×
You will be redirected back to your article in seconds

Spotify Reveals 2 Million People Used Hacked Apps to Suppress Ads

Music-streaming giant restates 2017 metrics to account for fraudulent streams

Spotify has restated key usage metrics for 2017 leading up to its IPO next month, claiming it recently discovered 2 million users had been accessing the free version of the streaming-music service using unauthorized apps that blocked ads.

“On March 21, 2018, we detected instances of approximately two million users as of December 31, 2017, who have been suppressing advertisements without payment,” the company said in an amended F-1 filing Friday with the SEC.

Spotify made the disclosure ahead of its planned April 3 public offering on the New York Stock Exchange, in a nontraditional direct-listing IPO. The 2 million fraudulent users represented 1.3% of its previously reported total user base.

Earlier this month, Spotify confirmed that it had begun cracking down on use of unauthorized apps, designed to circumvent the limitations of Spotify’s free service. That includes disabling ads between tracks and accessing on-demand playback on mobile devices — features available in Spotify Premium, which costs $9.99 per month.

As a result of the fraudulent activity it identified, Spotify reduced its monthly active user count as of the end of 2017, from 159 million to 157 million total. That includes 71 million paying premium subscribers.

In addition, the company restated the total number of content-hours streaming in 2017, by 1.2%, to account for the unauthorized usage. Previously, Spotify said users worldwide consumed 40.3 billion hours of audio and video last year; now it says users accessed 39.8 billion hours of content.

Spotify said that “we currently do not have, and may never have, the requisite data available to adjust such key performance indicators and other metrics prior to January 1, 2017, and as a result, such key performance indicators and other metrics for such periods may be overstated.”

In the risk factors outlined in its IPO filing, Spotify noted, it says it is “at risk of artificial manipulation of stream counts and failure to effectively manage and remediate such fraudulent streams could have an adverse impact on our business, operating results, and financial condition.”

In a filing Tuesday, Spotify said about 31% of its outstanding shares (55.7 million of 178.1 million total) will be available for sale on the first day of trading. Spotify CEO Daniel Ek is eligible to sell 15.8 million shares (less than one-third of his total holdings).

Spotify identifies Apple Music as its chief rival. Apple last week announced it now has 38 million paying subscribers for Apple Music, a little over half as many as Spotify’s reported year-end 2017 total.

More Digital

  • CEO of T-Mobile John Legere (L)

    FCC Chairman Backs T-Mobile, Sprint Merger With New Conditions

    FCC Chairman Ajit Pai gave a thumbs-up to T-Mobile and Sprint’s proposed $26 billion merger, after the companies committed to enhanced 5G buildout commitments and agreed to spin off Sprint’s Boost Mobile. T-Mobile and Sprint first announced their plans to merge in April 2018, looking to combine forces to take on industry leaders AT&T and [...]

  • Tyffon Raises $7.8M, Prepares Launch of

    Disney-Backed VR Startup Tyffon Raises $7.8 Million (EXCLUSIVE)

    Disney-backed immersive media startup Tyffon has raised a new $7.8 million Series A round of funding. The company wants to use the new cash infusion for an international expansion that includes the opening of a Santa Monica, Calif.-based virtual reality (VR) center. “We will also accelerate our IP licensing activities with major Hollywood studios,” Tyffon [...]

  • Huawei Restricted From Using Google's Android

    Huawei Restricted From Using Google's Android as U.S.-China Tensions Mount

    Google has prevented controversial Chinese tech firm Huawei from accessing the latest versions of the Android mobile phone operating system. The move follows U.S. government attempts to blacklist the Chinese firm. “We are complying with the order and reviewing the implications,” Google sources told news agencies Sunday. “Huawei will only be able to use the [...]

  • JUMP camera

    Google Is Shutting Down Its Jump VR Video Program

    Google will shut down Jump, its cloud-based video stitching service, this summer. The company emailed creators Friday afternoon to tell them that Jump would be shuttered on June 28, and detailed plans for the shut-down on its website as well. In its email, Google justified the closure of Jump with the emergence of new video [...]

  • Relix Live Music Conference

    Relix Live Music Conference Puts Spotlight on Gender Parity, Privacy

    The third annual Relix Live Music Conference took place at New York’s Brooklyn Bowl earlier this week. The two-day confab, which featured panels and Q&As by executives from such companies as Live Nation, Q Prime, SiriusXM, Bowery Presents, Glassnote Music, Shorefire Media and Splice, among many others, offered a fascinating and honest look at the [...]

More From Our Brands

Access exclusive content