NEW YORK • Spotify is under fire for dealings with artists who, in a sense, do not exist.
For the last week, the music industry has been buzzing over the accusation that Spotify's playlists are dotted with hundreds of supposedly "fake" artists, with names such as Amity Cadet and Lo Mimieux, who are racking up tens of millions of streams yet have no public profile.
Spotify has also been accused of secretly controlling the rights to these songs - atmospheric, wordless tracks on mood-focused playlists with titles such as Deep Sleep and Peaceful Piano - an arrangement that, if true, would allow the company to reduce the amount of money it pays in royalties to record labels and "real" artists.
The reality, however, may be more complicated.
Spotify denies that it owns the rights to the music under question, although the company may well pay lower royalty rates for these tracks than it does for more standard pop fare. And the pseudonymous creators of the tracks - real composers and producers, whose work appear under numerous made-up names - do not want to be called fake.
Peter Sandberg, a 27-year-old composer in Sweden who has created a number of tracks on these playlists, called the term unfair.
"I'm a composer trying to find a way to grow and spread my work," he wrote in an e-mail relayed through an intermediary, "and to be called fake is not something I appreciate."
Sandberg, who records music under his own name as well, does have a social media presence, making him a less anonymous figure than many of the other creators of this music.
The issue could damage Spotify's strained relationships with artists and record labels as the company prepares to go public. Streaming may now contribute a majority of the revenue for the record business, but many artists still have doubts about the format's underlying financial model.
The suggestion that Spotify's system is unfair would exacerbate the problem.
The idea that Spotify was commissioning its own music was first reported last summer by online publication Music Business Worldwide; the issue gained renewed attention after an article last week in Vulture. Since then, Music Business Worldwide has been listing dozens of what it says are fake artists on Spotify whose work has generated more than 500 million streams.
Many of these tracks were made by a small group of professional producers and songwriters in Sweden.
Mr Jonathan Prince, Spotify's global head of strategic initiatives, said in an interview that the unexpected popularity of its mood-based playlists - Peaceful Piano has 2.9 million followers - has created a demand for more of that material, which the company has actively worked to satisfy.
By Spotify's standard royalty rates, 500 million streams would be worth about US$3 million (S$4.1 million) - money that the company could theoretically save if it owned the material that generated those streams.