‘Fake streams are nothing new, but the recordings business is only just waking up to the scale of the practice.’

The following op-ed comes from Pascal Bittard, founder of France-based independent distributor IDOL. IDOL‘s roster includes Erased Tapes, Fire Records, Glitterbeat, Gondwana, Kitsuné, Local Action, Soundway, SRD, Ubisoft and Bandai Namco, while it also works directly with artists including La Femme, Ibrahim Maalouf and Lomepal.

Fake streams are nothing new, but the recordings business is only just waking up to the scale of the practice. As discussions in France around measures to prevent streaming manipulation continue, the fallout of a government-commissioned report from The Centre National de la Musique (CNM), has ignited concern.

Data collated from Spotify, Deezer and Qobuz suggests more than a billion plays (or between 1% and 3% of the country’s total streams) were fraudulent in 2021.

These are deceptively small margins but, as calculated by MBW, would equate to over a $500m global revenue loss if extended to the worldwide music market. Yet this figure only covers the activity we know about, with more advanced forms of manipulation likely to be slipping under the radar.

According to the report, more than 80% of detected fraudulent activity takes place within the longtail of France’s streams. This is mostly referring to background music and non-musical titles directed at passive listeners where manipulation techniques are often basic and it’s easy to farm royalties.

But more sophisticated, harder-to-detect techniques are at play higher up the food chain, some even taking place amongst France’s top 200 artists.

This frontline manipulation might include replaying tracks in full rather than churning through 31-second snippets, with seasoned fraudsters gradually bumping up streams across platforms making sure to keep in line with an artist’s fanbase size and market share of each DSP to evade suspicion.

The focus here isn’t to maximise royalties but more to influence chart position and sales scores, which in turn boost visibility, generating PR and better access to radio airplay.

Though labels and distributors are not actively buying fake streams, evidence suggests there may be bad actors among managers and artist teams working within some of the industry’s most lucrative rosters.

As a distributor working with both labels and artists, we can sometimes detect instances of manipulation among our own clients by combining information we receive from DSPs with our own data that allows us to analyse a track’s share of streams across platforms. We’ve identified a few cases in recent years, all of which resulted in severing ties with the perpetrators on future projects.

But though some other organisations, such as Merlin, are vigorously trying to address the issue, we suspect we sadly remain in the minority. Many distributors and record companies have their suspicions but choose to turn a blind eye due to money at stake and fear of losing important artists. Let’s be clear, this means they are acting as passive accomplices that ultimately benefit from manipulating the system.

“Though labels and distributors are not actively buying fake streams, evidence suggests there may be bad actors among managers and artist teams working within some of the industry’s most lucrative rosters.”

For DSPs on the other hand, it’s a different story. Spotify and Deezer have been proactive for several years, leading the way in developing advanced fraud detection tools. Whilst some other services are trying to quickly catch up, most other platforms are only just waking up to the true scale of revenue at stake. Deezer also continues to advocate a user-centric payout model as part of its efforts to strike out streaming fraud from its source, which ultimately relies on the current system of funds allocated under a pro-rata model. Under user-centric, the streaming revenue generated by each user subscription is effectively capped, making the usual methods for manipulating streams extremely expensive.

While the jury is out on streaming payout model reform, detection remains crucial and must keep improving. Labels and distributors cannot keep depending on DSPs to do the heavy lifting; they have a pivotal role to play.

If we’re to better equip ourselves against advanced forms of manipulation, the recordings business must unify to encourage more collaborative data sharing amongst stakeholders, including the Official Charts Company (active in the UK, Ireland & France) and its equivalent global organisations, to ensure we leave no stone unturned.

But detection alone isn’t enough, more preventive and deterrent measures need to be in play.

Having spoken with fraudsters who sell fake streams, it’s clear that many don’t believe they are engaged in any serious wrongdoing, given the lack of an explicit ban on their practices or enforcement against them. In reality, however, they are creating an environment for cheaters to steal money from honest and hardworking artists.

Legislation must evolve to make all forms of fraud illegal. This will take time, and so we must also be sure to act in the shorter term. To fight fake streams, the industry (including distributors, labels, the Official Charts Company and other institutions) must quickly come to a consensus on appropriate sanctions for those engaging in fraud and not be afraid to impose them. For example, this could mean removing tracks from chart listings and revoking industry certification if foul play is uncovered. Or even encouraging trade bodies to name and shame the guilty parties they represent.

This is a developing issue and it’s certainly reassuring to see one of the industry’s most senior figures, Lucian Grainge, sound out a call to action against streaming’s bad actors in his public letter to employees. France, the world’s fifth-largest music market and probably the most proactive on this issue, must now take action.

The CNM’s commitment to monitoring fraudulent activity and discussing prevention measures ahead of a new study expected in 2024, is a welcome new chapter. However, it remains essential for the key players in the recordings business to work with the CNM to deliver on its promises, with distributors, record companies and the OCC not shying away from difficult decisions that will ultimately bring positive and lasting change.

Music Business Worldwide

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