Music industry organisations have been commenting on the report by Swedish newspaper Svenska Dagbladet earlier this week which claimed that criminal gangs are using music streaming fraud as part of their money laundering operations.
Both the Independent Music Publishers International Forum and digital licensing organisation IMPEL have issued statements about the report, the latter stressing the need for a more coordinated approach across the music industry to tackle stream manipulation and streaming fraud.
Stream manipulation, of course, is where people employ various tactics to artificially inflate the number of streams of specific tracks on the streaming services, so that those tracks look more popular than they really are, and also earn more royalties.
The Svenska Dagbladet report alleged that gangs in Sweden have partnered with certain artists, used the profits from other criminal activities to hire the services of stream manipulation companies, and then shared in the royalty uplift the scam generated for the artists. Their cut of the Spotify money then appears to be legitimate income.
Streaming fraud is a multi-layered problem, in that it involves a number of different groups, each of which has different motivations and objectives. When streaming fraud has been debated within the industry, a lot of the focus has fallen on the stream manipulation activity in which the industry itself is not involved. Even though it seems likely that streaming fraud with industry involvement is much more prevalent.
Commenting on the Svenska Dagbladet report, the IMPF said in a statement yesterday: "Reports that suggest streaming fraud is funnelling significant revenue towards the activities of organised crime are incredibly disturbing and increase pressure on streaming platforms to stamp out the practice as a matter of urgency".
"Fraudulent streams have been a growing problem for some time now", it adds, "with the recent French Study [from the Centre National De Musique] estimating they could make up 3% of all streams - a figure that represents only those streams which the services can actually detect. Not only are independent publishers and legitimate music companies suffering financial damage as a result, but the suggestion that this issue is aiding and abetting violent criminals means it must become a critical priority for streaming services".
Meanwhile, Sarah Williams, the CEO of IMPEL - which coordinates digital licensing for a consortium of independent music publishers - stated: "IMPEL is glad to see Svenska Dagbladet shining a light on the role of organised crime in the business of fraudulent streams. Challenging as it is, we can't turn away from our shared responsibility for tackling this issue".
"Organised crime has many victims and as an organisation dedicated to securing value for the song, we do not want to see songwriters and publishers included in that list. Equally, as an organisation whose mission is also efficient, swift royalty payments for rightholders, we don't want the industry to be blown off this course by the problem caused by these bandits. The quicker the payout, the easier it is for bad actors to take the money out of reach of legitimate stakeholders. So, we need solutions".
"At the moment, various industry players and groupings are looking for suspicious patterns in the data and trying to tackle the problems that they reveal. It's very welcome but we must avoid an a hoc approach. We need comprehensive, integrated initiatives that attack this multi-headed hydra from all angles. We also need transparency from and cooperation between [streaming services]. Whilst streaming has created opportunities for criminals to siphon off huge sums, the wealth of data created by the digital industry is also our friend in this fight, provided we use it collectively".
Several industry organisations are trying to facilitate a more joined-up approach to tackling streaming fraud. And, earlier this year, a group of distributors and streaming services came together to launch the Music Fights Fraud Alliance.
Sam Taylor