streaming fraud
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Beatdapp co-founders and co-CEOs Morgan Hayduk and Andrew Batey were not initially focused on fighting streaming manipulation. Batey spent years in digital marketing, while Hayduk formerly worked as a lobbyist for the Canadian music industry in the area of copyright protection. At first, they teamed to build an auditing tool that would enable labels to evaluate inconsistencies between their sales reports and streaming services’ server logs. Conversations with label executives indicated that “there were pretty often material discrepancies,” Hayduk says.
As he and Batey tried to understand those inconsistencies, it became clear that streaming manipulation was causing some of them, and Beatdapp embarked on developing a tool to detect fraudulent streams — which Hayduk defines as the leveraging of “bots, stolen accounts or manipulated platform features” to steal streaming income — and prevent them from impacting payouts.
According to a recent report from the 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. “The methods used by fraudsters are constantly evolving and improving,” the report noted, “and fraud seems to be getting easier and easier to commit.” If that percentage was applied to IFPI’s estimate that global streaming revenue totaled $17.5 billion in 2022, fraudulent streams would amount to $350 million in potential lost income for legitimate rights holders.
Beatdapp’s software sifts through massive amounts of data from partners — including labels, distributors and streaming services — to identify and investigate suspicious patterns. In one case, it identified 10,000 accounts all playing the same 63 tracks. The pair say the company now analyzes hundreds of billions of streams, and while they declined to identify partners, they recently started working with SoundCloud and Napster, according to two sources.
“If we can make this industry less attractive for financial fraudsters, that will make a positive difference for everybody who’s working on music,” Hayduk says. “That’s what animates us.”
Why is streaming fraud an important issue?
MORGAN HAYDUK: It hurts everyone who makes a living in the music industry and, left unchecked, creates this promotional race to the bottom where everyone believes they have to cheat to succeed. In cybersecurity terms, it’s important to shrink the attack surface of the industry.
ANDREW BATEY: In an industry where it’s already hard to make something and then promote something and then get paid, you should at least get paid correctly.
How much data is Beatdapp analyzing at this point?
HAYDUK: We’re looking at about 320 billion streams now. That’s about 13 trillion individualized streaming data points when you account for all of the metadata associated with each of those streams. We expect to add data in the neighborhood of another 50 billion streams in [the second quarter] and about another 2 trillion data points on that.
BATEY: It’s not just the individual stream. You might make 12 decisions in an app, such as how you search — if you clicked on the artist first and then you looked at their song list. We’re capturing all of that, anonymized across users. All of that context helps us because if somebody consistently hits, let’s say, the exact 11 things for every song they play, that’s a pretty obvious case of fraud if they’ve done that 3,000 times in a week.
How has the industry’s perception of streaming fraud changed since you started Beatdapp?
HAYDUK: Just hearing people acknowledge the issue is probably the biggest shift. It used to be verboten to speak publicly about streaming fraud. It was all behind closed doors. But I don’t think you can fix a problem until you accept its existence. We’re starting to get there now and [are] seeing a more widespread willingness to put in place solutions.
How has your perception of the problem changed as your data set has expanded?
HAYDUK: The biggest revelation to us has to be that this is way closer to death by a thousand paper cuts than it is a top-of-the-market problem. If you asked us where most of the fraud came from 18 months ago, we probably would have pointed the finger at bigger artists because we would have thought they had the most to gain. But we were missing the point of most of this activity. It’s not about changing perception; it’s about making money. This isn’t a phenomenon that’s driven by major labels and major independent label artists or their top artists. The overwhelming majority, like upwards of 80% of what we see is fraud, is coming from — call it non-music content. It’s not being released for popular consumption or because these are artists who are trying to get noticed. These are releases that have no commercial purpose except as [instruments of] fraud.
BATEY: When we first started, we genuinely thought fraud would be 1% to 3%. Now we think it’s closer to 10% [though some of this is caught]. Also we would have guessed that most of the fraud would occur on the platforms where people were — Spotify, Apple, YouTube. But because it’s a lot of financially motivated fraud, what we actually see is that it’s easier for the fraudsters to attack all the mid- and long-tail [digital service providers] as well, where they’re less likely to get caught and they’ll get a similar or better per-stream payout. Why not target all of these smaller DSPs with zero protections in place and get paid across all of them?
France’s CNM recently came to the conclusion that fraud is getting easier to commit.
BATEY: I 100% agree with that. There are so many ways to exploit platforms. If your job is to deliver the best user experience possible, it often means making it easy for them to access that content and creating really cool ways for them to experience or engage with that content. [When that happens,] there are more ways to manipulate that content for the purpose of exploiting it for a payout.
HAYDUK: And the tools that you need to commit fraud effectively and at scale are easier to access now than ever before. The tools that facilitate fraud in e-commerce or ticketing or financial services are also repackaged and repurposed to commit streaming fraud. You can generate fully automated online bot farms using cloud computing in a way you couldn’t 10 years ago.
How do you avoid generating false positives when you’re hunting for fraud?
HAYDUK: We know that a false positive is worth considerably more in the loss column than a false negative, so we adjust our models to account for the fact that they need to be conservative in the right ways.
BATEY: You can’t get it wrong. If you miss a fraudster, it’s OK. We hope we catch them later. If we call something fraud that’s not, that’s way worse.
Some have suggested that a user-centric payout system might mitigate fraud.
HAYDUK: Our view is that it’s not going to make that big a difference. It’ll change the tactics, but it won’t change the motivation. It’s a big pot of money on the internet, and generally speaking, the DSPs are still fairly soft targets. A different payout structure will just change the tactics that fraudsters use to aggregate money and divert it their way. Obviously, there’s a whole different case for the merits of payout systems if you’re an artist or you’re a label.
There’s a lot of industry concern about artificial intelligence right now. To what extent does AI make it even easier to commit these types of fraudulent activities?
HAYDUK: It’s a tool. We work for some good AI companies that care about not being a tool for fraudsters. That said, the new models are incredibly powerful, and you can create content at scale. There’s no putting the genie back in the bottle when some of these tools emerge. The tougher we make it to get away with fraud, the less valuable the tool becomes in the hands of someone who’s wielding it for a bad purpose.
How incentivized are DSPs to care about fraud?
HAYDUK: Their biggest partners care, especially in light of what we said earlier: Market share shifts matter to the partners and, therefore, it matters to the DSPs. I think consumers also care because bad recommendations on the DSP side make for bad user experience. And given that every platform is offering roughly the same catalog to the consumer, if your recommendations are substandard, that makes consumers more inclined to choose your competitor.
Some music industry executives worry that public discussions of fraud undermine user confidence.
HAYDUK: How many times a week does your bank email you about the extra efforts they’re taking to protect you from fraud in the financial sector? It doesn’t make me want to boycott my bank when they tell me that. Fans probably want to hear that, as an industry, we’re taking steps so that the artists they care about are paid correctly.
BATEY: If you’re the consumer, your account was hijacked, and now you’re getting a bunch of recommended songs that don’t make any sense, you’re not blaming the fraudster — you’re blaming the platform.
What is your dream scenario for fraud mitigation in the industry?
HAYDUK: Our view is there are some things you can’t do in a vacuum. DSP A can’t look at the data from DSP B to help inform its own detection models. It’s way too competitive between the platforms to give up the level of data required to do fraud detection at the highest levels. Having a platform in the middle acting as Switzerland, working for the collective benefit of everyone without minimizing the level of competitiveness between the platforms, is the right approach. And it’s also an approach that we’ve seen play out in other verticals with similar dynamics.
In May 2022, the German Music Industry Association (BVMI) set its sights on “curbing streaming manipulation and streaming fraud.” These issues are “a central concern” for the music business, the organization wrote in a confidential document reviewed by Billboard, due to their “distortion of the chart ranking and/or influencing of royalty payments.” As a result, BVMI issued a call for proposals to “establish a ‘Fraud Detection System.’ ”
Related discussions have been taking place around the music industry recently. In January, the French government published what appears to be the first-ever national analysis of streaming fraud. In the United States, the outline of a fraud-mitigation proposal is circulating among several distributors, publishers and streaming platforms, while the annual Music Biz conference in Nashville in May will feature not one but three panels on the topic.
Why all the sudden attention on this issue? The Centre National de la Musique (CNM), an organization that operates under France’s Ministry of Culture, found that 1% to 3% of streams in the country were fraudulent in 2021. If those numbers were to hold true for the worldwide music market — which IFPI valued at $17.5 billion in 2022 — that would mean approximately $175 million to $525 million of streaming royalties are being hijacked globally.
Some think that’s on the low end. The streaming service Deezer has said that 7% of streams on the platform are fraudulent — and that’s just what it identifies. BeatDapp, a Vancouver-based company that builds fraud detection software for labels, distributors and streaming services all over the world, estimates that around 10% of global streams are fraudulent; while some of this activity is caught, that could mean that over $1 billion in royalties ends up in the wrong pockets.
“Nobody’s immune” to streaming fraud, says Christine Barnum, chief revenue officer at the distributor CD Baby. “So people are finally having the realization, ‘Yeah, this is a problem.’ ”
“It’s just very common,” adds one indie-label head who has “definitely bought” streams. “People are really worried about optics — ‘I need to have at least a million streams on a song,’ whatever the bar is that they’re trying to hit to make it look a certain way. There’s so much pressure.”
“Streaming fraud” is a rangy term that can encompass a variety of behaviors. These include uploading an unauthorized remix of a viral single, boosting play counts by streaming music through a hacked Spotify account or creating a bot network to drive streams to a pop hit (for chart purposes) or a white noise recording (for royalties). (CNM’s study found that 80% of fraud was detected in streaming’s “long tail,” meaning it had little to do with the charts.)
The unifying thread across these activities: They can siphon money from the royalty pool. For most streaming services, dollars from ads and subscriptions are lumped together and then distributed to rights holders according to their share of total plays. “If the demand for certain titles is increased due to streaming manipulation,” BVMI’s document explains, “other rights holders automatically receive lower royalty payments.”
Or, as Barnum puts it, fraud is “ruining it for the genuine artists who deserve to be accurately compensated for their listens. That’s being diluted.”
Some fraud is similar to old-fashioned music piracy, like uploading an unsanctioned version of an artist’s work to Spotify — or even just a duplicate under an alternate name — and claiming royalties from the resulting streams. With both piracy and fraud, “artists and anyone that makes their living from music have the potential to suffer real economic loss,” says Morgan Hayduk, co-founder/CEO of BeatDapp.
But while piracy in the file-trading and CD-burning era of the 2000s stemmed from “consumer demand for lower costs and more choice,” streaming fraud is “primarily driven by the profit motivations of nonconsumer enterprises seeking to extract revenue from the digital music industry,” Hayduk continues. “They leverage the same tools used for other types of online fraud, like stolen account credentials and bots. This isn’t a consumer-led phenomenon — it’s a reflection of the ease with which digital platforms can be manipulated for specific commercial gain.”
Sure enough, CNM’s report lamented that “fraud seems to be getting easier and easier to commit.” “In the beginning, fraud came mostly from unknown artists trying to get visibility, increased promotion or maybe a record or distribution contract,” says Ludovic Pouilly, senior vp of institutional and music industry relations at Deezer. “Right now, streaming fraud is more sophisticated and increasingly harder to detect, and we can see activity for the music of artists on all levels.” Meaning both that bad actors are diverting streams from major artists and it’s no longer simply unknown artists using bots to get visibility.
Currently, most efforts to combat fraud take place within individual organizations — whether that’s a streaming service or a distributor — which try to detect suspicious activity before it can affect payouts. In addition, IFPI has had some success taking legal action against streaming fraud sites in Germany and Brazil.
But fraud persists, which might be why there’s a growing realization that if the music industry really wants to prevent hundreds of millions of dollars from slipping out a side door, it may need a more comprehensive, cooperative approach. That said, there’s no consensus yet on what that might look like. In a statement to Billboard, BVMI said, “We are currently working on a tool to find artificial streams,” calling it a “work in progress.”
Louis Posen, founder of Hopeless Records, is an advocate for third-party oversight. “Currently, security is on a [digital service provider] by DSP level,” he says. “I think we need a monitoring, prevention, detection, mitigation and enforcement system at the level of the financial industry — both a third-party company that can monitor all the services as well as a department at each service with full resources.”
A senior executive at a major label doesn’t agree. “I’d really like to believe it’s not necessary, because it adds cost to the ecosystem,” the executive says. “Between the DSPs, the labels and the distribution side of our business, there are ways to solve this: having strong technology and technology controls, having strong rules and policies [around fraud] and adding consequences when you violate those.”
While the major labels either declined to speak about this issue on the record or did not respond to requests for comment, the senior executive notes that “we have concern over any level of fraud that happens in any of the platforms.” In 2019, the majors were among those that signed a code of conduct condemning streaming fraud, though the document was not legally binding, so it’s hard to tell the extent of its impact.
The disagreement about the best ways to combat fraud were evident in the CNM report. The study was hamstrung by several streaming services — Apple Music, YouTube and Amazon — declining to share information about fraud on their platforms, seemingly content to handle the issue internally. Those three platforms are estimated to account for a little over 35% of global streaming subscriptions; CNM was forced to perform its analysis without a complete view of the French streaming market.
Barnum maintains that “a global problem is going to take a global solution.” For now, she’s at least heartened by the fact that more people are willing to acknowledge streaming fraud’s existence: “I’m no longer a weirdo on the corner saying, ‘I think there’s a problem.’ ”
As the music industry becomes increasingly conscious of — and vocal about — the challenges of the streaming model, fraudulent streams have become a source of growing frustration. “Every penny that goes to a fraudulent stream is a penny that doesn’t go to a legitimate stream,” says Richard Burgess, president and CEO of the American Association of Independent Music. “Fraudulently increased stream counts can affect recording budgets, licensing deals, catalog valuations and can result in the misallocation of marketing budgets.”
The French government, which recently published the results of a months-long, country-wide investigation into streaming fraud, portrayed understanding the impacts of this activity as an imperative. “The stakes are high in our country as well as in the rest of the world: the development of music services, which can be free and financed by advertising, or paid through subscriptions, as individual or family plans, constitutes a tremendous opportunity for the music sector, after years of a long crisis,” the report asserted. “…Such growth whets the appetites and stimulates the creativity of those who seek to abuse the system.”
“The multiplication of fake streams, that is to say the processes allowing [bad actors] to artificially boost play counts or views to generate an income, is nothing short of theft,” the report continued.
The French study, conducted without data from YouTube, Apple Music, or Amazon Music, found that 1% to 3% of plays were fraudulent, while also noting somberly that “the reality of fake streams goes beyond what is detected.” BeatDapp, a Vancouver-based company that creates fraud detection software for labels, publishers, distributors and streaming services, believes the global level of fraud is higher. “In 2020, estimates were 3 to 10% of all streaming activity was fraud,” the company wrote in 2022. “Today, we confidently say it’s at least 10%, and more in some regions. That equals ~$2B in potentially misallocated streaming revenues this year, and will be ~$7.5B by 2030 if left unchecked.”
So what forms does streaming fraud take? According to Burgess, the practice “covers a multitude of techniques used to increase stream counts or impressions by other than legitimate means.”
Here are three of the most common:
Bots
Discussion of streaming fraud often turns quickly to bots, which Burgess defines as “automated software that can be used to generate views, streams or interactions.” To detect bot activity and prevent it from affecting royalty payouts, companies build models that trawl streaming data and look for listening patterns that appear anomalous: BeatDapp likes to discuss an example of finding tens of thousands of accounts all streaming the same 63 songs.
“If I’m trying to push numbers up, I’m going to do it across streaming services in a subtle fashion this way,” BeatDapp co-CEO Andrew Batey says. “Spread it across a lot of accounts and multiple platforms, and you can drive a significant number of plays with no one looking.”
Click Farms
Streaming services are looking for suspicious play patterns that don’t reflect human behavior. Fraudsters are aware of this, so they try to camouflage their activity in ways that appear human. One method is to get actual humans to press Play through what are known as “click farms.”
Eric Drott, a professor at the University of Texas in Austin who has written about streaming fraud, describes these as “enterprises concentrating low-paid, precarious workers who are engaged to perform the sort of rote, repetitive tasks that keep the flows of digital capitalism moving: creating social media accounts, moderating content for platforms, clicking online ads, liking or rating items and, of course, generating plays on streaming services.” Accounts that stream music 24 hours a day or stem from a smartphone that never moves or dips below 100% power could be evidence of click-farm activity.
Imposters
A third prominent form of fraud identified by Burgess involves impersonating creators by uploading a version of their song to streaming services and illegally collecting creators’ legitimate royalties. This is a common problem faced by artists who are having a moment on TikTok, for example: Imposters post a version of the TikTok hit on streaming services under a slightly different name, aiming to divert some streams (and hopefully royalties) their way.
“It happens to every single viral artist,” says one manager who shepherded a viral act to a major-label deal last year. There are many distribution companies out there, and managers say that some of them have lax oversight of what’s being uploaded to the DSPs through their platforms. This means artists and their teams have to keep close watch on streaming platforms and issue takedowns when they find imposter versions.
Global music piracy crept up in 2022, marking the second straight year it has increased after a period of steady decline, according to a report from MUSO, a U.K. technology company. MUSO, which tracks consumption across websites around the world to “to understand the true picture of digital piracy,” logged more than 15 billion visits to music piracy sites in 2022.
Piracy has been a thorn in the music industry’s side for more than two decades. In recent years, however, the widespread adoption of streaming has led to a steep drop in the types of peer-to-peer and file-sharing behavior that once threatened to bring the music business to its knees.
In a world driven by streaming, rather than downloads or CD sales, the industry is increasingly focused on a different set of issues. Key among them is streaming fraud, which is not driven by fan’s desire to have more music at their fingertips. Instead, this activity often involves bad actors siphoning money away from the music business — by running bot networks that play 31-second white-noise recordings nonstop on Spotify, for example.
Growth in streaming revenues shows signs of slowing, meaning that every dollar that leaks out of the music ecosystem is becoming more important to labels. And MUSO’s report shows that piracy, even if it has faded from headlines, isn’t negligible.
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For example, Justin Bieber‘s songs, albums, or “music bundles” — which could include an entire discography — were illegally downloaded over 1 million times across the peer-to-peer/torrent network in 2022, for example, with more than 40% of those downloads coming from the U.S. MUSO detected more than 950,000 illegal downloads of David Bowie‘s music, more than 780,000 across Bruce Springsteen’s catalog, and more than 750,000 involving Bob Dylan releases.
The U.S. accounts for 7% of all piracy traffic picked up by MUSO, third only behind Iran (15.05%) and India (10.29%). Despite the prevalence of streaming among U.S. listeners, their appetite for piracy far outpaces their peers in other major music markets like the U.K. (1.86% of piracy traffic) and Germany (1.92%). And more than half of all the piracy in the U.S. takes place via stream-ripping, which relies on programs to get around YouTube’s copyright protection and convert audio into MP3s.
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In 2019, the RIAA said it was monitoring more than 200 stream-ripping sites. Labels have taken legal measures to go after some of these: In December 2021, a U.S. judge ordered a pair of Russian sites to pay more than $80 million — $50,000 for each of the 1,618 copyrighted works infringed — in damages. The judge wrote that 1,618 was “likely on the low end of Defendant’s indeterminable number of violations.” Tofig Kurbanov, the owner of the sites, subsequently appealed the ruling.
RIAA chief legal officer Ken Doroshow said at the time that “this litigation sets out vital first principles that should chart a path for further enforcement against foreign stream-rippers and other forms of online piracy that undermine the legitimate market for music.” The ruling, he said, “is a major step forward to protect artists, songwriters, record labels, and consumers from one of the most pernicious forms of online piracy.”
Despite the judgement, MUSO’s data indicates that stream-ripping remains the most prevalent form of piracy in the U.S., accounting for more than half of piracy demand in the country (51.3%). This is well above the global average, which MUSO found to be 33.4%.
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Overall, music piracy has fallen by more than half since 2017, according to MUSO. But the company predicts another small rise in 2023.
“For the Film and TV sectors, MUSO’s data indicate that piracy demand will continue to increase across 2023, as inflationary and economic pressures result in subscriber losses for the various legal streaming services,” the company’s report notes. “This will drive users to illegally stream or download the content they want to watch via piracy sites. MUSO does anticipate seeing a similar uptick in music piracy across 2023,” but one that will be “less marked than [in] other industries.”
More than 1 billion music streams in France — or between 1% and 3% of all streams in the country — were detected to be fraudulent in 2021, according to a report released this week by a French government organization that analyzed data from Spotify, Deezer and Qobuz.
If the report’s number were to hold true for the worldwide music market — which the IFPI valued at $16.9 billion in 2021 — that would mean approximately $170 million to $510 million of streaming royalties are being misallocated globally. This is roughly in line with a 2019 estimate of $300 million lost to streaming fraud cited during Indie Week.
The Centre national de la musique (CNM), an organization created by the French government in 2020 that operates under the Ministry of Culture, found that fraud is widespread in France, the fifth-largest music market, to a sobering degree: “Irregularities are spotted” on both major-label and independent releases, national and international albums, old catalog and fresh new singles alike, the CMN says in its 56-page study. “The methods used by fraudsters are constantly evolving and improving,” it notes, “and fraud seems to be getting easier and easier to commit.”
The genres which had the highest percentage of fraudulent streams detected in the CNM’s report were background music (4.8% on Deezer) and non-musical titles (3.5%). While the raw number of fraudulent streams detected was highest in rap — the most popular genre in France — that represented just 0.4% of overall plays in the genre on Spotify and 0.7% on Deezer.
CNM’s report appears to be the first country-wide investigation of streaming fraud. “We’re happy with the effort by the CNM and the French government as a whole to look into this and take it seriously,” says Morgan Hayduk, founder and co-CEO of Beatdapp, a Canadian company that provides fraud detection software to streaming services, labels, and distributors. “This issue deserves the weight and attention that they gave to it.”
CNM’s report comes with several caveats, however. The organization’s data does not include information from Apple Music, YouTube and Amazon, who declined to share information about fraud on their platforms. According to a recent estimate from MIDiA Research, those three services account for slightly more than 35% of global streaming subscriptions. (MIDiA did not share country-level figures.)
In addition, Hayduk says, the report only looks at country-level data. This means it does not account for VPN usage that allows fraudsters to mask their country of origin.
Bad actors committing streaming fraud often “rotate through multiple countries redirecting traffic constantly,” says Andrew Batey, Beatdapp’s other co-CEO. “It’s not uncommon when we find fraud cases to see 15 devices spreading plays across 30 countries.” To catch that, he says, “you need a global view.”
Fraudulent streams, once defined by former Napster executive Angel Gambino as “anything which isn’t fans listening to music they love,” have become a major topic of music industry concern in Germany, France and Brazil. That’s because undetected fraudulent streams can impact market share calculations and divert money from honest artists.
The countries have taken different approaches to combat this fraud. The IFPI led a legal effort to shut down German websites that offered streams for cash starting in 2020. The organization made the case that manipulating play counts allows artists to create a false impression of popularity, ultimately misleading consumers and violating Germany’s Unfair Competition act.
In Brazil, law enforcement worked in conjunction with Pro-Música, IFPI’s Brazilian affiliate, to shut down 84 stream-boosting sites in the country in 2021. Prosecutors there argued that sites that offered fraudulent streams were violating Brazil’s Consumer Defense Code and treated the activity as a criminal act.
Brazil’s coordinated effort — dubbed Operation Anti-Doping — determined that the fraudulent streams were actually being generated outside of Brazil, illustrating the limitations of a single-country approach to fraud reduction. “No company in Brazil has the technology to make these fake streams,” Paulo Rosa, Pro-Música’s president, told Billboard in 2021. “This technology comes from websites hosted in Russia.”
The U.S. industry has historically appeared less bothered by streaming fraud — or at least less willing to acknowledge its existence publicly, with executives and streaming services reluctant to discuss the subject. This may be starting to shift, however. At a Music Biz panel in May, SoundCloud vp of strategy Michael Pelczynski noted that the current streaming ecosystem is rife with “very prevalent fraud and abuse,” and that this activity has “cultural ramifications.” When undetected fraudulent streams “start influencing the way we measure the success of music, we are literally supporting inauthenticity,” Pelczynski said.
The CNM appeared heartened by the fact that, since the summer of 2021, it has seen “the growing mobilization of platforms, distributors and producers” worried about fraud, resulting in the creation of “dedicated teams” and the outlay of increased resources to battle “manipulation.”
But there remain several key challenges when attempting to tackle fraud. The lack of transparency from some streaming platforms, and the inability to push toward assembling a comprehensive global data set, means that the scale of the problem is still unknown.
What’s more, as the CNM points out, it’s nearly impossible to punish those engaged in fraud because they are rarely identified. The penultimate section of the report lays out potential legal remedies that could be used to fight fake streams in France — if authorities were able to prove that bad actors violated laws related to illegal hacking or unfair business practices. They include fines of up to 300,000 euros ($324,000) and prison sentences of up to five years for perpetrators.
The CNM pledged to release a follow-up report in 2024.
As streaming became the dominant mode of music consumption, fraud and “fake streams” have been regarded as a minor nuisance — generally acknowledged but seldom worried about. Most industry executives tend to see this activity as a way for aspiring acts to inflate their numbers, and thus their commercial potential, or as an avenue for grifters to steer money into their pockets by running up plays of white noise or rain sounds.
At least since this summer, however, SoundCloud has detected evidence of fraudulent streams or manipulation on multiple releases from both notable independent acts and major-label artists, including hitmakers with track records of successful singles, according to two sources familiar with the company’s operations who spoke on the condition of anonymity. And this is not unique to SoundCloud. This summer, Deezer executive Ludovic Pouilly told the French investigative publication Les Jours that it has become more common to see “artists in the top 200 who have millions of real streams” have fake streams as well.
Streaming services are increasing their effort to fight the fakes. In a statement, a spokesperson for SoundCloud said, “We take the issue of stream manipulation extremely seriously and make every effort towards identifying and mitigating inauthentic plays.” It’s not alone: Earlier this year, a Spotify spokesperson told Billboard, “Stream manipulation is an industry-wide issue that Spotify takes very seriously.” SoundCloud also works with a third-party company that “specialize[s] in bot detection” to fight stream manipulation, an executive said at a Music Biz panel in May. (The panel had a pointed title, “They’re Coming For Us: Fraudsters & How We Stop Them.”)
Streaming executives say there are a handful of ways to fraudulently boost an artist’s numbers, including harnessing bot networks or fake or stolen user accounts, and that this activity is becoming “more intense,” as Pouilly put it. At Music Biz, Napster senior vp and general counsel Matthew Eccles noted that fraud on the platform “increased over COVID.”
In fact, the current streaming business is rife with “very prevalent fraud and abuse,” according to SoundCloud vp of strategy Michael Pelczynski, who spoke at the same panel. This abuse has “cultural ramifications,” Pelczynski added: If fraudulent streams go “undetected and not policed, and [they] start influencing the way we measure the success of music, we are literally supporting inauthenticity.”
The level of fake streams detected varies by service and region. At one point, bots on Pandora were generating “a large, large fraction of spins,” according to George White, senior vp of music licensing at SiriusXM, “nearly equaling” the amount coming from human accounts. Pouilly told Les Jours that “7% of the volume of daily streams [on Deezer] is now detected as fraudulent.”
The Merlin Network, which handles digital licensing for many independent labels and distributors, used to send members a monthly report detailing the percentage of fraudulent streams from their releases on Spotify; this February, 2.5% of ad-supported streams and 1.2% of the plays from premium Spotify accounts were identified as fraudulent. (Asked about the issue, a spokesperson for the platform said that stream manipulation was “an industry-wide issue.”) The ad-supported number was nearly 10% at one point in 2020, according to one executive who received the report.
As evidence of what Pelczynski dubbed “prevalent fraud” grows, music executives worry that artists who are playing by the rules will start to feel pressure to pad their numbers in order to keep up with rivals — especially in an increasingly crowded landscape where it feels harder than ever to stand out. Paying for fraudulent streams “will become a marketing expense that everyone needs to employ if it’s left unchecked,” White warned at Music Biz.
Eccles from Napster worried that the music industry could enter a phase like professional cycling decades ago, when cyclists felt compelled “to dope” just to compete at a high level. It is “key,” Eccles stressed, “to avoid a situation where that happens in music.”