Do you enjoy arcade games involving mallets? Do you own, operate, manage, or work for a small-to-global Digital Service Provider (DSP)? Do you make or listen to music?
If you answered yes to any of these questions, read on, this one’s for you.
Let’s start with a simple fact: streaming fraud is a multi-million dollar problem in our industry. Don’t just take our word for it: Rolling Stone, Music Business Worldwide, Billboard, Variety, Quartz and too many others to name have been shouting about this from their (digital) rooftops for some time.
Estimates vary, but from our discussions with leading experts from all corners of the industry including; labels, DSPs, distributors, artists, managers, and even a couple of streaming farm operators, the fraudulent streaming activity range typically nets out at 3-10% of all annual streaming activity.
Which begs some questions like: what does 3-10% represent in lost revenues? Is that a lot? Should we care? And if so, is there a solution to fix this?
Let’s zoom in on the North American market, where hard numbers are a bit easier to come by. In 2019, North America recorded ~1.15 trillion streams. And here, Drake has been Spotify’s most streamed artist of the last decade. Over that period, publicly available figures indicate that he’s accumulated an eye-popping 28 billion streams.
Recall that 3-10% of streaming activity is estimated to be fraudulent. Taking the conservative end of that range, 3%, and the 2019 North American streaming figures, we could estimate that ~34.5 billion streams were fraudulent.
That’s ~6.5 billion more streams ANNUALLY than Drake has had on Spotify over the past decade. And that’s the low estimate. At the top end of the fraud range, 10%, it would take peak-of-his-powers Drake 40 years to reach the same number streams annually attributed to fraud.
In dollar terms, Drake’s decade worth of streaming is valued at north of (no Canada pun intended) ~$120M USD by applying the approximate, albeit, imperfect Spotify blended per stream rate of $0.0044 per play.
That equates to between $150M and $506M USD in revenue flowing into the hands of fraudsters on an annual basis.
Since advertising and subscription revenues are divided pro-rata based on market share, every illegitimate stream is costing every legitimate artist and label by diminishing their slice of the pie.
This brings us to whac-a-mole, the most commonly used analogy to describe fraud in the industry, and what we should do to combat it.
If you haven’t played whac-a-mole recently, a refresher:
- In the game (pictured right), you’re a frenetic, mallet wielding, Conservation Officer smashing every mole that dares show its smug mole-y face through the hole in the board.
- The mole is an infuriating, persistent and regenerative tormentor that keeps coming back no matter how effectively you – and you alone – swing that mallet.
- Eventually, you get frustrated. F%&* moles, you think!
- Since you are a sentient being capable of strategy and reasoning, you invite a few friends over to join the game.
- Each of you stands over a hole or two, and together, you beat the moles at their own game.
Right now, as an industry, we’re playing hundreds of individual games of whac-a-mole to fight fraud. We’re developing unique internal systems and solutions to analyze patterns and detect inconsistencies, but as we’re learning, so are the moles. It’s hard to keep pace when you’re fighting alone; the moles are winning, to the tune of $150-$506M per year. F&^%ing moles!
Beatdapp has a solution for that. And without giving away all the goods in a blog post, you can think about it like this: we anticipate that the biggest limiting factor in working together is a universally held and legitimate concern about sharing sensitive information with competitors. We get that, and have a solve for it.
So if you’re interested in fraud detection, reach out, we’re already building with you in mind. The tech might be complex, but the solution is as simple as the last time you beat whac-a-mole.