Last week in the Swedish media, which has spread around the world, has been writing about criminals using Spotify to laundry money. I don’t understand why they start reporting that right now? In the business, we already talked about this on panels in 2019. It has not been a hidden thing it has been quite many people know about it. Also, why report it now when the phenomenon is moving away, or is it?
Buying fake streams is also not new. That has been coming and going over the years. Here in Sweden, it reached its peak a couple of years ago when a famous artist made a case and showed how easy it was. Interestingly enough it took Spotify almost two weeks to react to it before they closed his account. After that Spotify closed the most straightforward channels, the things moved into more of the darknet. Still, it was there as it was before.
How do they wash money you say? Most of the artists that do this have connections to the gangster lifestyle, they don’t make that much money being an artist Instead they sell weed and other drugs both for the money and also to prove they belong to this genre. Another thing is that the songs they do also send messages about what group they belong to and who is in conflict with others. The music is just secondary or even third. By selling drugs, you get a lot of cash. Today in Sweden buying things with cash is hard. If you just get up to even small amounts like 1000 dollars, the bank will start asking where you got them from. What you do is ask friends to buy Bitcoin instead. Take the bitcoin go to the dark web and buy some streams. The streams then go through Spotify and voila on the other side is clear white money. Of course, you lose money on the way. With this method, you can only get out at a maximum of 50 % of the value so even the criminals just do this with smaller amounts like between 10,000 to 30,000 dollars bigger amounts there are much better ways to launder it.
In the beginning, this was just laundry, but they did it so much that suddenly they were number one on the charts. In the beginning, this was a problem. The light suddenly got their way, and they didn’t like to be in the lights. At the same time, they realized that if they had a number one artist younger kids thought it was cool and they were easier to recruit to the gangs. Suddenly each gang should have a number one artist. The end result was that the whole chart was just infested with unknown Swedish gangster rappers. The top chart was of course fake and several bigger media entities took off to report Spotifys toplist. Another problem was for the rappers that they got invited to do shows. Of course, this is just your average snotty suburb kid rapping away so they can’t really play live and many of the live events lost a lot of money booking these artists that in reality just draw a hundred people, with a really bad live performance. Even the record labels tried to sign them but quickly left. Soon they got signed the streams dropped since the rapper then expected the record label to pay for it. In the end, a hybrid solution was made where the rappers then did feature with famous artists, both on stage and on record. A way to make them more established and the big labels could make some money and ride on the fame.
Then something happened. First of all the rappers started to kill each other, so many were dead or in jail. But a new style came along in Sweden called EPA dunk. To describe it, it’s a bad 90:s euro disco with really bad lyrics. Still, this style was legit. If you are a redneck hillbilly out in the deep woods of Sweden and driving a car you will play this on full blast. Maybe they bought some streams but most of it is legit, and they actually draw a lot of audience even if it’s just in farmers’ area. And many of them use TikTok to break through.
Why then start reporting on this right now? The phenomenon is gone? And why didn’t Spotify stop it? To be totally clear, Spotify knows what streams are fake and not fake. The inside knowledge they have about each account and artist makes this easy. Banning artists is hard since you can’t really prove who is doing the cheating. It could be the artist as well the record label, the PR company, the manager, or even a fan who wants to help out. Banning the artist can’t be done in that way. The problem I guess is that the easy first streaming was done with free fake accounts. Those are easy to shut down. No one can say something. The new streaming is probably done from accounts that are paying. My guess is that Spotify has trouble shutting down accounts that pay since they make money out of them. They are paying customers. Even if an unknown rapper from the hood suddenly gets streams outside the hood in millions and from countries outside Sweden even though they rap in Swedish. It’s easy to see what is fake. My guess is though that Spotify tried to fix the problem. They hit some fake streams with zero payment. The streams were there but they didn’t pay anything for it. With that done some of the laundry was taken off, and they lost too much money in the process. Here is probably where the new style entered the stage. My guess though is that the cheaters now mainly just pay to get better numbers, they don’t really care about laundering.
Spotify said that only 1% of the streaming is fake streams in a press release last week. I can say if they actually think that they must be dumb. Even with easy calculations, you can see that a low estimated number is 10%. The people that work in the business calculate up as much as 30%.
The cheaters are still out there and more sophisticated than ever. Sure, Spotify knows who they are and how it’s done but they make money in the process and Spotify needs money since it doesn’t really go that well and got rid of people at the beginning of the year and now seeing that people with the new bad economy are cutting their account off and they lose money.
My guess here is why they start to report on this right now is that the media smell blood and a way to do some payback on Spotify and their arrogance. Spotify has problems and the media is keen on putting nails in the coffin.
By Peter Åstedt
