The head of Spotify has denied claims that users can repeatedly listen to their own uploaded 30-second track to rake in monthly royalties.
Finance analysts at JP Morgan had said that Spotify subscribers could make $1,200 (£960) a month by listening to their song on repeat, 24 hours a day.
The claim suggested Spotify’s royalty payment structure could be manipulated.
But Daniel Ek, the streaming giant’s CEO, says that is not how the platform’s royalties work.
The theory was first reported in the Financial Times, and then tweeted about by Julian Klymochko, founder of Accelerate, a Canadian-based investment company.
“If that were true, my own playlist would just be ‘Daniel’s 30-second Jam’ on repeat!” Mr Ek tweeted back in response.
“But seriously, that’s not quite how our royalty system works.
Concerns have been raised that artificial streaming – where devices run chosen tracks on loop – is hindering the music industry, with JP Morgan executives estimating as much as 10% of all streams are fake, according to the Financial Times.
Just last week, Swedish Newspaper Svenska Dagbladet reported that criminal gangs were using Spotify’s royalty system to launder money made through drug deals.
According to Spotify’s website, it has two tiers of royalties, and artists are paid out once a month – but how much they get can vary.
“Contrary to what you might have heard, Spotify does not pay artist royalties according to a per-play or per-stream rate,” the website says.
“The royalty payments that artists receive might vary according to differences in how their music is streamed or the agreements they have with labels or distributors.”
Universal Music Group and Deezer recently announced they will jointly launch a music streaming model aimed at generating bigger royalties for artists – meaning they will be paid more if users actively choose to listen to their music.
This could mean Spotify, and other streaming services such as Apple Music, will be forced to adjust their own models.