$2 Billion a Year — That’s How Much Streaming Fraud Costs the Music Industry, According to the Latest Estimates

Photo Credit: Mohamed Hassan
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Photo Credit: Mohamed Hassan
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Photo Credit: Mohamed Hassan

What you thought was bad is now getting worse — much worse. Streaming fraud is now costing the music industry a whopping $2 billion a year, according to the latest data emerging.

Beatdapp Software Inc., a leader in fraud detection, has now joined forces with Beatport, the music store centered around DJs, producers, and their fans, to ensure the authenticity of every stream on the latter’s platform while eliminating fraudulent activity. According to details shared with DMN, the partnership places Beatport in a position to deliver more accurate insights into daily, weekly, and monthly streaming charts devoid of manipulation by integrating Beatdapp’s sophisticated fraud detection technology.

The real kicker: Beatdapp estimates that streaming fraud costs the music industry a whopping $2 billion a year. The company’s co-CEO, Andrew Batey, outlined the scope of the issue in a discussion with DMN Pro earlier this year and has been broadening awareness of the issue this year.

Streaming fraud has continually posed a significant hurdle for the music industry to overcome, undermining the integrity of streaming platforms and impacting artist royalties.  Now, damages are spilling beyond $2 billion annually, and could be substantially higher.

Companies are battening down the hatches as the threat intensifies. “We launched streaming products under the Beatport and Beatsource brands in 2019, and despite the fact that they have not historically been a target for streaming fraud, suspicious activity has been on the rise in recent months,” says Helen Sartory, Chief Revenue Officer of The Beatport Group.

The latest fraud estimate is disquieting, though it may not be the biggest culprit.

Nermina Mumic, CEO of Legitary, believes non-fraudulent anomalies are arguably the bigger enemy since they directly impact the IP owners involved. That’s not always the case with streaming fraud.

Indeed, the boogeyman of ‘streaming fraud’ tends to garner the most attention within the industry. However, Legitary noted that a far larger percentage of issues are unintentional or rooted in data errors, including metadata problems. Most importantly, tackling those problems results in a one-to-one recovery of missing royalties and doesn’t involve chasing shadowy stream-farm operators.

“With streaming anomalies, we’re seeing royalties simply not getting generated, so the issue is harder to find, keep track of, and resolve,” Mumic explains, adding, “The music industry must delve into the occurrences and factors that could be contributing to exacerbating these anomalies. It’s absolutely imperative.”