Fraud groups have been earning royalty payments by uploading millions of songs to streaming services and pretending to be the actual artists. It is estimated that at least 10% of all streamed songs globally are fraudulent.
According to a streaming technology company, these fraud groups siphon billions of dollars annually from the music industry through fake streams. Beatdapp, a streaming fraud detection platform, estimates that 10% of all song streams are fraudulent, resulting in a loss of $2 to $3 billion (£1.6 to £2.4 billion) each year for the global music industry.
Last year, global streaming surged by a third, with 7.1 trillion song streams recorded in 2023, according to Luminate, a music data provider. The revenue from streaming reached $19.3 billion in the same year, as reported by the International Federation of the Phonographic Industry, which represents the global recording industry. Streaming now accounts for over two-thirds of the industry’s revenue.
Andrew Batey and Morgan Hayduk, co-chief executives of Beatdapp, explained that all participants in the digital music supply chain lose money to fraud, which depletes the pool of revenue generated from subscription fees and advertising that is distributed based on streaming plays. Fraud groups impersonate artists, upload millions of songs to streaming services, and play them from fake accounts or real accounts with stolen details, thus collecting royalty payments that should go to legitimate artists.
Beatdapp, collaborating with Universal Music Group and the streaming service Napster, tracks streams using various metrics provided by streaming companies to identify and detect fraudulent activities. Batey and Hayduk highlighted that even though a few pennies might go unnoticed, in aggregate, these fraudulent activities can steal billions of dollars.
This money, which would have supported real artists, managers, agents, lawyers, labels, and distributors, is instead diverted to professional scammers.
Phil Kear, assistant secretary general at the Musicians’ Union, suggested that changing the accounting model used by streaming services could address fraud. A “user-centric” model would allocate a listener’s monthly subscription fee to the artists they listen to, rather than the current system where the majority of fees paid by someone who exclusively listens to heavy metal might be allocated to mainstream artists like Taylor Swift, Ed Sheeran, and Dua Lipa. This user-centric approach would ensure that money goes to the artists listeners actually hear and would reduce the profitability of bot streaming, as scammers would not make more money than they spend on creating fake accounts.
