Calm Knuckles: SEC, ETF, SPOT

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Hello and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money.

I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.

And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

What do we got today, Katie?

We're going to talk about SEC raids and how to trade them.

We're going to talk about private credit ETFs, question mark.

And we're going to talk about Spotify arbitrage.

Yes, excellent.

SEC raids.

I'm a little bit surprised you didn't wear your SEC jacket.

I know I should have.

I wrote about this like amazing paper about what happens when the SEC visits a company, and I mentioned that I own an SEC raid jacket that I joke about wearing but never wear.

And you didn't even bring bring it in?

I did.

You know, I wrote about this and then Reader emailed to say that an SEC raid jacket was his Halloween costume.

That's funny.

But he didn't have one and he didn't actually know that they even existed.

So he just like got a blue windbreaker and like got yellow tape and put SEC on the back and wore it to like Halloween parties with his finance pro friends to be scary.

Yeah.

That was a really good idea.

I have a real one.

It'd be kind of funny if he paired that with just fangs.

That's his whole costume.

That's cool.

Well,

you used the fact that you own an SEC jacket as like a cute little setup to talk about maybe a tradable signal, maybe not.

That amazing paper, Watching the Watchdogs.

Yes, Watching the Watchdogs, tracking SEC inquiries using geolocation data.

What they find is that when the SEC visits a public company, that probably means there's something bad, right?

And so it's a negative signal.

It's not just a chat, like just a coffee meeting.

In aggregate, statistically, it's a bad sign.

And so like they get abnormal returns of like negative 1.4 to 1.9% over the three months after the SEC visit.

Whether or not there's a subsequent announcement of an SEC investigation, even if they just do an informal visit, there's some negative signal there.

They also have some really fun findings about the insider trading around that.

Yeah.

The CEO of a company in the SEC comes and visits.

Should you sell the stock because that's bad news?

Or should you not sell the stock because that's insider trading?

And the answer is most people, there seems to be a chilling effect where people tend not to sell, but like when it's really bad news, they do sell.

Well, I have to say, so the stat that you highlighted was that insiders are 16% less likely to sell in the two weeks surrounding an SEC visit relative to periods with no visits.

I'm kind of surprised it wasn't like 85% or 90%.

I feel like if the SEC was knocking on the door, maybe I would just sit tight for a moment.

Right.

Because like, arguably that's material news.

And if you're still selling, it does seem risky.

But it's, you know, it's not that material.

Because like, maybe they're coming to chat, right?

Like, you don't know.

Yeah.

Well, maybe it's that penchant for risk that got you invited from the SEC in the first place.

Right.

The causation could go either way, right?

Yeah.

You're, you're the person who's, you know, they're visiting you about your insider trading.

Book in the book.

Keep insider trading.

Yeah.

So that is interesting, but it's not as interesting as the methodology of the paper, which is like amazing.

So basically, like your phone has 200 apps on it and like 100 of them track your location and 99 of those

at all times.

And 99 of those sell your location to a data vendor that then sells it to hedge funds, right?

That's what your phone is.

That's why I never turn off my location.

I want the hedge funds to have that data.

And the hedge funds appreciate that.

Yeah.

And they use it, as far as I can tell, mostly to figure out what stores are getting a lot of foot traffic from.

Yeah.

That's sort of the main use of this sort of thing is like, oh, there's a lot of foot traffic to this retailer, so we should buy that retailer store.

It's not just like Katie went to Jaw Salad today and usually she goes to Sweet Green.

You know, my understanding is that this data is pretty anonymized.

They don't have like Katie's data.

They have like, you know, how many people went to Sweet Green.

But if you get all the data, you can like kind of recreate who's Katie, right?

Like you can look at the phone that is at the Bloomberg headquarters a lot and at the horse barn a lot.

Yeah.

Be like, pretty sure this is Katie Green.

Never goes downtown.

And

so what the authors here did is they got all the cell phone data and they figured out which phones belonged to SEC employees by looking at which phones were mostly in SEC offices.

And if your phone is mostly in SEC's office, you're an SEC employee.

And then, if it goes to a corporate headquarters, then the SEC was visiting that company.

Well, let's just read this.

You put it in the column, but for listeners who haven't read the newsletter, a smartphone is assumed to belong to an SEC employee if it is, quote, paying for at least 20 unique workday hours within one SEC location during the month, and the accumulated time in the SEC building is greater than in any other buildings in the respective month.

I do like to imagine, though, that they're tracking janitors.

Maybe, but the point is that those janitors are then also visiting.

Maybe they're freelancing.

I don't know.

Okay.

Okay.

But statistically, it works out to be a useful signal.

This is true.

So there's so much to say about this methodology.

One thing about it is I have talked a lot in my column about how the SEC gets mad at banks for letting their employees talk about business on their personal cell phones and fines them hundreds of millions of dollars.

This is like SEC employees' personal cell phones providing tradable signals to, well, to academics, right?

And I think it's very funny that the personal cell phone usage of the SEC continues to be like a funny little minefield for an agency that is fining banks for using personal cell phones.

I will note that it was a pretty short time period.

They were collecting data from January 2019 to February 2020.

so you know a little bit over a year but still yeah the paper came out like this year and and the data is from four or five years ago so it's not tradable in the sense that you know

well the data is

if you had it in real time and like these vendors they do sell the data in kind of real time so like my question was can and do hedge funds trade on this signal yeah and i asked people the email if they did and no one said they did.

My impression is that most hedge funds do not try to get the data that is like, can we identify Katie or like, can we identify SEC employees?

They get like, how many people were in the building, right?

Like they're getting, you know, aggregated data, not like trying to individually identify people.

And so this is probably not a signal that anyone actually trades on.

Also, it's not like so strong a signal.

You know, it's like 1.9% abnormal returns over three months.

That's like, yeah, it's like.

Well, I was wondering why that would exist at all if people weren't trading on it.

You know, it's like a chicken and the egg thing.

Why, what, the data?

No, like why you would get those abnormal returns.

Like, why is an informal SEC visit bad necessarily?

What was interesting, if I'm understanding this correctly, is that you had that abnormal performance, even if no formal investigation was announced.

You could tell stories, right?

Like they're aggressive with their accounting, and the SEC says knock it off, and they stop being aggressive with their accounting, and their next earnings report is disappointing because they've stopped switching the money.

right?

You know, stuff like that.

Or just like they're a badly managed company, which is why the SEC is visiting them and that bad management ends up affecting their performance.

Yeah.

But like, I don't think people trade on this signal.

But it is interesting because hedge funds do use cell phone location data.

And cell phone location data is like controversial, right?

People get mad.

You know, your phone now probably asks you, like, will you let this app track you, which it didn't used to do as much.

Like, now it's like Apple is trying to prevent apps from tracking you unless you want them to, which you do for that matter.

I I always say yes.

And, you know, people have like periodic privacy worries about these things.

And

if you're a hedge fund, you're putting a lot of effort into compliance around this.

You're putting a lot of effort into making sure that you're buying this data from vendors who sort of ultimately have user permission to track their location and that it's anonymized in the right way so that no one is going to later accuse you of insider trading or of like violating people's privacy or anything like that.

And, you know, you worry about the regulatory environment changing and like it getting harder to use this sort of cell phone location data.

And one thing that might cause that to happen is the SEC finding their personal phones being tracked to like create a tradable signal.

The SEC might get annoyed by that.

They might say, hmm, we should crack down on these vendors.

Maybe don't build your whole business on the availability of this data.

Yeah, but I think that this is a big source of like alternative data for redshants to actually trade on.

And now, obviously, don't build your business on like SEC cell phone data, but nobody does.

That's just an academic paper.

But it's an academic paper that draws awkward attention to location data.

Well, I was going to say, even if no one has emailed you to say that they're trading on it, there's an ETF for everything.

Like some interesting, indie little issuer might be reading this.

People do try to trade on SEC investigations.

People like FOIA SEC investigations to sort of see what's being investigated and use that as a signal.

And this is like a sort of much more real-time.

weaker but interesting signal.

It's just still, it's,

I don't see people paying for this data.

I want to see it.

How much does this data cost?

We should do like a money stuff investigation and try to trade on it.

It sounds fun

if it's still out there.

We go pass on that.

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Moving on.

Moving on to ETFs that don't exist but might one day.

At least this one has plans.

Private credit ETFs.

We were just talking about this, sort of in a thought experiment type of way.

How would this work?

Now it's real.

The big brains at Apollo have a plan.

Yeah, I did.

The big brains at Apollo.

I'm screaming.

The big brains at Apollo have a plan.

We're keeping all of that in.

Yeah, they have a plan.

And the plan is they're teaming up with State Street to make an ETF that is like mostly public credit and some private credit, I think.

Yeah.

There's many interesting things about this.

I find the partnership interesting just from like an ETF industry perspective.

It's public and private credit.

We had talked a bit about how there was that 15%

limit on illiquid securities.

Give me the Matt Levine take because you actually haven't written about this yet.

I haven't.

This is a podcast exclusive.

Okay, so you mentioned the liquidity rule, right?

Like typical SEC mutual funds, including ETFs, have to have no more than 15% of their assets in illiquid securities.

And private credit is probably an illiquid security, probably, in the sense that you can't, it doesn't, it's not like a really, you know, liquid trading market.

Illiquid means something like it would take you more than seven days to sell it without affecting the market.

And we just have like an initial filing, and so I don't exactly know what they're doing.

But what they've done here is they've said Apollo has a trading desk to trade private credit, which is first of all fascinating.

Like that's kind of a new thing.

But their trading desk is going to give firm intraday bids to the ETF.

So

all the private credit stuff that the ETF holds, which it presumably bought from Apollo, Apollo will buy it back.

And they give you a bid to buy it back every day.

And the ETF can sell it every day.

And I think that the point of that is to satisfy the liquidity requirement because what they say is, you know, if Apollo will buy it back.

instantly, then that makes it liquid.

And so we can fulfill the ETF rules.

I think that works.

It's like a little cheating.

It's a little weird.

Well, I have to say, I'm really interested to see.

First of all, we have to get to the launch.

Talking to people, it seems like there is confidence that this will launch, but with any first-of-its-kind sort of fund, there's always questions over whether the SEC will green light it.

I am curious to see if it launches how much of it actually is private credit, because you take a look at some of the details.

At least 80% of the fund's assets will be in investment-grade either public or private securities.

As much as 20% may be allocated to high-yield bonds.

So it could just turn into it's 80%

high-grade public debt and then 20% high-yield bonds.

Yeah.

There are a lot of like regular stock mutual funds that are tech-focused and like have one little holding of like a startup private stock, but are 99% public equities.

You could imagine this being that.

There's like a little sprinkling of private credit.

Yeah, Ron Barron's funds.

I mean, he has at least one mutual fund that's all public and then just SpaceX.

Right.

I want to make two points with this.

One is it's easy to get retail exchange traded private credit exposure.

It is called a BDC.

People find that unsatisfying though.

I know that.

I don't

know.

A BDC is a business development company.

It's a publicly traded pot of private credit.

That feels like buying micro strategy for Bitcoin exposure though.

No, it's not.

But it feels like

it.

I don't know.

I don't think it does.

A BDC is a private credit fund.

That's what it is.

It's a exchange-traded, publicly available fund that holds private credit loans.

The difference between it and an ETF is that a BDC is closed then.

You can't take your money out.

There's no arbitrage mechanism.

And so it won't necessarily trade at net asset value, but

it's mostly pretty close, I think.

So I don't fully understand the need for an ETF.

I think some of it is like fee-driven.

Some of it is like just the ETF is the popular product.

And so a BDC feels weird and different.

And the ETF feels like an easy thing to hold hold in your portfolio.

I suspect part of it is like

market maker driven.

I suspect that like the Jane Streets of the world love trading ETFs and so like they're like, hey, we can do it, private credit ETF.

And so there's some like desire for that, whereas the BDC is more of an orphan in like the market structure world.

But still it's weird, right?

Because like a BDC is this.

It's a retail private credit fund.

Yeah, I don't know.

It does feel unsatisfying.

Why?

I mean, maybe because I'm totally ETF pilled, but.

Why does it feel unscale?

Like, tell me what is wrong with a BDC in your mind.

It just feels feels like a proxy.

It just feels not as

a pot of private credit assets.

There's nothing proxy about it.

It is simply a pot of private credit assets.

I know I'm not alone because if that answered the desire in the marketplace, and maybe it's a misguided

name is business development company, which sounds like it's a company that develops businesses.

It needs a rebrand.

Right.

If you just called it a,

would you be happier if you called it an exchange-traded closed-end private credit fund?

Are you still just allergic to the words closed-end?

Yeah.

I mean, again, like I'm ETF-filled, so

I need the openness.

Okay.

Here's the other thing I want to say about this, though.

You know, we talked about Bill Heckman, the closed-end fund.

He said he should do an ETF.

And I was like, well, you know,

he wants long-term capital so that he can make long-term investments.

I've written a lot about private credit in the last few months.

And one thing I always say about private credit is that it is a better funding structure for making loans than banking is, right?

Banks have short-term funding.

Banks take deposits.

It's possible to have a run on bank deposits.

And so if banks are making like illiquid long-term loans and funding them with short-term deposits, that's a risky business to be in.

Private credit, meanwhile, like raises money from insurance companies, and it's a fairly safe funding source for their long-term loans.

If Apollo is offering to buy back its private credit assets every day,

that turns it into runnable funding.

If they have an ETF that they promise to buy back the assets every day,

if something goes wrong, investors can take all their money out and Apollo will have have to buy a ball back and then have to raise new funding.

So, it is a much riskier funding source for private credit than like the traditional, you know, insurance company, wealthy individual, whatever, like long-term locked-up money.

So, in that sense, it's very different from a BDC, right?

BDCs are permanent capital.

ETFs are kind of runnable capital.

I just got a buzz.

Maybe we don't want to include this, but I just got a buzz because there was just another filing for a private credit ETF.

Oh, there you go.

At like 2:30 p.m.

on Thursday, for the Bond Blocks Private Credit CLO, ETF.

Reading from the prospectus, the fund is a newly organized, actively managed, exchange-traded fund that will invest under normal circumstances at least 80% of its net assets in private credit CLOs, may invest up to 20% of its net assets in broadly syndicated bank loans, broadly syndicated bank loans, CLOs, high-yield bonds, investment-grade bonds, and cash.

So the demand, at least from issuers, is out there.

Even though BDCs, to your very real point, they exist.

They exist.

Also, it feels like there was a response.

There's clearly a response from this issuer, bond blocks.

It feels like there was a response from BlackRock to this because people have been waiting for this.

I mean, we've talked about it on the podcast before, like, who's going to figure out how to put private assets in a publicly traded ETF?

We know that BlackRock.

We know that BlackRock has ambitions there.

And on Thursday, they didn't announce that they were doing that, but they did announce this partnership with Partners Group.

They're teaming up to offer retail investors a variety of private markets through a single portfolio.

They want to create like this one-stop portfolio to private equity, private credit, real assets.

It's not an ETF, though.

No, because it's not true retail.

It's like a model portfolio for like qualified investors.

Yeah.

You need to have like over $2 million in assets.

Yeah.

And it's just like, if you are a customer of a wealth manager, like they will happily put you into like a private credit fund or whatever.

And now BlackRock will help them put you into a portfolio of private credit funds in one place.

But it's not an ETF.

It's not like a true retail thing you can buy from Robinhood, you know?

Yeah, you can't click a button and then buy it.

It is interesting, though.

Just, it feels like, especially in the ETF market, there's an arms race for any white space.

And here's the white space.

I do think it's interesting that Apollo partnered with State Street.

It does suggest that Apollo isn't all in on the ETF industry, that they didn't want to, you know, hire.

They're so ETF pilled.

They don't care.

I know, I know, but it's.

They want like funding for their giant portfolio of private credit, right?

If State Street comes to them and is like, we'll give you retail funding, they'll take it, right?

They're not like, ooh, the one basis point fees on ETS.

We want that.

Juicy.

It is interesting that they went with State Street, though.

I mean, State Street obviously is home to the oldest and biggest ETF, but they've kind of been slipping in the ranks.

Apollo is like, yeah, who does ETFs?

Probably State Street.

State Street.

But Goldman Sachs, for example, has this accelerator platform, which is like a white label, but not quite a white label.

That some big names have come through.

I'm kind of surprised that Apollo went with State Street versus going through a white label, such as Goldman's, but that's just a little bit of industry chatter.

It does not, it does not matter to end investors at all.

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Let me just check my phone.

I'm sorry.

Ugh.

Everything's so stupid all the time.

I'm excited to talk about Spotify.

That's like a perfect intro.

I've never thought about the economics of Spotify.

Before we get to Michael Smith, which

we might get to him.

He sounds like a fake person.

Maybe he's a robot.

Oh, it could be.

Yeah.

Michael Comknuckles Smith.

Anyway,

Spotify.

Yeah.

I mean, the way it works is you pay like $12 a month.

Every month, I do.

It doesn't matter how much you listen to.

You pay $12 a month.

Yeah.

I have never thought about that, and it would really suck if they did a sliding scale based on use because I listen to so much.

Yeah, I mean, the whole point of it is like you don't, right?

Like the whole point of it is like, you know, it used to be you paid for albums and now you pay for unlimited streaming and you pay 12 bucks a month.

But Spotify still pays the artists based on how much they stream.

Sort of.

It like takes all the money that it gets.

Yeah.

And it assigns 75% to the rights holders.

artists and record labels and then it divides up that pot of money based on relatively how much you stream.

It's not like Spotify is like, we pay one cent a stream and like if there are more streams than they expected, they pay more money than they expected.

They pay a fixed amount of money, but they divide it up based on how much your songs get streamed.

And so what that means is that if you are a customer and you pay 12 bucks a month and you stream music 24-7 for a month, you will allocate more money than the 12 bucks you put in.

Spotify will send more than $12 to the people you are listening to.

Meanwhile, if I sign up for Spotify and I listen to one song a month, Spotify will send like one penny to the artist of the song that I listen to.

And once you know that,

like the answer is obvious, which is like you sign up for Spotify, you know, you have a computer on mute playing 24-7 the songs that you want to send money to, and then like you get the money.

Yeah.

And that's

what money.

That's what I do with money stuff.

Absolutely.

I have my laptop at home just listening on loop.

And I make

three-tenths of a penny.

I make nothing.

I'm doing this for fun.

I'm just doing it for the good of the company.

Our producer raises his hand.

He gets all of it.

There's not that much money in this unless you have a thousand computers doing it.

And so there's this guy, Michael Smith, who had a thousand computers, by which I mean actually like virtual computers on like a cloud service.

Right.

He had like a thousand cloud computers streaming songs 24-7 to send him the money.

And because Spotify pays attention to this stuff, he couldn't just like stream one song over and over again.

He had to set up a bunch of fake bands and have the fake bands record a bunch of fake songs.

And even the fake songs, it can't just be like him tapping on a table, you know?

It has to like sound song-like.

And so he had like hired an AI company to write like AI music.

And it is so disappointing.

The prosecutors list a couple of dozen band names and a couple of dozen

titles.

I mean, many of them are kind of cool sounding.

They're so good.

I know.

This is like an alphabetical list.

Like, there's like a randomly selected bit of the alphabet.

So the song titles are mostly words starting with ZY that don't make any sense, but they include Zygotes, Zygotic, Zygotic Washstands, Zyme Bedooing, Zyme Zymite, Zymophyte, Zymogenes.

And the artist names include Calliope Bloom, Callus Humane, Calm Knuckles.

It's It's good.

Calm Market.

Calm Man.

Calvinistic Dust.

Yeah, anyway, it's like a lot of great randomly chosen names for fake songs.

But my point is that all of this stuff presumably lived on like Spotify.

I say, we say Spotify, it's like all the streaming services he apparently took for money.

So Spotify, Apple Music, YouTube.

All these songs apparently lived on these services.

And they all seem to have been taken down because I've been searching for them and I can't find any because like if we could play them.

I know, like asking from the perspective of the listener like we should be playing this music were these songs good were they bad yes were they mediocre they were generated by AI so they weren't like just nothing they were an AI trained music they recomposed the song so how much money did he make 10 million dollars that's insane so I always think about this like when people just get too greedy like what if he had pretended to be a real artist and like made his own music and like maybe

I don't know he had a hundred songs under his name but he had all these robots listening to it and maybe he only made a million dollars would that have been less detectable i think it would have been more detectable because like the reason he had all these songs was that no one was streaming these songs millions of times right each of these songs was streamed a small number of times and like in the aggregate all of his songs were streamed a lot and he made a lot of money.

But if he had just one song and it was streamed 10 million times, someone might say.

But what if he had a hundred songs?

You know, like what?

he decided that the best way to avoid detection and to like avoid getting caught by Spotify's cheating checking algorithms was to have a lot of songs so that it's spreading out among a bunch of different songs.

I respect his hustle.

Should I say that?

I respect his hustle.

Okay, good.

I respect his hustle too.

I'll say.

But I wish that he had actually

made music.

He had a robot making music.

I mean, for all I know, he made music, and then he decided that it was more.

Like, I would have appreciated the vulnerability if he put his music online

and then he needed thousands of songs yeah like he was busy running a scam that's true it does sound it does sound draining people email me a lot to be like your math is wrong and in fact when like spotify gives this money to the rights holders like most of that goes to the record labels it doesn't really go to the artists and the artists are getting screwed fine point taken I'm writing about this guy's scam.

Like, in fact, the streaming services are worse for musicians than I implied when I read about the arbitrage.

But secondly, like 20 people emailed me about Volfpeck, which is a funk band that you might know as one of my like notes for what I wanted the money stuff theme song to sound like.

Oh, right.

I was like describing the vibe I wanted and our brilliant art director Jackie was like, oh, you should listen to this Volfpeck song.

I was like, yes.

Now we're going to see stream Skyrocket.

For Volfpeck, yeah.

In 2014, they put out an album that was like

12 30-second tracks of silence, and they were like that's what you wanted our music to sound like.

No, no, otherwise, they put out music that is louder.

They asked their fans to stream it on loop as they slept, yeah, because the fans weren't paying for that, right?

They didn't affect them, right?

It was quiet, and they weren't paying because they paid a flat fee to Spotify.

Spotify counts a stream if it's like more than 30 seconds, so you stream like 12 31-second songs on loop all night.

Then that's like, you know,

that's great.

Uh,

80 streams, wait, no, hold on.

800 streams.

I'm certainly not going to fact-check you.

Yeah, it's like thousand streams for them, right?

So that's like thousand streams at like a fraction of a penny per stream is like, yeah, they get like 10 bucks or something, right?

Not bad.

If all of their fans do that, they were like, we're going to put on a free concert funded by the that's hysterical.

They ended up raising about $20,000 and the album was removed for violating Spotify's terms of service.

Oh, come on.

Nobody thought it was a crime.

Somebody emailed me to say that they handed out $20 bills at this free concert to thank their fans for doing it.

I don't know if that's true.

That's so fun.

Anyway, it's really cool.

The other thing that people pointed me to is that in 2016, Nellie

owed $2.4 million in back taxes.

And so there is a hashtag campaign saveNelly to get people to stream hot in here.

Some number of times that was estimated between like 280 and 400 million in order to raise the money.

That's insane.

I don't know if it worked.

I don't think it worked.

I'm sure Nelly's fine.

He's fine.

Yeah.

He's fine.

I will say, I listen to podcasts when I sleep, which got me thinking about the sliding scale.

Like, most of my Spotify usage comes at night when I'm asleep.

Oh, I mean, people were like, is this a crime?

Should it be a crime?

No, it's in the code.

It's in the code, right?

I mean, like, there's a lot of stuff like this where, like, there's a company that has some terms of service and people violate the terms of service.

And then people are, yeah, shouldn't they just sue them?

Right.

And I think here it's a little different because this doesn't actually cost Spotify any money.

Spotify doesn't care.

Yeah.

Spotify is like, we get all this money and we set aside three quarters of it for the people who own the songs and we just don't care what happens to them.

Yeah.

Whoever wants that, you know, we don't care.

We have like some reasonably fair formula as a matter of like PR

and as a matter of like, you know, getting the record labels to sign up to put their music on Spotify.

But like, they don't care.

It's not their money.

So does it get worse for artists as Spotify gets more popular?

That's

compared to what?

Compared to...

I don't know, I guess.

It gets good for artists because Spotify has more money and it sets aside a fixed fraction of that money for artists.

It's bad for artists if the alternative to Spotify was like buying CDs.

Oh, yeah.

But what's really bad for artists is like if there's a lot of guys like this.

That is people's reaction to the story is like, yeah, okay, here's this one guy with a bunch of bots and a very sort of sophisticated way to do this arbitrage who made $10 million.

But like,

are there hundreds of those guys?

Is a lot of the money on Spotify going to people who are somehow faking their streams?

And obviously, Spotify, like, puts a lot of effort into stopping that.

And, like, they did keep stopping this guy, and he had to go to some lengths to get back on.

But, you know, people are suspicious.

And they did extract $10 million from Spotify.

That's so funny.

That's so much money.

Sounds like a good, good gig.

Oh, one thing I wanted to add.

He paired up with that AI company in 2018 or 2019, right?

They were early.

That's true.

Yeah.

Yeah.

I don't know what AI means, right?

Like, you can get pretty sophisticated generative ai models now that will like make a song in the style of blah blah blah but like

like if you randomly i do wonder like when

you might have enough to fool spotify in 2018 you know that's true i do wonder though when ai artists are going to become big on spotify because i'm on tick tock a lot and there's all these silly ai songs of drake

singing like a Lana Del Rey cover and some of them are good.

Some of them sound like real music.

So that'll be an interesting ethical question for Spotify in like a couple years probably.

I wish I had a snappy return.

No, that's fine.

That's fine.

And that was the Money Stuff Podcast.

I'm Matt Levy.

And I'm Katie Greyfeld.

You can find my work by subscribing to the Money Stuff newsletter on Bloomberg.com.

And you can find me on Bloomberg TV every day on Open Interest between 9 to 11 a.m.

Eastern.

We'd love to hear from you.

You can send an email to moneypod at bloomberg.net.

Ask us a question and we might answer it on air.

You can also subscribe to our show wherever you're listening right now and leave us a review.

It helps more people find the show.

The Money Stuff Podcast is produced by Anna Mazarakis and Moses Andam.

Our theme music was composed by Blake Maples.

Brendan Francis Newnham is our executive producer.

And Sage Bauman is Bloomberg's head of podcasts.

Thanks for listening to the Money Stuff Podcast.

We'll be back next week with more stuff.

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