Spotify, a music streaming company, has attracted significant criticism since its 2006 launch, mainly over artist compensation. Unlike physical sales or downloads, which pay artists a fixed price per song or album sold, Spotify pays royalties based on the artist's "market share"—the number of streams for their songs as a proportion of total songs streamed on the service. Spotify distributes approximately 70% of its total revenue to rights holders, who then pay artists based on their individual agreements. Multiple artists have criticised the policy, most notably Taylor Swift and Thom Yorke, who temporarily withdrew their music from the service.
Spotify faces particular scrutiny due to its free service tier, which allows users to listen free with advertisements between tracks. The tier has led to a variety of major album releases being delayed or withdrawn from the service. Spotify claims it benefits the industry by migrating users away from piracy and less monetized platforms and encouraging them to upgrade to paid accounts. Record labels keep a large amount of Spotify earnings.
Spotify has also attracted media attention for several security breaches, as well as for controversial moves including a significant change to its privacy policy, "pay-for-play" practices based on receiving money from labels for putting specific songs on popular playlists, and allegedly creating "fake artists" for prominent playlist placement, which Spotify denies.
Spotify CEO Daniel Ek was also criticized for making donations through his investment company to military research of artificial intelligence.
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