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The recent legal case involving $23m of YouTube royalties diverted away from Latin artists has put streaming fraud firmly back on the music industry’s headaches list. But how big is the problem really?

“In 2020, estimates were 3-10% of all streaming activity was fraud. Today, we confidently say it’s at least 10%, and more in some regions,” wrote fraud-battling startup Beatdapp earlier this year. “That equals ~$2B in potentially misallocated streaming revenues this year, and will be ~$7.5B by 2030 if left unchecked.”

Music Ally has been talking to Beatdapp’s Andrew Batey and Morgan Hayduk for our latest Music Ally Focus podcast, to pick their brains on streaming manipulation, and how it can be tackled.

The first step in that process is coming to a consensus on what, exactly, streaming fraud is. Beatdapp’s definition is when an individual or group uses bots, stolen accounts or manipulated platform features to bump up streams for a particular artist, and/or to steal streaming income away from legitimate artists and rightsholders.

“There are people who just look at the internet as a big pot of money that can be stolen from if you can figure out how to hack it,” said Hayduk. “It isn’t just about musicians competing for top placement on charts or playlists. Streaming is just another digital platform that can be hacked.”

One recent case study is sobering. “A household-name DJ: the overwhelming majority of their streams were being diverted to the wrong content owner,” said Hayduk.

“The audio was identical, so it had clearly evaded the filters somehow on the content recognition side, and everything about the release was the same except for the distributor, and obviously the rightsholder… and there was a whole network of streams that were happening under the surface that were targeting him.”

A company whose business model is being paid to uncover streaming fraud will inevitably talk up the impact of that problem – something Hayduk and Batey acknowledged in the podcast.

However, Beatdapp’s understanding of the issues does offer some paths forward: for example the need for DSPs and rightsholders to find a way of sharing streaming data to create an aggregated dataset that can be analysed over time for “subtle patterns” indicating scams.

“You have to look across a bigger data set than just one individual DSP,” he said. Music industry titans sharing sensitive data for a common goal?

That’s crazy talk! But Beatdapp is optimistic, citing the example of how the banking industry tackles fraud with the help of trusted third parties. “If it can work in banking, and that’s the most sensitive data on the planet, it can definitely work in streaming… There’s a precedent for this.”

Listen to Episode 74 of the Music Ally Focus podcast in full here or wherever you usually get your podcasts.

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