Streaming services, especially when it comes to the music industry, have been around for a while now, shaping users’ everyday lives for the better. However, with such a scale and thousands of tracks uploaded daily, streaming fraud has entered the room, seemingly creating some security difficulties for various platforms. Bad actors manipulate the system to inflate music plays or chart rankings, not to mention using bots to repeat songs and fake accounts to sell more music.
And the list goes on. Other unwanted guests from the fraud list, like impersonation, account takeovers, or song leaks, have become an issue for basically everyone involved: from distribution platforms to the average consumer. Music platforms need stronger fraud prevention systems, but implementing them is easier said than done. The most effective first step is lowering user anonymity, which is why many companies rely on Know Your Customer (KYC) measures, or identity verification, to be exact.
In this blog post, we explore the topic of streaming fraud and how it affects the music industry, detailing some tips on how to combat this issue.
What is Streaming Fraud?
Streaming fraud, also known as store-end fraud or streaming manipulation, is a type of illicit activity, often linked to artificial inflation of digital streams, among other manipulation tactics, used by bad actors on various online music platforms. Streaming fraud is conducted to artificially boost streams, followers, and sales to either a) generate revenue or b) inflate playlist performance.
In general, fraud in the music industry takes many forms, for example:
- Multi-accounting
- Track manipulation
- Identity theft
- Impersonation
- Streaming farms
- Account takeover (ATO)
This fraudulent practice harms legitimate artists and music distributors, since it affects multiple factors, such as chart positions and visibility. To prevent streaming fraud, major platforms like Apple Music or Spotify use monitoring systems that are designed to detect suspicious activity.
Why Fake Streams Hurt Real Artists
When fraud storms the platform, it not only takes money from genuine artists trying to pave their way to the industry. Fake, AI-altered stream numbers boost numbers and, at the same time, trick the platform’s algorithm.
As a result:
- Real artists get pushed down in recommendations. It becomes difficult for their music to reach new listeners.
- Real data is distorted. Audience response becomes inaccurate, while artists need this information for promotion, tour planning, and details like which cities would be best for concerts.
For small artists who are just getting started, streaming fraud can be the end of it, closing a small door that they have to break into the industry. For those operating in this business, fraud takes up the budget that’s meant for other operations, such as supporting and discovering new artists. That’s why it’s important to optimise all processes and ensure that fraud is detected in real-time and instantly, not when it already enters the platform.
How Does Streaming Fraud Happen?
Streaming fraud happens when a person or a group of bad actors exploit various digital music platforms for their own financial gain through channels like artificially boosted plays, chart performances and royalties. Fraudsters can create large volumes of unverified profiles to repeatedly stream tracks, making it difficult to separate real listeners from bot-driven activity. This allows them to monetise streams, manipulating the system. Streaming fraud can also occur when artists pay promotion companies that promise higher streaming numbers or extra exposure.
For example, a form of streaming fraud can be associated with bot usage, where criminals employ bot networks to create streaming farms and inflate music counts. This diverts funds from the limited royalty pool, and, as a result, the money that was meant to reach the real artists and rights holders (creators, their labels, or publishers) goes to the criminals.
How Do Platforms Respond to Streaming Fraud?
If a platform monitors for fraudulent activity and detects unauthorised behaviour, such as streaming fraud, the released content can be removed, and the royalties withheld. So, while the offer to boost your music and streams might sound like a good idea, it can lead to poor side effects, including suspension or a banned account.
Other negative effects for artists include:
- Inflated numbers without building a real fan base
- Damaged credibility with potential partners and future venues
More importantly, it impacts genuine artists who want to earn and grow sustainably on the same platform. That’s why most music streaming platforms have strict guidelines for their users, outlining what’s considered fair promotion and what falls into the prohibited activity section.
Related: AI in Fraud Prevention
What are Some Real-Life Examples of Streaming Fraud?
There are numerous cases where fraudulent practices were used to alter real streaming numbers. For example:
The Michael Smith Streaming Scam
Michael Smith was caught due to these relatively innovative AI streaming fraud tactics. Allegedly, he managed to generate hundreds of thousands of AI-created songs, used thousands of bots (~661,440 streams per day, according to Forbes), and then received over US$10 million in royalties. Some sources state that he collaborated with a music company, which provided him with songs that would feed off the bot farm, fully collaborating in the fraudulent scheme. This helped Michael Smith bypass fraud prevention systems and fully integrate with platforms like Spotify.
Danish Bot Case
Recent news was stormed by a story of an unnamed 53-year-old man from Denmark, who allegedly used bots and generated at least 2 million Danish kroner (≈ £229,676) from royalties using artificially generated plays of hundreds of tracks. To succeed with such a scale of crime, the man took songs from other artists and altered them slightly, uploading them under his name with a changed length and tempo. The court confirmed that the streams came from illegitimate listeners, and the man was sentenced to 1.5 years in prison.
What are the Consequences of Streaming Fraud for Distributors and Record Labels?
Fraud is bad for business and bad for users in terms of the trust that they put into the platform and its services, which are monetised. That means financial and reputational challenges are one of the key consequences of streaming fraud for distributors, record labels, and those associated with the music industry.
Additional factors linked to streaming fraud that influence firms working with music services include:
- Inflated numbers and analytics. Various internal teams can’t rely on data anymore, as it’s inaccurate if it’s corrupted with fake streams. For example, in marketing and decision-making, this can lead to poor strategies.
- Harmed relationships. Any sort of fraud can lead to lowered confidence in the brand, signalling low standards for security and compliance. Simply put, repeated manipulation affects everyone, disrupting royalty payouts.
To protect artists and everyone involved, firms need to build internal fraud prevention systems that are able to detect streaming manipulation automatically based on different risk signals that would help flag suspicious behaviour.
From a security and compliance perspective, artists can go through an identity verification workflow that requires a government-issued ID document, especially before payouts. For potential partners and other businesses, Know Your Business (KYB) checks and additional due diligence are essential to ensure you’re not partnering with a fraudulent or poorly controlled music platform that enables or ignores streaming fraud.
Why are Fraudsters Targeting the Music Industry?
To put it simply, the use of AI makes it easier to target and approach niche industries, especially those like music and streaming service providers. That’s because, traditionally, they have fewer security measures, making them more susceptible to fraud compared to traditional banks or the fintech sector. For example, a criminal can now generate millions of tracks and boost each one with at least a few thousand plays. This AI-powered approach allows them to earn royalties, and at the same time, lay low without triggering traditional fraud alerts. It’s fast, simple, and effective from the fraudsters’ standpoint.
Other factors that impact the music industry and its rising fraudulent activity:
- Convenience. There are platforms that allow anyone to enter, which means people can upload music without KYC checks. This creates manipulation and an environment where fraudulent releases can be used via fake shell accounts.
- Automation everywhere. While this is a good sign in general, systems left without any sort of manual monitoring are still not accurate. For example, complex, algorithm-driven payout structures can be exploited by artificially inflating plays (because royalties are distributed based on stream counts), generating illegitimate revenue.
So, it’s clear that while the “streaming fraud” term isn’t new, AI has accelerated it and put new labels on it. Advanced tools now make fraud easier to execute and harder to detect. For businesses, this is unacceptable, as fraud undermines the brand, its reputation, and the entire industry’s business model.
What is Identity Verification in the Context of Streaming Fraud?
Identity verification is the process of confirming a user’s identity online, typically through document verification, biometric verification, or database verification methods that allow regulated companies, like music and streaming service providers, to confirm and onboard users before they can create an account, or, for example, payout their earnings.
A common ID verification workflow consists of a few steps:
- The user provides their ID, such as a passport, allowing the system to capture personal information (like the name, date of birth, etc.)
- Afterwards, they are asked to submit a selfie, sometimes, moving their head in a certain direction
→ This is a workflow that consists of both a government-issued ID check and a biometric check with liveness detection. Such an option is supported by iDenfy’s identity verification software, which extracts and compares the information and biometric traits from the user’s document and their selfie to see if they match. The person is then either verified or declined.
Related: KYC Verification [3 Main Components & More]
Identity Verification Benefits for Music Streaming Platforms
In this sense, identity verification works like a primary defence mechanism in a company’s fraud prevention system, especially at the initial registration stage, where the user backs their identity with a legitimate document. That means issues like identity theft, bots, blocklisted/known fraudsters, forged IDs, underage users who can’t monetise their music yet, or multi-accounting are prevented.
For artists, identity verification adds to the overall integrity of the music businesses, contributing to a safer ecosystem with high regulatory standards and secure, fraud-free transactions. For example, by verifying artist identities, music firms guarantee that royalty payments reach the rightful owners while preventing unauthorised use of copyrighted music.
iDenfy’s Approach for Helping the Music Industry Prevent Fraud
At iDenfy, we’ve built a high-end ecosystem with multiple simple integration options for Know Your Customer (KYC) services, including Mobile/Web SDKs and no-code ID verification workflows using our Magic Link solution. Since 2017, our team has been specialising in simplifying both compliance and user experience in different regulated industries, including the music industry.
We have multiple partners working with streaming and music distribution services, and we can help you onboard artists and all users around the world, increasing payment safety and ensuring global compliance, especially if you need to cover more complex cases through the same vendor, meaning we have a bunch of AML/KYB and fraud prevention tools, such as SMS verification, in one place.
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