fraud
Even by the standards of a litigious business, Drake’s recent legal actions against Universal Music Group and other companies look like odd filings.
On Nov. 25, Drake filed an action accusing UMG and Spotify of acting to “artificially inflate” the popularity of Kendrick Lamar’s “Not Like Us”; the next day, he made a similar filing against UMG and iHeartRadio, alleging that UMG’s release of the song could also constitute defamation. The basic idea seems to be that “Not Like Us,” Lamar’s diss track against Drake, became so successful because it was rigged.
“UMG did not rely on chance, or even ordinary business practices,” Drake’s lawyers wrote in the first filing. “It instead launched a campaign to manipulate and saturate the streaming services and airwaves.” The filings accuse UMG and its partners of acting in ways that are fraudulent, including using “bots” and payola, but little proof is provided — a “whistleblower,” an “inside source known to petitioner” and an assertion that Drake “learned of at least one UMG employee making payments to an independent radio promoter” who had agreed to pay stations. (The company has said in a statement to Billboard that “the suggestion that UMG would do anything to undermine any of its artists is offensive and untrue.”)
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These filings aren’t lawsuits, but rather legal attempts to get information that might provide the basis for them. And since Lamar’s success doesn’t really come at the expense of Drake’s — at least any more than any artist becomes popular at the expense of any other — it’s hard not to wonder if Drake is just upset that, with “Not Like Us,” Lamar seems to have won the long-running feud between them. That’s a long story — well-summarized here — but Drake and Lamar basically traded diss tracks for hip-hop fans until Lamar’s scathing “Not Like Us” topped the Billboard Hot 100. Drake is essentially claiming that UMG — for which both rappers record under different labels — cheated on Lamar’s behalf. It was rigged.
Quick: What other famous person does this remind you of? Hints: When he wins, he revels in his success; when he loses, he blames it on unfairness and litigates. Yes, I’m going there: Drake has become Trumpian.
Before Team Drizzy throws bottles of Virginia Black Whiskey by Drake, Drake is a skilled rapper, a compelling performer, and a fantastic Drake — it’s hard to compare him to other artists, both because he doesn’t fit neatly into a genre and because his greatest talent is being Drake. (Drake the artist seems to be an exaggerated version of Drake the person, with the soap operatic conflict amped up and the more mundane parts edited out.)
Both Drake and Trump thrive on success and fandom — their fans root for them because they win and they win because their fans root for them. (Trump the politician seems to be an exaggerated version of Trump the person, with the cultural conflict amped up and the boring parts edited out.) Neither gets a ton of respect from critics, but they are both popular beyond belief, and they love to win and then show off that they did. Drake’s feud with Lamar became so compelling because each was a champion in his own way — Drake the unmatched entertainer, Lamar the iconic old-school lyricist. By scoring a No. 1 single with a diss track, an unusual achievement, Lamar essentially beat Drake at his own game.
Is this why Drake is filing legal actions? Most people file litigation for financial restitution, to get an injunction to stop something, or to win negotiating leverage. In this case, the first would be hard to calculate, the second involves practices that would be hard to prove and the third seems unlikely — why would Drake want out of the UMG deal he signed in 2021, which includes publishing and merchandise rights and was described as “Lebron sized.” The only thing we know about Drake’s motive is that his second filing says he “brings this action for a discrete and specific purpose: to understand whether, and how, UMG funneled payments to iHeartRadio and its radio stations as part of a pay-to-play scheme.” Perhaps, like Trump, he simply can’t imagine the possibility that he would lose a fair fight.
Does Drake have a case? If UMG really had the power to make any song a hit, wouldn’t it do so more frequently? If anyone thinks Drake hasn’t received enough marketing or promotion — and I have yet to meet such a person — it’s worth considering that some Spotify subscribers found the service’s promotion of Scorpion so extensive that they asked for a refund. This, too, has political echoes: If U.S. elections are as unfair as Trump claims, how can he trust the one in November?
Like Trump, Drake loves the one-upmanship drama of competition — but only, apparently, when he wins. Trump ran several campaigns based partly on the politics of insult comedy — his dog-whistle racism was obviously far worse — but he doesn’t like to be on the receiving end of it. (The kind of thin skin that would be a personal fault in most is terrifying in the U.S. president.)
If rappers could pursue defamation claims for diss tracks, much less against the labels that release them, hip-hop never would have made it out of the Bronx. Lamar called Drake a certified pedophile, which is an ugly accusation, and a pun on Drake’s Certified Lover Boy, but not an actual thing; the reason Drake looks bad isn’t because people believe it but because “Not Like Us” is catchier and wittier than his own diss tracks. Drake certainly has the right to ask about music promotion practices — even in a legal filing. If no evidence of this emerges, though, he will need to seek satisfaction the old-fashioned way — by releasing a more compelling single.
This story was published as part of Billboard’s music technology newsletter ‘Machine Learnings.’
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Let’s get the news out of the way: on Monday (Nov. 24) Drake initiated legal action against Universal Music Group — the parent company of his record label — and Spotify over allegations that the two companies conspired to artificially inflate the popularity of Kendrick Lamar’s diss track “Not Like Us.” This, he says, was done through a variety of allegedly illegal promotional methods, like UMG — which also is the parent company to Kendrick’s label — accepting a royalty reduction in exchange for boosting streams; payola via independent radio promotions; and paid but undisclosed influencer campaigns. (For their part, Universal called these claims “offensive and untrue.”)
Longtime readers of Machine Learnings know that most of the topics presented in Drake’s case are ones we’ve covered extensively in this newsletter. I don’t take the issues of streaming fraud and shady digital marketing tactics lightly, and if these allegations are true, it would be a bombshell that one of the world’s biggest artists called out the world’s largest music company for partaking in it. (And trust me, I’d be all over reporting that!) But while Drake’s allegations could still hold some merit, this particular court document seems to be backed up with questionable evidence and — it seems — some level of misunderstanding about the way music promotion works today.
So let’s break it down. Here are a few key quotes from Monday’s court document, with commentary.
“In his memo to staff reflecting on the highlights of 2021, the CEO of UMG, Lucian Grainge, remarked on it being ‘harder than ever for artists to break through the noise: sixty thousand songs are added to Spotify every day.’”
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Maybe I’m splitting hairs by pointing this out, but I find this to be a strange way to begin laying out these allegations. Why are they citing highlights from 2021 when we get updates every year about how many songs are added to Spotify on a daily basis? It would have been far more effective to start by including the 2023 stat: 120,000 songs are uploaded to Spotify each day, according to Luminate. Or, if they want to keep the quote from Grainge in, why not tack that current number on to the end?
Throughout this document, it seems like Drake’s team is missing key, up-to-date information on the ways songs are released and marketed today. This is surprising, given Drake is one of the most successful artists in the world and one who often makes savvy marketing and business decisions. One of those marketing tactics that immediately comes to mind is when Drake graced the cover of a ton of Spotify playlists during the release of his album Scorpion in 2018 to raise awareness, and streams, for the project. It was so over the top that Billboard reported at the time that some fans were calling for Spotify to provide refunds because they were seeing too much Drake.
“On information and belief, UMG charged Spotify licensing rates 30 percent lower than its usual licensing rates for “Not Like Us” in exchange for Spotify affirmatively recommending the Song to users who are searching for other unrelated songs and artists. Neither UMG nor Spotify disclosed that Spotify had received compensation of any kind in exchange for recommending the Song.”
Rather than some nefarious back room deal, this sounds like Drake’s lawyers are referring to Spotify’s Discovery Mode feature, which is used by a wide array of labels and artists and is practically never disclosed. According to an article from Spotify’s support team, artists who want a song to receive an additional algorithmic boost on the platform can opt in to Discovery Mode which “doesn’t require an upfront budget” and instead takes a “30% commission… to recording royalties generated from all streams of selected songs in Discovery Mode contexts.”
When Spotify debuted this feature in November 2020, it immediately drew controversy. In June 2021, Reps. Jerry Nadler (D-NY) and Hank Johnson Jr. (D-GA) sent a letter to Spotify’s CEO/founder Daniel Ek voicing worries that the feature “may set in motion a ‘race to the bottom’ in which artists and labels feel compelled to accept lower royalties as a necessary way to break through an extremely crowded and competitive music environment.”
Again, in March 2022, Reps. Yvette D. Clarke (D-NY), Judy Chu (D-CA) and Tony Cardenas (D-CA) — co-chairs of the Congressional Caucus on Multicultural Media — expressed concerns that Discovery Mode “lack[ed] transparency” for both artists and consumers. The representatives then asked the company to publish “on a monthly basis the name of every track enrolled in the program” and the agreed-upon discounted royalty rate for each, calling Discovery Mode “a serious risk for musicians.”
That said, it’s not clear if “Not Like Us” was part of Spotify’s Discovery Mode program, and historically, Universal Music Group has not been known to use the feature for any of its frontline releases — including any Kendrick Lamar or Drake songs.
“UMG, directly or through Interscope, also conspired with and paid currently unknown parties to use ‘bots’ to artificially inflate the spread of ‘Not Like Us’ and deceive consumers into believing the Song was more popular than it was in reality… One individual unknown to Petitioner revealed publicly on a popular podcast that Mr. Kendrick Lamar Duckworth’s ‘label’ (i.e., Interscope) paid him via third parties to use ‘bots’ to achieve 30,000,000 streams on Spotify in the first days of the release of ‘Not Like Us’”
If this is true, this is streaming fraud and would be a serious offense. Just a few months ago, a man named Michael Anthony Smith was indicted by federal prosecutors on charges of wire fraud, wire fraud conspiracy and money laundering conspiracy for allegedly using bots to boost the streams of his catalog and to help him siphon $10 million out of the royalty pool.
But the evidence here is sketchy. Drake’s lawyers admit that the “individual” who was allegedly solicited to artificially drive up Kendrick’s streams is “unknown to [Drake]” but that this anonymous person went on DJ Akademiks’ podcast to talk about this alleged scheme. DJ Akademiks is a podcaster who is known to be close with Drake, and he has played a significant role in backing up Drake during the beef earlier this year. Even if this ended up being true, which seems like a stretch, it feels quite biased.
“While historically payola has been thought of in terms of paying radio stations to play songs, in February 2020, the Federal Trade Commission released guidance stating that ‘by paying an influencer to pretend that their endorsement or review is untainted by a financial relationship, this is illegal payola.’ On information and belief, UMG employed a similar scheme by paying social media influencers to promote and endorse the Song and Video. For example, Petitioner understands that UMG paid the popular NFR Podcast — which has nearly 300,000 subscribers on YouTube and over 330,000 followers on X — to promote ‘Not Like Us’”
Drake’s team is citing a quote from February 2020 by the FTC that has been removed from the agency’s website. I do not know if that means it is no longer their current rule, or if there was another reason.
What I do know is that just a few months ago, I wrote a story on the topic of influencers receiving undisclosed payments to play songs in the background of TikTok videos. I went into the reporting believing, as Drake’s team seems to, that this was definitely against FTC guidelines, but the FTC told me that wasn’t necessarily the case.
“While we can’t comment on any particular example, that practice seems somewhat analogous to a product placement,” the FTC told me. “When there are songs playing in the backgrounds of videos, there are no objective claims made about the songs. The video creator may be communicating implicitly that they like the song, but viewers can judge the song themselves when they listen to it playing in the video. For these reasons, it may not be necessary for a video to disclose that the content creator was compensated for using a particular song in the background in the video.”
Some of the examples from NFR that Drake cites here are not exactly the same type of pay-to-play content I researched for my story, but I could see these examples being acceptable by the FTC based on what they told me. One example of UMG’s alleged influencer payola cited by Drake’s lawyers was a tweet by NFR that says that Kendrick Lamar’s new music video was released. Another was NFR saying “Kids rapping Kendrick Lamar’s ‘Not Like Us’ word for word at a birthday party.” Another: “Kendrick Lamar’s ‘Not Like Us’ becomes the FASTEST rap song to reach 300M Spotify streams.”
All three of these examples are objective statements about one of the biggest artists in the world. Referring back to the statement I got from the FTC, “There are no objective claims made about the songs…viewers can judge the songs themselves.” (I say all this while also acknowledging that some of the other examples listed might be in more of a gray area with the FTC).
The practice of paying influencers to post about new songs is nothing new, and one major label marketer told me he estimated “75% of popular songs on TikTok started with a creator marketing campaign.” According to digital marketing experts, influencer campaigns have been the go-to marketing strategy at every major label since TikTok took off in 2020. With that in mind, it is hard for me to imagine that Drake’s team has never run a similar campaign for any of his own viral hits, which would undermine his entire argument.
“Streaming and licensing is a zero-sum game. Every time a song ‘breaks through,’ it means another artist does not. UMG’s choice to saturate the music market with ‘Not Like Us’ comes at the expense of its other artists, like Drake. As Drake is Petitioner’s sole owner, and Petitioner owns the copyright to Drake’s entire catalogue, Petitioner suffered economic harm as a result of UMG’s scheme.”
I find this to be a strange claim — that if Kendrick’s song streams well it directly takes away from Drake or other artists. It feels like a stretch to blame Kendrick for other artists not succeeding with their songs at the same time. I imagine Drake faced more “economic harm” from the reputational damage this song did to him (by calling him a “pedophile”) than it did by being a “zero-sum” streaming game. Plus, with UMG the parent company distributing both artists — and thus making money from their success — it makes no business sense for them to be deliberately harming his career and prospects.
This zero-sum claim seems to be what he’s getting at in his second legal filing, released Tuesday (Nov. 26). In it, he claims UMG should have stopped Kendrick from releasing a song with “false” claims that defamed his character.
“UMG … could have refused to release or distribute the song or required the offending material to be edited and/or removed,” Drake’s lawyers write in the court document. “But UMG chose to do the opposite. UMG designed, financed and then executed a plan to turn ‘Not Like Us’ into a viral mega-hit with the intent of using the spectacle of harm to Drake and his businesses to drive consumer hysteria and, of course, massive revenues. That plan succeeded, likely beyond UMG’s wildest expectations.”
By saying this, Drake is essentially advocating for labels to censor their artists, which is a very slippery slope — I’d wager most people would find it troublesome if a billion-dollar corporation started preemptively censoring art. Not to mention, Drake has levied plenty of his own unsubstantiated claims against Kendrick this year, most notably on also-UMG-released diss track “Family Matters.”
The hip-hop industry has fought for years to remind the judicial system in the U.S. that not everything a rapper says in a song is a cold hard fact, and it should not be used as evidence against a rapper in a criminal sense. As top music attorney Dina Lapolt once put it to Variety, “[these] attempts to put all rap lyrics into the categories of historical fact and fiction [are] failing to understand that hip-hop, like most art, is more complex than that… lyrics are not to be taken literally.”
Louisiana-based rapper NBA YoungBoy pleaded guilty Monday to his role in a large-scale prescription drug fraud ring that operated out of his multimillion-dollar home in Utah.
The 25-year-old artist, whose real name is Kentrell Gaulden, walked into a courtroom in Logan, Utah, with his head hung low as he entered the plea for his part in the alleged scheme, KTVX-TV reported.
Gaulden was originally charged in the Logan District Court with 46 charges related to the alleged crime. On Monday, he pleaded guilty to two counts of third-degree felony identity fraud, two counts of third-degree felony forgery, and six counts of misdemeanor unlawful pharmacy conduct. Gaulden entered a “no contest” plea to the remaining charges.
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As part of a plea deal, Gaulden will not serve prison time in Utah. Instead, his four felony charges were reduced to Class A Misdemeanors and he was ordered to pay a $25,000 fine, the television station reported.
District Judge Spencer Walsh agreed to suspend a prison sentence as Gaulden is expected to serve a “substantial” 27 months in federal prison for related charges in a case stemming out of Weber County, Utah. Following his release, Gaulden will then be placed on five years of federal supervised probation.
“This is somewhat of a unique case where there have been multiple jurisdictions involved both in the federal and the state systems,” said state prosecutor Ronnie Keller. “This is just really a smaller cog in the bigger wheel of ultimately seeking justice.”
Gaulden had been living in Utah under house arrest having previously been allegedly involved in a 2019 Miami shooting. His relocation to Utah came as part of a deal in 2021 in which his lawyers argued that “moving to Utah would keep YoungBoy out of trouble.”
During his hearing Monday, Walsh said it was clear that Gaulden was a very talented young man.
“I’ve seen so many times where you have young men and women who have a lot of talent and potential. They can be robbed of that potential when they start to really struggle with their addictions,” Walsh told Gaulden. “I don’t want that for you.”
Walsh continued saying, “I’m sure that in your future, once you’re done with your federal prison time, you can be really successful on federal probation and have a really bright future where you can reach your full potential in every aspect of your life. Best of luck to you, Mr. Gaulden.”
“I feel like that guy in Don’t Look Up,” says Andrew Batey, co-CEO/co-founder of streaming fraud detection company Beatdapp. “I’ve been yelling about the comet coming for years, and so many people haven’t taken it seriously. Now, I think it’s arrived.”
On Nov. 4, Universal Music Group sued TuneCore and its parent company Believe in a $500 million copyright infringement lawsuit, claiming that TuneCore’s “business model” of letting users upload a massive volume of songs for a low flat rate is powered “by rampant piracy” and that TuneCore “makes little effort to hide its illegal actions.”
According to the lawsuit, some of these uploads are remixed or sped up versions of UMG hits and titled with slight misspellings of the artists or works they are infringing — like “Kendrik Laamar,” “Arriana Gramde,” “Jutin Biber” and “Llady Gaga.” UMG also alleges that TuneCore has “taken advantage of the content management claiming system” on YouTube “to divert” and “delay… payment of royalties” that belong to record labels.
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The nine-figure lawsuit serves as a searing indictment of the way one of the world’s largest DIY distributors is allegedly conducting its business. It’s also being viewed as an indictment of the business model of DIY distribution as a whole because, as Jamie Hart — founder of publishing administration company Hart & Songs — explains, “These problems are definitely not unique to TuneCore.” Throughout her career, Hart has spent time at SoundCloud and at Downtown’s YouTube royalty collection service AdRev (now part of FUGA), learning about the intricacies of rights management online, and why it can get so messed up. “This is happening across all self-upload distribution companies at a big rate, and it has been happening for years.”
Along with users profiting from content containing copyrighted material that doesn’t belong to them (sometimes colloquially referred to as “fraud,” “fraudulent content,” or “modified audio” in certain contexts), experts say DIY distributors are also usually the pipes that let in an excessive amount of songs that will be used in “streaming fraud” schemes — a term used to describe the process of artificially juicing stream counts to siphon money out of the royalty pool.
Batey and fellow Beatdapp co-founder/co-CEO Morgan Hayduk see this is the start of a serious crackdown on distribution companies like TuneCore, with “a small window for [distributors] to get on board” and clean up their issues with infringement and fraud before it leads to serious consequences. For those unwilling to put in the extra effort to prevent much of the illegal activity on their services, the Beatdapp leaders fear the financial penalties from streaming services or lawsuits from rights holders, like UMG, could be harsh enough to put some of the small players out of business and lead to consolidation.
“We don’t want to see consolidation,” Hayduk says. “It’s healthy to have a lot of distributors in the market, for users and for our business, too. We want to see them clean up their act, but they need to start now.”
Over the last few years, there have been a number of efforts made to address the growing problems in DIY distribution — from streaming fraud to copyright infringement to sheer volume. Last year, TuneCore, Distrokid, CD Baby, Symphonic, Downtown and more joined together to form the Music Fights Fraud coalition, an attempt to self-police these issues through a shared database. (Since then, Beatdapp alleges that there has only been an increased amount of streaming fraud across the industry.) Spotify also announced new amendments to its royalty payment models in an effort to curb these issues, including financial penalties for distributors and labels that perpetuate fraud.
But this fall, a number of high-profile instances of anti-fraud regulation have started popping up in quick succession. In September, federal prosecutors indicted a North Carolina musician in the first ever federal streaming fraud case, alleging he used two distributors to upload “hundreds of thousands” of AI-generated tracks, and then used bots to stream them, earning him more than $10 million since 2017.
Then, in October, TikTok cited issues with “fraud” as its reason for walking away from renewing its license with Merlin, a digital licensing coalition representing thousands of indie labels and distributors. Instead, TikTok reached out to Merlin members individually — something which TikTok says could help them curb fraud from specific members, but which Merlin calls an excuse to “fractionalize” its membership and “minimize” TikTok’s fees for indie music.
Experts are torn about whether or not the problems at these DIY distributors will be easy or hard to solve. One DIY distribution employee, who requested anonymity, says stopping bad activity is a never ending game of “wack-a-mole” and that it is “impossible to catch everything” even with a quality control team. “There’s so much content pushed through at once that a lot slips through the cracks.” They add, however, that there is too much of an emphasis on “quantity over quality” at these companies and that they need to hire more quality control personnel than they have right now.
But Larry Mills, senior vp of sales at Pex, a company that provides tools for content identification and rights management, believes “it actually isn’t that hard of a problem to solve. Some distributors and DSPs are just making a business decision to use lesser technologies that aren’t tuned to finding modified audio or covers until they are forced to.”
Beyond contracting a third-party service, like Pex or Beatdapp, or spending a millions on more full-time staffers, there are also much more simple measures that can be taken. Greg Hirschhorn, CEO/founder of distributor Too Lost and a member of the Music Fights Fraud coalition, said in an October interview that his company has seen significant success by simply requiring users to submit a photo ID and a selfie before uploading songs to Too Lost. “There’s no hiding from it, and it’s easy,” Hirschhorn says. “If you break the law using our site, I have your information, and I can just send it to local law enforcement or to the streaming service.” Hirschhorn claims he has offered to implement this same service for fellow MFF members, but he says no one has taken him up on it.
According to Mills, the new UMG lawsuit against Believe has encouraged more action. “Thankfully, people are starting to take this seriously. Our phones are certainly ringing more since [the UMG lawsuit],” he says.
An employee at one of the DIY distributors also has seen a change in attitude about these problems in light of the UMG lawsuit. “A lot of us [in distribution] have been talking about this lawsuit,” this person says. “This is a systemic issue in distribution. No company is blameless … Other distributors should be f-cking nervous.”
For those in the business of helping artists and writers collect their rightful royalties online, like Hart and Jon Hichborn, founder of royalty tracking company Records on the Wall, “There’s too much responsibility on the rights holder,” as Hichborn puts it, to police their copyrights. “It’s mind boggling. I track down royalties 24/7. Imagine if I wanted to be a musician who was writing and performing? There would not be enough time in the day to do it all.”
Still, the continued dysfunction and challenges stemming from DIY distributors has birthed a lucrative cottage industry for companies like Pex, Beatdapp, Hart & Songs, Records on the Wall and more that are designed to clean up the mess that is protecting copyrights and collecting royalties on the internet today. “My business unfortunately does thrive on everybody screwing up,” laughs Hichborn. “It’ll never go away.”
It’s unclear what the future looks like for DIY distributors. While Beatdapp foresees “extinction” for distributors that don’t get their act together, Hirshhorn predicts great change “in the amount of quality control, the amount of KYC [“know your customer” checks], the amount of diligence required,” but he doesn’t see it as an apocalyptic event. As he’s found with the implementation of ID checks, even if the scale of songs a distributor releases goes down some, a distributor can still thrive. Too Lost, he says, is doing better than ever, earning over $50 million in annual revenue this year.
“At the end of the day, you just shouldn’t be able to make money on the internet — whether it’s from music, gaming, or the creator economy — if you don’t disclose exactly who you are,” Hirshhorn says. “That just makes total sense… The music industry is always slow to adopt any changes, but this is what the future will look like.”
The rise of DIY music distribution platforms like TuneCore and DistroKid has been unequivocally transformative for artists — it has given them the ability to reach listeners without traditional label constraints.
Yet, while democratization has opened doors for countless artists, it’s also opened the floodgates to an equally pernicious, unintended byproduct — rampant fraud and copyright infringement. For context, Luminate reported that in 2023, over 120,000 new songs were uploaded daily, a sharp increase from 93,000 per day in 2022. The surge is predominantly due to two things: the ubiquity and growth of the DIY distribution sector and the proliferation of consumer-facing music production resources. This relatively nascent landscape has dramatically increased not only the volume of content but also the industry’s exposure to unauthorized and infringing material.
Universal Music Group’s recent $500 million lawsuit against TuneCore and its parent company Believe highlights the severity — as well as a tipping point. The lawsuit asserts that these platforms are illegally profiting from large-scale copyright infringement, where the culprit for disseminating and monetizing the unauthorized IP is both distributor and unethical user alike. Ultimately, this case highlights a broader, systemic failure, exacerbated by insufficient monitoring, accountability and safeguards for control. But the ecosystem has become too big, too unregulated and too profitable for some of its stakeholders to rectify it on their own. Reform is overdue.
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Democratized Distribution
DIY distribution was originally designed to level the playing field, allowing any artist to release music on platforms like Spotify, Apple Music and YouTube. However, open access came with side-effects — most notably, rampant IP abuse. The sector has become a breeding ground for exploitation; malicious users take advantage of the low barrier to entry by uploading pirated, remixed, or slightly modified versions of copyrighted songs. Collectively, these uploads generate significant revenue, with a portion of that going to the distributors who host them.
This is far from an isolated issue. With millions of tracks uploaded annually, there is an immense challenge in verifying every song. While some platforms claim to have anti-fraud systems in place, policing measures frequently fall short. The sheer volume of uploads makes scalable monitoring difficult, in turn creating a laissez-faire approach that indirectly allows infringement to thrive.
YouTube Royalty Collections Unique Challenge
Nowhere is this problem more pervasive than YouTube, where scale and visibility is inherently even more challenging. Some users deliberately circumvent YouTube copyright policies by uploading and distributing pitched remixes, slowed down/sped up remixes or near-identical versions specifically in order to bypass Content ID. Detection is challenging, and most of this infringement goes unnoticed. Even when violations are flagged, recouping misappropriated payments is impossible. Artists are left to navigate an opaque, complicated system and often leave their rights exposed and earnings minimized. For many independent artists, YouTube is a key, significant revenue stream and copyright fraud siphons away that income with little recourse.
Industry-Wide Consequences
Overvaluing volume vs. quality control creates a system ripe for exploitation because the current model often benefits the infringer. But solving the core issue mandates more than increasing lawsuits. There needs to be enforceable quality-control metrics that are clearly communicated and that actively deter fraud, while protecting rights holders. Transparent protocols to ensure flagged content will not generate income for infringers along with improved early detection systems will help standardize accountability and visibility. An enforceable and sustainable safeguard system will:
A. Prevent infringing content from reaching listeners at allB. Mandate greater transparency when infringement occurs, andC. Ensure rightful compensation for rights holders.
Closing the knowledge gap and developing industry-wide standards are also essential for meaningful change. By raising public awareness, providing a forum where artists and rights holders can report infringement and increasing pressure within the industry, the path to reform is achievable — and similar to regulations that have been implemented to curb other forms of online piracy.
A Call for Collective Responsibility
Setting clear deadlines for reform will hold platforms and distributors accountable while improving transparency. Fundamentally, and despite the challenges of volume, even en-masse DIY distributors must showcase a basic respect for IP and prioritize rights holders/artists while identifying (and deterring) the bad actors who undermine them.
With collective, industry-wide efforts, digital music distribution can become a sustainable model that supports independent artists while upholding their rights. A system that empowers artists while maintaining integrity is essential to preserving the value of music and protecting it from exploitation.
George Karalexis is co-founder/CEO of Ten2 Media. His expertise as a media executive, strategic advisor, and serial entrepreneur spans 15-plus years across multi-sector leadership, with a focus on music, marketing strategy and tactical team building. Donna Budica is co-founder/COO of Ten2 Media. With a degree in finance from The Wharton School and an MBA from USC Marshall, she leads corporate strategy and operations at Ten2 and its subsidiaries.
Ten2 Media is a rights management and content marketing company specializing in asset monetization, audience development and content optimization on YouTube. Ten2’s expertise on YouTube and decades of experience in the music Industry is the foundation of its unique approach to maximizing revenue and marketing music for the world’s leading artists and labels.
A few days after the Sept. 16 arrest of Sean “Diddy” Combs on racketeering and sex trafficking charges, a book said to be based on diaries and notes from his late girlfriend, Kim Porter, became a best-seller on Amazon. (It was a best-seller within a certain category, which probably means it sold well but not hardcover-bookstore-best-seller well.) What’s really impressive is that the book did so well despite the fact that Diddy and Porter’s children say she didn’t actually write any of it.
The 60-page book, Kim’s Lost Words: A Journey for Justice, From the Other Side, was self-published under the name Jamal T. Millwood by Chris Todd, whose real name is apparently Todd Christopher Guzze. Todd has said the book is based on the contents of a flash drive, which he allegedly received from two people close to Porter and Combs, but he “didn’t ask too many questions about how they got it,” according to Rolling Stone. “If somebody put my feet to the fire and they said, ‘Life or death, is that book real?’ I have to say I don’t know,” said Todd, who says he’s a producer and journalist and hopes the book will lead other sources to come forward. (Journalists generally tend to ask too many questions.) “But it’s real enough to me.”
It would be hard to find a more ridiculous quote to describe the very serious problem that big media platforms have created. I have no idea how the book was written, of course, but Todd knows that’s not the point and presumably so do readers — it’s real enough to me, he says, so it’s real enough for them. (The story behind the book actually sounds more interesting than the book itself.) This sounds harmless enough until you realize that — wait a minute — that’s basically what Republican vice-presidential candidate JD Vance says about the claim that Haitian immigrants are eating pets in Springfield, Ohio. He heard it, then justified it as a way to call attention to a problem. (There is no evidence that anyone is actually eating pets, and the whole idea sounds racist.) Like Todd’s book, it certainly went viral. It was real enough for people — to the point that it has become an actual political issue.
Stories about scandals, real and exaggerated, are hardly new. (Diddy faces unrelated criminal charges; Porter died in 2018 of lobar pneumonia.) What is new, though, is the way online platforms create incentives to create and spread them. Amazon now sells more than a dozen books about Porter, including a “Kim Porter Coloring Book” and several books that use “lost words” in their titles. The speed and ease of selling books on Amazon’s open system has made Porter’s death a cottage industry. It’s gross — does anyone want to be memorialized by a coloring book? — and you can’t blame her kids for being upset. There’s money in it, though.
It’s a useful metaphor for streaming fraud. The problem isn’t that Amazon or online music services stand behind conspiratorial books or useless music with streaming numbers pumped up by bots — it’s that they don’t stand behind anything. Open platforms like these let people distribute their own art, which is promoted as a feature but might more often be a bug — a lot of what’s online is neither professional work nor hobbyist creations but rather get-rich-quick schemes of various kinds. Which is funny until it could affect an election.
The most common argument against this in the music business is that fraud takes money from artists, which is true, but it can be hard to get horrified about schemes to steam millions of fractions of pennies from thousands of artists. (Most of the book business works very differently, but dubious books do take money and attention that more legitimate books need.) Another argument is that low-quality material undermines the integrity of the system — consumers who hear lousy music and read dubious books might be less inclined to spend more money on such legitimate products.
The argument that ought to get more attention is that these kinds of products simply aren’t good for the overall experience platforms offer. Streaming services used to promote their vast selection, but at this point some of what’s uploaded just makes more popular music harder to find. The same applies on Amazon. A search for “Kim” and “Lost Words” brings up a half-dozen books — and even those who find and buy the one they want may be disappointed. Kim’s Lost Words has 98 reviews, which average out at three stars. Others have none at all. This doesn’t affect the value of other books, of course, but it could make them harder to find.
Any serious solution to this will involve changing the incentives. The current level of curation and enforcement won’t work once AI is more widespread. It’s one thing to sell a book that may or may not contain Porter’s words, but Amazon already sells 12. Are we ready for 12,000?
Making platforms easier to use will mean making tough choices, then pushing them down to distributors who will in turn push them down to individual uploaders. There are options, however: Platforms could hold uploaders responsible for content that hurts the user experience or pay out more to companies who have a better ratio of content users engage with compared to their total. That’s what I think — unless this all came from a flash drive someone gave me.
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Source: PATRICK T. FALLON / Getty / Chase Bank
If it sounds too good to be true, chances are very high it is. Opportunists and scammers are finding out the hard way that check fraud isn’t wavy.
People are suffering heavy financial consequences after attempting to take advantage of the Chase Bank glitch, aka commit check fraud.
Per Complex’s reporting, many are now seeing their bank accounts overdrawn by thousands after trying to expose the glitch that went viral on TikTok by depositing fake checks for large sums of money and immediately withdrawing the funds or seeing money immediately reflected in their accounts because Chase is not flagging the deposited check or large loan applications.
The financial institution caught on quickly to the “glitch” and is now leaving the people who thought they got a come up with a large receipt, rendering their bank accounts useless.
If you typed in “Chase Bank glitch” on X, formerly Twitter, you would see actual videos of people running to Chase Bank locations, lined up at ATMs, trying to get their hands on what they thought was “free money.”
You will also see many people sharing screenshots of their accounts and reacting to being financially in the red.
This is not the first time a glitch similar to what Chase experienced over the weekend was exploited, leaving many people jammed up. Cash App users could transfer large sums of money they did not have.
Doordash users could order whatever they wanted without being charged. Both companies caught on to what was happening, and people had to pay their large debts.
Let this be a lesson to those looking for fast money.
The gallery below shows more reactions to the “Chase Bank glitch,” leaving people in financial ruin.
2. Ridiculous
4. Howling
7. It’s too late for a lot of these people
The Mechanical Licensing Collective (The MLC) has partnered with Beatdapp, an independent fraud detection company, to prevent streaming fraud. While the MLC already has internal measures in place to fight against this, their collaboration with Beatdapp will provide additional and complementary protections to their database.
Beatdapp has quickly become the music industry’s go-to for independent fraud analysis in the last few years. The company has worked for a number of record labels, collection societies, distributors and streaming services to help them sift through trillions of lines of data and identify and investigate suspicious patterns. At the beginning of this year, Beatdapp announced a strategic partnership with Universal Music Group and a fundraise of $17 million in its latest funding round. Other clients include SoundCloud, Beatport, 7digital and more.
According to a report from Centre National de la Musique (CNM), a government-backed organization that supports France’s music industry, in 2021, over 1 billion music streams — between 1% and 3% of all streams generated in the country that year — were fraudulent. Streaming fraud can take on a number of forms. This can include falsely claiming royalties and ownership of songs made by other artists, or uploading songs and juicing their stream count using various means, like bot farms or account hacking.
Trending on Billboard
Billboard has investigated the rise and persistence of royalties fraud, including one story detailing an outfit out of Arizona, called Mediamuv, which stole $23 million in YouTube royalties over the course of 5 years. “The methods used by fraudsters are constantly evolving and improving,” as the CNM report states.
“The MLC is uniquely positioned within the music industry to contribute significantly to addressing streaming fraud,” says Andrew Mitchell, chief analytics and automation officer at The MLC. “Building on our ongoing efforts, we are proud to be working with Beatdapp to further amplify the many ways The MLC serves its 43,000+ Members.”
“The MLC plays a vital role in the music industry and we’re proud to collaborate with them and enhance their continuous efforts to combat streaming fraud,” says Morgan Hayduk and Andrew Batey, co-CEOs at Beatdapp. “Beatdapp has built its technology by learning from the best trust and safety solutions serving other online verticals and tailoring our technology to the unique attributes of music, to provide an unbiased, independent fraud detection solution capable of grappling with the persistent and ever-changing nature of fraud.”
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Source: Variety / Getty / Carlos Watson
Carlos Watson and his now-defunct startup, Ozy Media, have been found guilty of fraud.
Spotted on The Verge, Carlos Watson and Ozy Media were found guilty of fraud by a federal jury on Tuesday, per the New York Times reporting.
During the trial, the jury heard arguments from the government that Watson and Ozy Media misled investors by falsifying financial records, inflating audience numbers, and even completely making up business deals.
Things started well for Watson and business partner Samir Rao when they founded Ozy Media in 2013. The company launched with a newsletter, magazine, and an annual conference in New York City.
The company also received millions in investments while establishing high-profile partnerships before it all went to sh*t.
Per The Verge:
But things came to a halt when a 2021 article from New York Times media columnist Ben Smith reported that Rao impersonated a YouTube executive during a call with a Goldman Sachs banker about a potential $40 million investment. Rao pleaded guilty to related charges last year and is awaiting sentencing.
Additionally, prosecutors alleged that Watson lied to a prospective investor by saying that Google offered $600 million to take over the media startup. According to testimony from Google CEO Sundar Pichai, the company only considered investing $25 million as part of a potential plan to hire Watson. During the trial, Watson’s lawyers blamed Rao and Ozy Media’s employees for the fraudulent activity, NYT reports.
Speaking on the verdict, Breon Peace, the US Attorney for the Eastern District of New York, broke down the fraud shenanigans Watson was up to.
“The jury found that Watson was a con man who told lie upon lie upon lie to deceive investors into buying stock in his company,” Peace said in a statement. “Watson invented phony financial figures and caused others to forge fake contracts and impersonate a media executive.”
Bruh.
Watson is looking at a lengthy 37 years in prison after being charged with conspiracy to commit securities fraud, conspiracy to commit wire fraud, and aggravated identity theft.
Damn.
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Source: BROWARD SHERIFF’S OFFICE / Broward Sheriff’s Office
Sean Kingston will now have to defend his name in a court of law. He has been booked on defrauding over $1 million dollars in goods.
As reported by TMZ, the singer has some serious legal issues to deal with. His South Florida home was raided by police Thursday, May 23, where his mother Janice Turner was arrested. The celebrity gossip website has confirmed Sean Kingston was also arrested in Fort Irwin, California, that same day and made an agreement to be extradited back to Florida. It seems he was a man of his word and was booked at Broward County jail on Sunday, June 2.
According to the Sun Sentinel, his mother and the performer were charged on several charges including four counts of criminal use of personal identification information and three counts of grand theft. For the last couple of years the family name has been tied to multiple allegations of defrauding a jeweler, a car dealership and a luxury television vendor. Additionally, the arrest warrant claims they finessed almost $300,000 dollars from Bank of America and First Republic Bank. His lawyer Bob Rosenblatt tells BBC that both Sean Kingston and his mother plan to plead not guilty.
The man born Kisean Paul Anderson hit it big in 2007 with his single, “Beautiful Girls,” which charted at No. 6 on the Billboard 200.