Spotify has asked prediction markets Polymarket and Kalshi to remove its logo from their platforms, and to clarify that it does not have formal partnerships in place with either company, even though their respective users are betting on predictions about what music will perform best on the streaming service.
It follows concerns that people making bets on Kalshi may have been responsible for stream manipulation that added an extra half a million Spotify streams to a track by Sony Music-signed Malcolm Todd.
According to the FT, it was Kalshi trader Caleb Davies who raised concerns that rival traders were paying to artificially boost streams of Todd’s track ‘Earrings’ in order to profit from bets they’d made on the Spotify US charts, which Todd’s April release topped earlier this week after a surge in streams last Sunday.
Spotify subsequently confirmed it had identified what it believed were manipulated streams and cut the play count for ‘Earrings’ by 500,000.
Prediction markets are basically a form of online gambling modelled on financial trading platforms. Users buy and sell ‘contracts’ based on the outcome of future events, including political, sporting and cultural events, making money if they correctly predict the outcome, losing money if they do not.
Given growing controversies around Polymarket and Kalshi users allegedly utilising insider knowledge from companies or government departments when making bets - including in relation to the US government’s current military adventures and especially the war in Iran - connections between the prediction markets and a bit of stream manipulation may seem like less of controversy.
But it potentially adds another layer to the music industry’s ongoing battle with streaming fraud - and is another reason why an artist might unknowingly benefit from stream manipulation and then have to deal with any sanctions that follow if and when the manipulation is uncovered.
Minneapolis-based Davies told Wired that he crunches Spotify data every day in order to predict the future performance of key tracks on the platform. Based on all that number crunching, he reckoned that the sudden surge in streams for ‘Earrings’ last weekend was a “11.24 sigma event”, which means “a roughly 1 in 77 octillion chance of happening randomly”.
Although Spotify hasn’t expressed any opinion on the cause of the ‘Earrings’ manipulation, it has confirmed the track benefited from artificial streams. Spokesperson Laura Batey then added, “All streaming services face ever-changing stream manipulation. Spotify has best-in-class detection and mitigation practices for manipulated streams, and we don’t pay out associated royalties”.
For its part, Kalshi told the FT “we're in touch with Spotify and are actively investigating this matter”.