Fraud Examined: Streaming Fraud

Strap in as we dive into the high-stakes world of streaming fraud, where over a billion dollars in royalty payments could slip through the cracks yearly. That’s a whopping four percent of the global music revenue—totaled at $26.2 billion in 2022—is estimated to be lost to nefarious digital deeds. And when you zoom in on the streaming sector, which pulls a hefty 67% of that revenue, the plot thickens.

Here’s a breakdown of streaming fraud and how it's systematically exploiting the music industry.

What is Streaming Fraud?

At its core, streaming fraud involves manipulating streaming services like Spotify and Apple Music to generate fake plays and, consequently, unearned royalties. With their vast pools of royalties, streaming platforms present a tempting target for scammers looking to divert funds into their own pockets.

This modern-day 'skimming' echoes "Superman 3" or “Office Space” but with a digital twist.

How Does Streaming Fraud Work?

There are a few different ways in which streaming fraud can work,

The Heist:

• Artificial Amplification: Scammers use bots or click farms to inflate play counts. It's a classic case of quantity over quality, as these artificial streams mimic real human behavior without any actual ears on the other end.

• Fake music: Scammers can start by acquiring or creating mediocre yet passable music—sometimes using AI-generated tracks or buying songs from unsuspecting artists at low prices. This music doesn’t need to stand out; it just has to blend in.

• Imposter Tracks: Imagine listening to your favorite artist, but it turns out, it’s just a knock-off version uploaded under a slightly altered name. Yep, that’s streaming fraud—diverting royalties and causing a real identity crisis for artists.

• The Complex Networks: Some networks go as far as physically distributing computers to unsuspecting individuals under the guise of charity. These computers, however, run bots in the background, streaming music from various accounts to mimic real geographic and demographic listening patterns.

• Rented Botnets: Scammers rent hacked accounts from other cybercriminals, much like renting server space, to play their tracks subtly throughout the day. This makes the activity seem legitimate, as if real users are choosing to play these songs.

• Account Hijacking: Scammers hack into legitimate user accounts to play their tracks, blending in the fraudulent streams with everyday listening.

Why It Matters:

With 6% of global streaming revenue potentially pilfered by fraudsters, artists from the top musicians to independent newcomers are feeling the pinch. It’s not just about lost earnings; it’s about maintaining the integrity of the charts and ensuring the music that deserves the spotlight isn’t overshadowed by counterfeit tunes.

The Implications and Detection

Streaming fraud doesn’t just rob artists and labels of earnings; it distorts the music industry’s economic landscape and can undermine the credibility of streaming data. Detecting this fraud involves recognizing patterns of unnatural streaming activity, such as an unusually high number of plays from accounts that otherwise show normal activity or spikes in plays that don’t correlate with legitimate promotional activities.

Companies helping fight streaming fraud:

Companies are now deploying sophisticated algorithms to detect and mitigate such fraud, ensuring that payouts are made only for genuine interactions. However, as scammers continuously refine their strategies, the battle against streaming fraud remains ongoing.

• Beatdapp - Find missing royalties & identify streaming fraud

• Music Fights Fraud Alliance - An industry-wide alliance working to combat streaming fraud

• Arkose Labs - Stops botnets

• Pex - Real-time content identification and UGC datantent