In the digital age, music streaming is the lifeline of the industry, powering careers, connecting artists with fans, and generating billions in revenue. But lurking beneath this thriving ecosystem is a growing threat: music streaming fraud. From inflated streaming numbers to full-scale financial crimes, the industry is facing a problem that’s bigger than many may think—and it’s costing real artists, labels, and platforms real money.
This issue took center stage at Music Ally’s recent webinar, ‘Fighting Music Industry Fraud at the Source’, hosted in partnership with payouts platform Trolley. The panel featured Barnett Klane (VP, Product at Trolley), Andreea Gleeson (CEO, TuneCore), and Morgan Hayduk (Co-founder, Beatdapp), and was moderated by Music Ally’s editor Joe Sparrow. Together, they dug deep into the many faces of streaming fraud, its ripple effects across the industry, and the battle plans to fight it.
The Two Faces of Streaming Fraud
Hayduk opened the discussion by categorizing streaming fraud into two types:
- Perception-based fraud – where artists inflate their own numbers to appear more successful.
- Financially motivated fraud – driven by criminals using streaming platforms as a source of illicit income or even a money laundering channel.
Interestingly, perception fraud, often the most talked-about, only makes up about 10% of the problem, according to Hayduk. The real issue lies in the remaining 90%—more sophisticated schemes orchestrated by bad actors who know how to exploit digital infrastructure.
And with music streaming revenues rising, the financial incentive for fraud is substantial. Even if only a small percentage of streams are fraudulent, the dollar value is significant. Hayduk estimated the fraud rate might be closer to 5–10%, not the often-quoted 1–3%, which could mean billions of dollars siphoned from the system each year.
A Hidden Drain on Industry Resources
Beyond the direct loss of revenue, streaming fraud has another insidious effect—it creates huge operational overhead for platforms, distributors, and labels.
Klane highlighted the immense cost of dealing with compliance checks, support tickets, and internal investigations whenever suspicious streaming activity is detected. This administrative burden takes time and money away from supporting legitimate artists and building better systems.
“It really just hurts everyone in the industry,” Klane said, emphasizing how even honest participants are affected as fraudsters eat away at the system’s integrity.
For Artists, It’s a Double-Edged Sword
For legitimate artists, streaming fraud presents two major risks:
- Royalty dilution: Streaming services typically pay artists based on their share of total streams. So when fraudulent streams take up space, everyone else earns less.
- Reputation risk: If an artist (intentionally or not) engages in fraud—say by hiring a shady promo company—they could face serious consequences. Getting caught could be a career-ending or career-limiting move.
Gleeson echoed this sentiment, stressing how common it is for artists to unknowingly fall prey to fake services that promise to boost streams or placements. Ads for such services are rampant on social media, and marketplaces like Fiverr are flooded with “promo experts” who often use illegal methods.
Fraud’s Dark Financial Side: More Than Just a Music Issue
Hayduk brought up a sobering point: platforms aren’t just music businesses anymore. Many operate like fintech companies, moving millions in royalties monthly. That financial function puts them under scrutiny—not just from music industry regulators, but from governments cracking down on money laundering and terrorism financing.
Citing the USA Patriot Act, Hayduk warned that platforms can face massive legal consequences if they’re seen as turning a blind eye to suspicious financial activity. “If that’s money laundering… you have a massive, platform-wide legal liability that cannot be understated,” he said.
Enter the ‘Know Your Artist’ Era
To combat fraud, platforms and distributors are borrowing a page from the financial world’s KYC (Know Your Customer) practices.
Klane described the need for a ‘Know Your Artist’ framework, especially for open platforms like TuneCore, where anyone can sign up and upload music. This involves verifying user identities, collecting tax data, and flagging suspicious behaviors before content goes live or royalties are paid out.
Gleeson explained that TuneCore uses tools like IP address scanning and hashed credit card data to detect known bad actors. If red flags appear, they may block the content entirely. Additionally, there’s a second level of checks during royalty payouts—especially for songwriters and composers.
Collective Action: The Industry Is Fighting Back
One of the most powerful tools in the fight against fraud is collaboration. Gleeson highlighted the work of the Music Fights Fraud Alliance (MFFA), a cross-industry organization with nearly 30 members sharing data on fraudulent behavior. The alliance uses a third-party partner, NCFTA (National Cyber-Forensics and Training Alliance), to manage a centralized database of known bad actors.
If a new user pops up on one platform, members can anonymously check if that individual has been flagged elsewhere. This cross-platform intelligence is critical to identifying patterns and preventing fraudsters from hopping from one distributor to another.
But Hayduk also warned that fraud rates vary dramatically across platforms. Some lesser-known distributors operate at nearly 99% fraud rates—with almost all uploads being fake. These businesses have little incentive to stop fraud, since every fake stream adds to their own revenue. For the industry to make progress, these players must be held accountable.
Advice for Artists: Don’t Fall for the Trap
The panel wrapped up with practical advice for artists trying to navigate the increasingly murky waters of music promotion:
- Be wary of services promising overnight streaming success.
- Ask for references and reviews before hiring marketing teams.
- Avoid companies that look sketchy or promise unrealistic results.
“If it looks too good to be true, it probably is,” Hayduk emphasized. “Would you give your credit card details to a site that looks like it was built in 1997? No? Then don’t do it here either.”
Gleeson shared that TuneCore not only flags suspicious activity but also contacts artists proactively if strange spikes in streaming data appear. This opens a dialogue with artists who may be unaware of shady tactics being used in their name.
Looking Forward: Hope on the Horizon
Despite the scale of the issue, the panel was optimistic. Fraud will never be fully eliminated, but the industry is becoming more resilient. Increased awareness, shared data, better onboarding protocols, and legal clarity are pushing the ecosystem in the right direction.
As Hayduk put it, “Fraud is like water on the internet—it finds a way.” But with smart infrastructure, proactive monitoring, and consistent standards across platforms, the goal is to make fraud harder, less profitable, and ultimately, not worth the effort.
The message was clear: the fight is far from over, but a cleaner, fairer music ecosystem is possible. And it starts with vigilance, collaboration, and accountability from every stakeholder—artist, distributor, and platform alike.
