By Sean Rapela
Today, streaming accounts for a majority share of the revenue in the music industry. Artists are able to make their music available on platforms such as Apple Music, Spotify, or YouTube, and subscribers can listen to music where ever they are without having to download the song. While you do not pay for and download a song that you stream, artists instead make money for each stream. However, the payout for artists is not great. In 2018, Spotify paid about $.006 to $.004 per steam to the holder of music rights. To put this in perspective, about one million plays would translate to around $7,000 on Spotify and around $1,650 on Pandora. Therefore, artists, record labels, producers, and anyone else that is a holder of the music rights have a strong interest in getting as many streams as possible for their music. Consequently, streaming fraud is a massive issue in the music industry right now, as fake accounts are used to inflate streaming play numbers.
Recently, Tidal, a music streaming platform, was accused of intentionally falsifying streaming numbers for Beyoncé’s “Lemonade” and Kanye West’s “Life of Pablo.” Tidal is primarily owned by Beyoncé’s husband Jay-Z, and as a result of the fake streams, Tidal is accused of paying inflated royalties to Beyoncé’s and West’s labels. Assuming that these accusations are true, Tidal is responsible for several hundred million fraudulent streams. These fraudulent streams generated massive royalty payouts for Beyoncé and West at the expense of other artists. This leaves other artists wondering what can be done to combat fraudulent streaming in the music industry.
For starters, the use of fake accounts that generate fraudulent streams is absolutely illegal. While there have not been any major lawsuits to show for it, in the event that disadvantaged artists do take action, they might be able to use section (a)(4) of the Computer Fraud and Abuse Act. The relevant section states that it is a crime to knowingly and intentionally defraud, access a protected computer without authorization, or exceed authorized access, and by means of such conduct further the intended fraud and obtain anything of value. Additionally, Spotify explicitly states in its terms and conditions that artificially increasing play counts by using any bot, script or other automated process is strictly prohibited. While there are legal ramifications for taking part in fraudulent streaming, it does not seem to deter the activity. Therefore, in tandem with legal action, streaming platforms must take their own measures to minimize fraudulent streams.
Rebeat, a record label startup, is building independent solutions for labels to monitor and detect fraudulent streaming activity. Additionally, a Spotify representative stated that the company uses both computerized algorithms and human review to identify questionable streaming activity. No one can honestly believe that any streaming platform will ever be able to stop all of the bots that generate fraudulent streams. However, by taking both legal action and in-house measures, these streaming platforms can do their part to dramatically reduce the amount of fraud. Still, it is the independent musicians and small labels that self-publish that are losing the most money as a result of fraudulent streaming because their royalty rates are the most pliable.
There is potential for a class action suit where the independent musicians take on fraudulent streamers. However, aside from the Tidal allegations, it is often very difficult to identify the source of fraudulent streaming. For the most part, the streaming problem in the music industry is undetectable. This works to further disadvantage the independent musicians and small labels. As a result of the undetectability of fraudulent streaming, legal ramifications do not seem like they will work to deter the streaming fraudsters. As a result, streaming platforms like Spotify must take matters into their own hands by taking better measures on their end to detect and prevent fraudulent streams. Currently, the royalty payout for playing a song exceeds the cost of required server time. Therefore, if fraudulent streaming continues unrestricted music streaming platforms would become unprofitable.
Student Bio: Sean Rapela is a second-year law student at Suffolk University Law School and serves as a Staff Member on the Journal of High Technology Law. Sean holds a Bachelor of Arts in both English and Political Science & International Affairs from Wake Forest University.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.