FAKE ACCOUNTS + FAKE LISTENING = REAL ROYALTIES: Holy crap – you’ll want to buckle your seat belts for this one. Remember back to last July when I reported on Spotify’s use of fake artists to source music content without having to pay performance royalties? Well it turns out some enterprising crooks in Bulgaria may have flipped the script on the streamer with a different royalty fraud. Stay with me on this one since it’s a little complicated. According to an in-depth Music Business Worldwide investigation, Spotify paid out about $1M in royalties for music which was played on two unusual playlists. What made these playlists, called Soulful Music and Music From The Heart, so weird is that they were filled with hundreds of short songs (like :30-40 seconds long) that nobody has ever heard of. Yet these playlists were being played non-stop on a couple thousand Spotify accounts. All the songs on these playlists were tied to the same ISRC (royalty code) which was owned by an unknown entity in Bulgaria. Per their normal operating procedure Spotify paid royalties on these plays, and the money eventually made its way to the Bulgarian scammers. So what does this mean? First of all Spotify overpaid on royalties by about $1M – and that’s just for the two fake playlists we know of. And second, this situation proves how easy it can be to manipulate the system by creating fake accounts and even fake listening, which puts Spotify’s entire audience metrics in question. I guess when it comes to royalties shadiness what goes around comes around.
SMARTPHONES HIT THE SATURATION WALL: Since 2007 smartphones have been the single most important tech accessory in all our lives. As a result global handset sales have gone up and up . . . until now. According to a Gartner Research report in the attached TechCrunch link, global handset sales dropped 5.6% in Q4’17 compared to 2016. The biggest cause for the decline is the slowing of smartphone tech innovation which gives consumers less of a reason to upgrade to the latest model. (Was that higher def two way camera in the iPhone X really worth spending $1,000 on? Of course not.) The other contributing factor is the increased quality of lower end handsets. Smartphones are just made better these days, so less breaking of current phones means less buying of new ones. Obviously the handset manufacturers and Telcos have seen this coming for a while, which is why they’ve begun diversifying their businesses into other hardware products and content distribution. With the exception of some underdeveloped parts of the world smartphone ownership hit a saturation point around 2016. And now we’re holding on to our phones longer, which is the first step in the eventual sales decline.
THE PEOPLE (AND KYLIE JENNER) vs. SNAPCHAT: Just when you thought Snapchat was starting to stabilize its business comes some new storm clouds. The first problem is a completely self-inflicted wound. At the beginning of January Snapchat redesigned its interface and users are not having it. According to the attached Verge link an astounding 1.2M Snapchat users have signed a Change.org petition asking Snap to go back to the old design. So far Evan Spiegel and team are staying with the redesign, but insiders are worried that the blowback will decrease overall usage. And speaking of decreasing usage, Snapchat super-influencer Kylie Jenner casually tweeted that she hasn’t gone on Snapchat since becoming a new mom, which sent the Social-sphere and even Wall Street into a frenzy. According to the attached Bloomberg link Snap, Inc. lost $1.2B in market value due to what’s now being called the “Kylie Effect” (I can’t make this stuff up.) And no, it’s not that Kylie Jenner was using Snapchat so much that her absence is hurting Snapchat’s overall usage metrics. It’s more the symbol of a heavy user growing up, getting busy with a new child, and suddenly having more important things to do than posting completely useless videos on Snapchat. Hopefully they have some hard stuff in Snap’s corporate kitchen to get through this one!
Have a great Friday (and weekend) guys!
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