INDIE INSIDER
HAS A CANADIAN COMPANY SOLVED
MUSIC STREAMING ’ S COSTLY FRAUD PROBLEM ?
Vancouver-based company Beatdapp is identifying fraudulent streams that are costing labels , publishers & artists hundreds of millions of dollars per year in lost royalties
By Michael Raine
Streaming has a fraud problem , which means everyone who earns royalties from music has a fraud problem . This isn ’ t a new development ; labels and publishers have been speaking out about for at least the last three or four years – but it is a uniquely modern one . For decades , the music industry was concerned with fans not paying for music , whether it was copying cassette tapes in the 1980s or illegal downloading in the 2000s , which reduced the amount they spent on music . Streaming fraud is different , though , in that actual dollars spent are being stolen out of the pockets of rights holders , from unsigned artists to major labels and publishers . We ’ re talking about hundreds of millions of dollars , potentially billions in the near future , in royalties lost as fraudsters use bots and other sketchy means to rack up streams on the music they ( or clients ) own , taking a chunk out of the revenue pool that should be divided amongst legitimate artists , labels , and publishers . But a Canadian company , Beatdapp , and its team of data scientists and engineers is working with streaming services , labels , and publishers to claw back these stolen royalties .
There ’ s no agreed-upon definition of a “ fake stream ,” but the primary concern is the use of bots and automated accounts to manipulate streaming numbers , either to inflate a song or artist ’ s popularity , or to divert royalties to the fraudster . In essence , practices that are not “ genuine ” listening . There are two general categories this falls into , and the first is illegitimate playlist promotion services , which you ’ ve likely seen ads for on social media . They promise artists that they will boost their streaming numbers ( but don ’ t say how they do it ). The second category is straightforward theft , where any old nonsense music ( often very short songs because why waste three minutes when only 31 seconds of listening to a track counts as a stream ) is uploaded to the DSPs and then bots are used to quickly accumulate streams .
“ Music has an interesting set of motivations , because it ’ s hard trying to cut through the noise of the 50,000 tracks a day , or however many , that are now uploaded to Spotify . And so , if you ’ re an emerging artist and you ’ re looking for marketing techniques that might help you get noticed , when you google ‘ how do I get more streams on Spotify ?’ you ’ ll be served a litany of advertisements for streaming or marketing services that are just fronts for bot activity . And so , that ’ s a problem , and it ’ s a problem that artists sometimes walk into almost unknowingly , because they think they ’ re just buying playlist promotional services , but what they ’ ve actually contracted with is someone who ’ s running a bot farm . That sort of ladders all the way up because wherever you are in the hierarchy of success , there are incentives to be bigger and better ,” Beatdapp Co-Founder and Co-CEO Morgan Hayduk tells Canadian Musician . “ We think that is a pretty limited bucket relative to the , ‘ We can just make money by putting nonsense music onto a streaming service and targeting it with sophisticated bots , then reaping those royalties for as long as those services don ’ t notice us .’”
The other important element is the ease with which digital distribution allows fraudsters to target dozens of services at the same time . For any of the popular digital distributors , like a DistroKid or CB Baby , one of their main selling features is that an indie artist can upload their song once
and it get distributed to over 100 streaming services and stores , from the major players like Spotify and Apple Music to regional services like Lebanon-based Anghami , which covers music in the Arab world .
“ So , you actually have a lot of attack surface to target with uploaded content , if you ’ re just in it to illicitly reap royalties ,” says Hayduk . “ This is central to our thesis , which is if one DSP catches you and takes your song down , you still have 49 other kicks at the can to keep going . If 40 of them catch you , you still have 10 . And so , if there isn ’ t somebody in the middle , saying , ‘ Hey DSP A , what we ’ re seeing on your platform looks identical to what we ’ re seeing on service B , C , and D , and all four of you should take this down ,’ then you ’ re left not just playing whack-a-mole , but you ’ re giving fraudsters the opportunity to have lots of other places to continue making money . That ’ s why coordinating around somebody who can look across platforms is the most needed step , I think , to being efficient at this , and at being able to mitigate damage before it gets into the hundreds of thousands or millions of dollars per attempt , which we ’ ve seen in some of the publicized scams that have popped up over the last couple of years .”
How much exactly is fraudulent streaming costing artists and the music industry ?
10 CANADIAN MUSICIAN