Music-streaming fraud is A Thing, and as an industry we’ve become aware that it could be accounting for anywhere between 5% and 10% of plays on streaming services.
However, one of the startups that is helping the industry to tackle this challenge has told Music Ally that the percentages may be far higher for certain music distributors.
Beatdapp’s co-CEOs Morgan Hayduk and Andrew Batey talked numbers for the latest episode of our Music Ally Focus podcast, which is out today.
“It’s common for us to see fraud between 20 and 60% of all streams on multiple distributors, month over month. We’re seeing massive amounts, and some big names that you would not expect,” said Batey, adding that the highest he’s seen is 74% in one month.
“There are also some distributors who are very clean, who have almost no fraud. So it’s not like an all-distributor problem. It definitely lends itself to DIY platforms, and one of the risks is that they have an incentive to sort of keep it going, because they take a percentage of the revenue that comes through… This problem is huge. It’s a lot bigger than people want to say.”
The pair also offered some thoughts on who’s trying to manipulate streams and why. It’s very much an organised crime thing, rather than an artists-being-cheeky thing.
“80% of this is from financial scammers, not from artists themselves. You do see some artists try to juice streams or stream manipulate, but it’s the minority of the problem. It’s less than 20%.” said Batey.
“80% we’re seeing is financially motivated fraud, which means they do not want to be in the charts. They do not want to be in the top 100, top 10. They would rather have 500,000 devices working in concert to play a song one time per day across multiple streaming services, and extract value in pennies.”
Beatdapp is working with DSPs but also a growing number of distributors to tackle these challenges, and Hayduk said he is optimistic that the percentage of fraudulent streams can be reduced from the current 5-10% range.
“I think less than 1% is a completely realistic and attainable goal,” he said. “And the harder it is to get paid for doing bad things in music, the more likely it is that fraudsters will eventually do the cost/benefit of ‘you know what, maybe PayPal was a better target after all’ and they’ll go to another vertical that has less stringent [fraud detection] or more attack vectors.”
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