-bit/44.1kHz or higher resolution. in September 2025, but capped it at 24-bit/44.1kHz, below what Qobuz offers.
Tidal pays approximately $0.012 to $0.013 per stream, roughly three to four times the Spotify rate. Its fan-centered royalty model directs a portion of each subscriber’s fee to the artists they actually listen to, rather than pooling all revenue and distributing it by total stream share. If you are a subscriber’s most-streamed artist in a given month, you can receive up to 10% of their subscription fee directly. Tidal also supports Dolby Atmos spatial audio and lossless streaming up to 24-bit/192kHz.
Bandcamp operates on a fundamentally different model: direct sales, not streaming. Artists keep 82 to 85 percent of each sale (Bandcamp takes 15%, dropping to 10% after $5,000 in revenue, plus payment processing fees). On Bandcamp Fridays, the platform waives its cut entirely. A single $10 album purchase on Bandcamp can equal thousands of Spotify streams in artist revenue.
What Switching Actually Means
The common objection is convenience. Spotify’s interface, its algorithmic playlists, its integration with every device and speaker: these are genuine advantages. Qobuz’s device ecosystem is still growing (Qobuz Connect launched in May 2025 with limited device support). Tidal’s library occasionally has gaps. Bandcamp requires you to buy albums individually, which feels almost quaint.
None of this changes the math. When you stream on Spotify, the majority of your subscription fee goes to the platform and to whichever major label’s catalog dominates the global stream pool that month, not to the artist you are actually listening to. When you use Qobuz or Tidal, a meaningfully larger share reaches the musician. When you buy on Bandcamp, the artist gets paid something resembling a fair price.
The question is not whether Spotify is convenient. It is. The question is whether you care that the platform has built a system of Spotify ghost artists, algorithmic payola, legal maneuvers to reduce songwriter royalties, and per-stream rates that make it nearly impossible for working musicians to earn a living from recorded music. If you care, the alternatives exist, they work, and the music sounds better on most of them.
Nobody is asking you to delete your account today. But the next time you discover an artist you genuinely like, consider buying their album on Bandcamp or streaming them on Qobuz. The difference to you is a few dollars a month. The difference to them is whether making music remains economically viable.
Sources
- Liz Pelly, “The Ghosts in the Machine,” Harper’s Magazine, January 2025
- Billboard, “Spotify Lawsuit Says ‘Discovery Mode’ Is Just ‘Modern Payola,'” November 2025
- Recording Academy, “Does Spotify’s New ‘Discovery Mode’ Resemble Anti-Creator ‘Payola’?”
- Spotify for Artists, “Modernizing Our Royalty System,” November 2023
- National Music Publishers’ Association, “Spotify to Pay Songwriters About $150 Million Less,” 2024
- Qobuz, “Qobuz Unveils Its Average Payout Per Stream,” 2024
- NME, “Los Campesinos! reveal how much they earned from each streaming service in 2025”
- Spotify Newsroom, “From $11B in 2025 Payouts to What We’re Building for Artists in 2026,” January 2026
