Spotify

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Spotify

Basic information
Founded	2006
Type	Public
Industry	Audio Streaming
Official website	https://spotify.com/

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Spotify is a global music-streaming service founded in 2006 in Sweden by Daniel Ek and Martin Lorentzon. It allows users to stream music, podcasts, and other audio content via a freemium model, offering both free, ad-supported access and premium subscription services.

Summary of anti-consumer practices

Micro Payments per Stream

• Label Retained Royalties:

Spotify pays artists between $0.003 and $0.005 per stream, requiring approximately 4 million monthly streams to earn $1,160, which is equal to a month of the U.S. minimum wage. High profile artists like Taylor Swift and Thom Yorke withdrew music in protest.

• Policy Changes Harming Indies:

70% of Spotify’s revenue goes to rights holders (e.g., record labels), but artists receive only 11% to 16% after the labels take their cuts. For example, Universal Music kept 73% of Spotify payouts.

Spotify stopped paying royalties in 2023 for tracks with less than 1,000 annual streams, and diverted the approximately $40 million per year to major labels. This disproportionately impacted emerging artists.

Fake Artists and Playlist Manipulation

• Perfect Fit Content (PFC) Program:

An internal initiative to seed playlists with AI generated or low cost music (e.g., ambient, jazz) from Swedish producers. These tracks replaced human artists to reduce royalty payouts.

• Fake Artist Networks:

Investigators found 20 individuals operating under 500 aliases (e.g., Trumpet Bumblefig, Vattio Bud) generating millions of streams. One obscure Swedish jazz artist outperformed Grammy winning albums.

• Consumer Deception:

Employees admitted listeners wouldn’t know the difference between authentic and PFC tracks, degrading content quality.

Licensing Violations and Legal Battles

• Unpaid Royalties:

In 2017 Spotify faced a $1.6 billion lawsuit from Wixen Music Publishing for hosting 10,000+ unlicensed songs by artists like Tom Petty and Neil Young.

• Repeated Non Compliance:

Despite a 2015 pledge to fix bad publishing data Spotify’s $43 million settlement (2017) for unpaid mechanical licenses was deemed "inadequate" by industry groups.

• Bundling Schemes:

The National Music Publishers Association (NMPA) condemned Spotify for bundling music with audiobooks to lower royalty rates, calling it "predatory".

Privacy Violations and Data Misuse

• Invasive Data Collection:

In 2015, Spotify demanded access to users’ contacts, photos, and location via mobile apps, triggering backlash over disproportionate data harvesting.

• Pay-for-Play Allegations:

Spotify was accused of taking payments from labels to prioritize songs in playlists, mimicking payola scandals without transparency.

Price Hikes and Subscription Exploitation

• Forced Price Increases:

Under pressure from record labels (e.g., Universal Music), Spotify raised U.S. prices by 31% for duo plans and 25% for family plans (2023–2024). Similar hikes occurred in 50+ markets.

• Label Profit Extraction:

Labels pushed hikes under the guise of "artist fairness," yet retained most revenue. For example, Universal’s streaming revenue grew 8.9% year-over-year in 2024.

Spotify Subcription Price Increase (2023-2024)

Plan Type	Price Increase	Key Markets Affected
Premium Individual	10%	USA UK EU
Premium Duo	31%	Global
Premium Family	25%	50+ countries
Student	20%	USA Australia

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Genre Manipulation and Cultural Appropriation

Spotify invented vague algorithm-driven genres inspired by TikTok such as:

• Stomp and Holler

• Escape Room

• pov: indie

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Systemic Exploitation

Despite recent profitability, Spotify relies heavily on price hikes, algorithmic manipulation and royalty suppression. These anti consumer practices come out of a profit-driven business model which prioritizes labels and shareholders over artists and listeners. The PFC program epitomizes Spotify's continued fight agianst musicians. Regulatory intervention—like the EU's antitrust actions—remains critical to force transparency and fairness.

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Car Thing

Main article: Spotify Car Thing

In 2019, Spotify announced the Car Thing, a device marketed as a voice-controlled interface for selecting music and podcasts while driving. The device was officially launched in the U.S. on February 22, 2022, it cost $89.99 and requires a Spotify Premium subscription plan along with a phone with a mobile data connection to be used. On June 30, 2022, the device went on sale for $50. The company discontinued production of the device in July 27, 2022, citing low demand. A spokesperson told TechCrunch. “Based on several factors, including product demand and supply chain issues, we have decided to stop further production of Car Thing units. Existing devices will perform as intended." In August of 2022, Spotify further reduced the price to $30 in order to sell off all existing stock.

On October 20, 2022, security researchers released a report on how they achieved root on the Car Thing, uncovering how the device could potentially be hacked. Spotify responded on October 21, 2022, saying that the product is unsupported, end-of-life, and therefore no bugs would be accepted pertaining to the product. The product had gone from its launch to "end-of-life" in the span of 8 months.

Screenshot of email from Spotify, sent to Car Thing users.

On May 23rd, 2024, Spotify announced, via email to users, that support for the Car Thing would end in December of that year, rendering the device inoperable after that point.

The Car Thing support page advised Car Thing owners to "contact your state or local waste disposal department to determine how to dispose of or recycle Car Thing in accordance with applicable laws and regulations," rendering the device obsolete. On May 28, 2024 a class action lawsuit was filed against Spotify, due to a lack of refunds offered on the Car Thing. “All of the claims herein arise out of Spotify’s decision to unilaterally and without recourse cut off its support of the Car Thing and announce its plan to terminate its functionality on December 9, 2024,” the lawsuit reads. "Many owners of the Car Thing have complained in public forums and to Spotify about the discontinuance of the product and have requested that Spotify address and remedy the problem by providing a refund, equivalent replacement, or allow the Car Thing to be open sourced for use outside of Spotify’s control. Spotify has stated that it will not refund, or replace, the Car Thing, instead recommending that Consumers “reset your Car Thing to factory settings and safely dispose of your device following local electronic waste guidelines.”

On May 31, 2024, Spotify began offering refunds for the Car Thing.

The Spotify website for Car Thing now reads "Contact customer service by no later than January 14, 2025 to discuss your refund options." The Spotify support web page for Car Thing states that they are discontinuing the hardware product as part of ongoing efforts to streamline their product offerings.