The music industry has never been short of semi-legal and illegal schemes and shady operators. Every aspect and every era of the industry have experienced various levels of fraud. In fact, a «standard» record deal through history could, in many instances, be viewed as an outright fraud! But, that’s a story for another day.
Today, in the streaming era, streaming fraud is the dominant force of evil in the industry , undermining the integrity of streaming platforms and threatening artists’ livelihoods. This practice involves artificially inflating stream counts through various methods to generate unearned revenue and manipulate chart positions.
Who are the bad actors?
Organized criminals, «crafty individuals», fraudulent companies and perhaps even the platforms themselves contribute to the problem. Unfortunately, there is a lot of creativity in coming up with methods to defraud platforms and artists.
Three Types of Streaming Fraud
1. Automated Streaming Farms
Fraudsters operate large-scale operations using networks of devices or virtual machines to continuously stream songs. These “farms” often employ:
– Thousands of fake accounts
– Automated scripts to simulate human behavior
- Proxy servers to mask locations
- Sophisticated rotation patterns to avoid detection
What’s the benefit?
This is essentially a criminal «micro-payment scheme» to siphon money from the digital streaming platforms. This method could also be used for money laundering.
The Swedish newspaper Svenska Dagbladet recently revealed that criminal gangs in Sweden created fake artist profiles on Spotify and uploaded music either generated by AI or stolen from lesser-known artists.They used bots or payed individuals to artificially inflate the streaming numbers of these fake artists.
The criminals collect royalties, effectively “cleaning” the money earned through illegal activities like drug dealing, robberies, and fraud. To further obscure their activities, the criminals often use cryptocurrency to pay for the bots or streaming farms, making it harder to trace the money trail. This activity asked some serious questions regarding Spotify’s internal streaming fraud measures.
2. Playlist Manipulation
Bad actors exploit playlist systems through various methods:
– Creating networks of playlists with fraudulent songs mixed among legitimate tracks
– Purchasing spots on third-party playlists
– Operating “follow-for-follow” schemes to artificially boost playlist visibility
– Using bots to generate fake followers and playlist adds
What’s the benefit?
These actors generally represent fake playlist placement services, offering artists placement and streams for payment. It’s a too familiar offer for artists today, X number of streams for $$. This is, unfortunately, a widespread practice making it exceedingly difficult to get much momentum from playlist placement.
Many services are also in, what we’d call a «grey zone», directly or indirectly paying playlist owners for playlists. This is an exchange that the DSPs are not too happy about, and it could be that they decide to come down harder on these services in a not so distant future.
3. Account Hacking
Criminals hack legitimate user accounts to:
– Generate streams without the account owner’s knowledge
– Create more believable streaming patterns
- Bypass fraud detection systems
- Exploit premium accounts’ higher payout rates
What’s the benefit?
This is a pretty straight forward fraud scheme for monetary gain, and can be another method used for money laundering as an alternative to streaming farms to bypass the fraud detection systems.
Besides these three prevalent fraud methods, there are a couple of other challenges to the legitimacy and profitability of streaming platforms.
«Creative» use of Multiple Artist Accounts
One tactic to take advantage of listeners’ love of generic music is to create fake artists with songs that match will with playlists with so-called «mood music»; «chill», «study», «relax» etc. themes. If you are able to mass-produce tracks like these with multiple artist accounts, and a percentage of these get picked up by the official playlists, then you have generated a pretty solid income stream (pun intended).
The prime example of this is Swedish artist Johan Röhr who generated 15B streams on Spotify by creating 656 artist names with a total of 2700 songs picked up on more than a hundred official playlists. This scheme was exposed by the Swedish newspaper Dagens Nyheter, and this story is yet another challenge to the legitimacy of the Spotify model.
Can we trust the digital streaming platforms?
In the context of receiving a completely «unfiltered», non-manipulated listening experience, the answer is a resounding no! Furthermore, as we’ve seen from the various examples of fraud and «grey zone» manipulation, there are many issues with the integrity of the streaming platform model. Whether these DSP companies are engaged in illegal manipulation, however, that is a tricky question.
The first major DSP scandal emerged in 2018 when Norwegian newspaper Dagens Næringsliv (DN) accused Tidal of inflating streaming numbers for Beyoncé’s “Lemonade” and Kanye West’s “The Life of Pablo».
DN claimed to have a hard drive with data showing hundreds of millions of fake plays, leading to higher royalty payouts for these artists at the expense of others. The Norwegian economical crime unit dropped the charges in 2021 due to «insufficient evidence to prove manipulation beyond a reasonable doubt.» However, the scandal cost Tidal both users and serious repetitional damage.
Another recent example is Drake accusing Universal Music Group and Spotify of “Illegally” boosting Kendrick Lamar’s “Not Like Us” streams in a recent legal filing. The track is a famous «diss track» related to a long-standing «beef» between the two rap-giants. Whether this law suit is based on more than hurt feelings is not exactly clear, and most legal specialists claim that this is a case that will not come to trial. Still, if nothing else, it’s another example of the lack of trust in the DSPs.
Consequences of Streaming Fraud
It is estimated that the cost is an astounding $2BN (source: BEATDAPP) making by far the most prominent threat to artist income. Besides this massive diversion of revenue for legitimate artists, the practice also accrue extra costs for fraud detection and prevention, and legal costs related to investigation and prosecution. These costs obviously also contribute to diluting the revenue for artists. Furthermore, fake streams and fake artists «mess» with the DSPs algorithms and recommendation systems making the less reliable than they otherwise could be. Unreliability of the overall system also impacts advertising revenue.
Ultimately, user and industry trust plummet for every new streaming fraud scheme that is brought into light. And, it is not like the DSPs had an abundance to begin with!
To be able to successfully combat this, a continued collaboration between platforms, artists, labels, and technology providers needs to be transparent and efficient.
