Fake Streamers Steal $2-$3 Billion from Real Artists, Says New Report

Fake streaming costs the music industry billions yearly, hurting real artists' earnings.
Fake streaming costs the music industry billions yearly, hurting real artists’ earnings.

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Here’s how fraudsters are draining the music industry.

The music streaming industry faces a growing issue as fraudsters take billions from real artists and rightsholders. According to Beatdapp, a fraud detection platform, fake streams cost the industry between $2 billion and $3 billion each year.

This problem has become more serious as streaming revenue keeps growing.

For reference, streaming has reached $19.3 billion in 2023, which is over two-thirds of the industry’s total income.

Scale and Impact of Streaming Fraud

Global streaming numbers hit 7.1 trillion in 2023, according to Luminate’s 2023 Year-End Music Report. However, Beatdapp’s study suggests that 10% of all these streams are fake.

Fraudsters work by pretending to be artists, uploading lots of tracks, and artificially boosting play counts using fake or hacked accounts. This takes royalty payments away from real artists, causing a ripple effect throughout the industry.

CNM's report shows a breakdown of fraud detected in Spotify’s 2021 charts in France. (From: CNM.fr)
CNM’s report shows a breakdown of fraud detected in Spotify’s 2021 charts in France. (From: CNM.fr)

Beatdapp’s co-CEOs, Andrew Batey and Morgan Hayduk, stress that this fraud affects everyone in the digital music supply chain as it reduces the money generated through subscription fees and advertising.

“That money would have gone to real artists that would have been used to pay out managers and agents and lawyers, labels, distributors. But instead, it’s siphoned off and it goes to professional scammers who are stealing from the industry,” they said.
Beatdapp CEOs Andrew Batey and Morgan Hayduk in an interview on Ari's Take. (From: YouTube/Ari's Take)
Beatdapp CEOs Andrew Batey and Morgan Hayduk in an interview on Ari’s Take. (From: YouTube/Ari’s Take)

However, identifying the true source of fraudulent streams is challenging.

According to a Beatdapp employee, it’s tough to tell if inflated streams for a popular artist are due to the artist’s team. Or, if it’s from competitors trying to manipulate the recommendation algorithms.

“Let’s say I observed a lot of artificial streams going towards Drake. How do I know if the Drake team actually did it? It could have been another artist who wanted to abuse the recommendation system. So they mix in some of their music in a playlist with a lot of Drake tracks.” he explained.

Beatdapp’s Role in Combating Fraud

Beatdapp logo. (From: Beatdapp)
Beatdapp logo. (From: Beatdapp)

To combat this issue, Beatdapp has developed advanced fraud detection methods.

The company analyzes vast amounts of data – over 2 trillion streams and 20 trillion data points in 2023 alone – to find suspicious patterns and activities. Their approach involves examining various metrics provided by streaming platforms to tell the difference between real and fake listening behaviors.

This helps maintain the integrity of trending charts and playlists by filtering out artificial streams.

As a result, Beatdapp’s efforts have gained traction in the industry.

Their customers include digital service providers, music labels, collection societies, creator tool services, and music distributors. But, they’ve also partnered with major players like Universal Music Group, SoundExchange, and Napster.

Matt Eccles, SVP of Napster, emphasized the need for the industry to work together to fight streaming fraud.

“Napster believes that streaming fraud is an industry-wide problem. It requires an industry-wide solution to ensure that the correct royalties are reported and paid to the legitimate artists and songwriters who bring us the music we love,” Eccles said.

With a recent $17 million funding boost, Beatdapp plans to expand its reach into new markets like Asia, India, and Europe. They’re also looking to grow their team by hiring senior leaders and adding to their data science and technical departments.

For instance, the company’s expertise is backed by an advisory board that includes industry veterans such as former Warner Music SVP Howie Singer and ex-Spotify executive Adam Parness.

Beatdapp also partnered with Boomy, a generative AI music startup, to analyze its entire distributed catalog. This came after Spotify removed numerous Boomy-distributed tracks due to fraud concerns, highlighting the growing intersection of AI and streaming fraud.

Proposed Solutions and Industry Response

Some messages that offer to artificially boost Spotify streams for a fee. (From: YouTube/Spotify)
Some messages that offer to artificially boost Spotify streams for a fee. (From: YouTube/Spotify)

Streaming platforms are also taking action. Spotify, for instance, has implemented fines for labels and distributors when it detects “flagrant artificial streaming.” And, they’ve also adjusted their payment model to discourage fraudulent activities.

Some industry experts, like Phil Kear from the Musicians’ Union, suggested a user-centric accounting model. With this solution, a listener’s subscription fee is distributed among the artists they listen to, potentially reducing the incentive for fraud.

“The pirates need to pay £10 for each account, they currently make money by skewing the distribution so they get more than £10 back. But with user-centric they’d never make more than they spent,” Kear explained.

Universal Music Group’s Michael Nash also emphasized the need for a coordinated approach to combat streaming fraud.

“Fraud fueled by a flood of uploads with no meaningful engagement, including non-artist noise content, has necessitated a more sophisticated, coordinated, proactive approach to mitigating streaming fraud, to foster a thriving music ecosystem,” he said.

This sentiment is echoed by other industry leaders.

Sony Music Group Chairman Rob Stringer, for one, has called for aggressive enforcement by DSPs and distributors. He also suggested a fundamental change in payment methods to reduce fraud incentives.

New platforms are also joining the fight against fraud.

For example, Hangout FM, a social music platform, has also partnered with Beatdapp to integrate fraud detection tools into its service. This partnership aims to find suspected bot accounts and hacked user profiles to keep the platform’s ecosystem honest from launch.

The urgency of the situation is also supported by a French study showing that up to 3% of streams on platforms like Spotify are known to be fake. This potentially translates to annual losses between $175 million and $525 million globally.

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