Fraudulent gangs ‘steal billions’ from the music industry through ‘fake’ streams | Science and technology news

Scam groups take billions of dollars a year from the music industry through fake streams, a streaming technology company has warned.

At least 10% of all music streams are fraudulent, and this takes between $2 billion and $3 billion (£1.6 billion and £2.4 billion) from the global music industry every year , according to Beatdapp, the streaming fraud detection platform.

Global streaming increased by a third last year, with 7.1 trillion streams of recorded music in 2023, according to the latest figures published by Luminate, the music data provider.

Streaming revenue was $19.3 billion in the same year, according to the International Federation of the Phonographic Industry, which represents the global recording industry.

Streaming represents more than two thirds the industryrecipe, the research found.

Andrew Batey and Morgan Hayduk, co-chief executives of Beatdapp, said all stakeholders in the digital music supply chain lose money to fraud because they are taking from the pool of money, generated by subscription fees and advertising revenue, that is paid based on streaming plays.

Fraudulent groups act by pretending to be artists, uploading millions of songs on streaming services and playing them on fake or real accounts using stolen account details.

In doing so, they collect royalty payments that would otherwise have gone to those who own the rights to real artists’ songs.

Batey and Hayduk said Beatdapp, which works with label Universal Music Group and streaming service Napster, tracks streams by measuring a number of different metrics provided by streaming companies to identify streaming habits and detect fraudulent habits.

“No one realizes that a few cents go to this song and a few cents to that song, but in total they can steal billions of dollars,” they said.

“That money would have gone to real artists who would have been used to pay managers, agents and lawyers, record labels, distributors. But instead it gets diverted and goes to professional scammers who are just stealing from the industry.”

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Streaming services have introduced fines and other changes to royalty payment models in an attempt to prevent fraud. At the beginning of the year, Spotify introduced fines for record labels and distributors when “blatant artificial streaming” was detected in the content they released on the platform.

Phil Kear, joint general secretary of the Musicians’ Union, said fraud could be tackled by a change in the model used by streaming services.

A “user-centric” accounting model would mean that a listener’s monthly subscription fee would be distributed among the artists they listen to.

“Currently, 99% of the monthly fee paid by those who listen exclusively to heavy metal will end up going to Taylor SwiftEd Sheeran, Dua Lipa and the pockets of major record companies,” he said.

“User-centric would not only mean that money would go to the artists someone listened to, but it would also put an immediate end to bot streaming: pirates already have to pay £10 for each account, they currently make their money by skewing distribution so that they get more than £10 back, but with a user focus they would never earn more than they spent.