Anna Nicolaou in New York
Record labels join tech groups to tackle ‘industrial-scale’ deployment
of fake users

A music industry hit parade including Spotify, Amazon and Universal is
moving to stifle an emerging threat to the sector’s business model: fake streams.

Digital streaming has revived an industry battered by the illegal
download explosion early in the dotcom era, generating tens of billions of dollars for record labels. But a growing army of online bots posing as human listeners is distorting the distribution of these revenues, inflating listening figures for certain tracks to earn higher royalty payments and chart placings.

A coalition of 21 technology groups, record labels and music publishers on Thursday agreed a “code of best practices”, in the first collective push by the biggest players in music to combat stream manipulation.

The group, which also includes Warner Music and Sony Music, warned that “industrial-scale” impersonation of users by “troll farms” was
distorting perceptions of what music is popular, according to the
document seen by the Financial Times, and vowed to thwart such
manipulation by weeding out the bots from the music fans.

The streaming boom has given rise to a cottage industry of services
offering artists and labels the chance to buy their way to success. A
Google search for “buy Spotify streams” yielded 124m results, with sites
such as “spotistar.com” offering 1,000 Spotify plays for $6.

“A lot of managers do this stuff to try and either help their artists
get a good start or, if they are in a race for number one . . . buy
extra streams,” said one label executive. “Some labels view it as a
marketing expense.”

While there is no definitive data to show the scale of the problem,
music industry insiders say streaming manipulation is widespread. Louis
Posen, founder of California-based label Hopeless Records, told an industry conference this week that 3-4 per cent of all streams were
“illegitimate”, costing the industry $300m a year.

Norway is investigating streaming figures at Tidal, the music service
owned by rapper Jay-Z, over whether streams for Beyoncé, Kanye West and others have been inflated by tens of millions of plays. Tidal has denied any wrongdoing and its lawyer has said the platform is “not under
suspicion” in the case.

Jordan Bromley, an entertainment lawyer for Manatt, Phelps & Phillips
who represents acts including The Eagles, believes stream manipulation
amounts to fraud. However, he cautioned that it would be “a lot of work” to bring a class-action lawsuit. “They don’t have the data at their disposal to know how many streams have been purchased, or what that dollar amount equates to. And then in order to get the actual damages, you would need to get all the artists on board as plaintiffs.”

Some music executives say Spotify has not invested sufficiently in
technology to block the bots. Spotify has previously addressed the
issue, stating during an earnings report last year that it works to remove “fake” users. But the company cautioned that “some such users may
remain in our reported metrics because of the limitations of our ability
to identify their accounts”.

Stream manipulation is not the only way the music industry’s revenues are distorted. Spotify has already cracked on a new form of “payola” in which record labels pay for their music to be included in widely
followed streaming playlists.

https://www.ft.com/content/371b7b96-92e1-11e9-aea1-2b1d33ac3271

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