Spotify Says It Paid 1% of a $10 Million Streaming Fraud Scheme’s Royalties — So Where Did the Other 99% Come From? Questions Abound Amid Radio Silence from Competitors

If Spotify paid less than 1% of the royalties behind an over $10 million music streaming fraud scheme, which platforms provided the rest of the sum? Photo Credit: Towfiqu Barbhuiya

Yesterday, another interesting piece of the $10 million+ royalties scheme puzzle fell into place, as Spotify claimed to have promptly halted the operation on its own platform. But which services allowed the AI tracks to stay live and rack up billions of plays?That’s the multimillion-dollar question right now, after a North Carolina-based musician was indicted earlier in September on charges stemming from an alleged music streaming fraud scheme. Per the indictment, the defendant allegedly used bots to stream hundreds of thousands of tracks across the better part of a decade.

But the plot quickly thickened when it came to light that the CEO of Warner Music-backed and ADA-partnered AI music generator Boomy had allegedly provided the works at the scheme’s center. And subsequently, Spotify told DMN that it, today’s leading on-demand music platform, had only paid out $60,000 or so of the $10,000,000+ in royalties described in the indictment.

(Said indictment also cites emails penned by the defendant, who pointed therein to closer to $12 million in total royalties stemming from the alleged scheme.)

The disclosure raised multiple interesting points and questions. Chief among the former was the fact that Spotify seemingly caught the alleged fraud early on – before the culprit nevertheless managed to score millions upon millions in illicit royalty payments from different services. Related communications between the MLC (which per the indictment uncovered the alleged fraud last year) and Spotify were seemingly non-existent.

And on the questions front, which platform(s) failed to flag the defendant’s tracks and paid the lion’s share of the alleged fraudulent royalties? Running with the information provided by Spotify, DMN set out to answer the question. Yesterday, we sought comments from Apple Music, Amazon Music, and YouTube Music alike. Starkly contrasting their usual eagerness to discuss coverage, none of the services had responded at the time of this writing.

Furthermore, various factors are preventing a detailed analysis of where exactly the alleged fraudulent streams came from. Per the indictment, the defendant allegedly went out of his way to direct a small number of streams to each of the tracks, attributed to a multitude of made-up artist names, to avoid raising suspicion.

Among other things, this largely successful endeavor means that while Chartmetric registered the “artists” and “songs” at hand, few fetched the consumption information, and there isn’t an abundance of hard data available about the since-removed tracks. Separately, it’s possible that at least some of the uploads would have failed to generate recording royalties on Spotify under the platform’s controversial 1,000-stream-minimum policy.

Shifting the focus to what we do know, the “songs” mentioned in the indictment didn’t appear to be streaming on Apple Music, Amazon Music, YouTube Music, or Deezer at the time of writing. But for those interested in getting a taste of the generic AI outputs, SoundCloud was still hosting uploads from the likes of Calypso Xored, one of the artist names mentioned in the indictment.

(In another aside, even the mass-produced AI tracks were seemingly unable to avoid winding up on piracy platforms, one of which has a Saint Pierre and Miquelon domain ending and was the target of multiple BPI DMCA notices to Google.)

As we continue to seek details about which services hosted and paid royalties on the uploads at the heart of the indictment, it’s worth reiterating the apparent scope of the wider AI problem on streaming services.And those streaming services include Spotify despite the comparative quickness with which it looks to have flagged the alleged royalties scheme here. Back in April of 2023, we reported on the findings of a listener who said he’d encountered the same “song,” albeit with different artist names and titles, about 50 times via Spotify Radio.

Roughly 17 months after that individual added 49 of the works to a Spotify playlist, 40 are still live – with similar availability through competing services.

This isn’t to say the remaining tracks are benefitting from streaming fraud, but they’ve racked up over 553,600 cumulative Spotify plays in any event. With several other machine-generated audio snippets on each of the profiles (which also have uploads across non-Spotify platforms), this operation, a tiny component of an increasingly massive overall AI library, seems to be raking in sizable royalty payments relative to the responsible party’s effort.