ASCAP and BMI, the two largest performance rights organizations (PROs) in the United States, have joined together to create a task force to combat fraud. The force will address suspicious registrations associated with musical works across their collective management system, which includes over 25 million compositions.
“We’ve been seeing lately that as technology advances, the fraud is supercharged,” explained Mona Simonian, a partner at the entertainment law firm Pryor Cashman at a panel devoted to music fraud at Music Biz earlier this week. The conference, which is held each year in Nashville, discusses an array of music industry issues, and this year, Music Biz devoted a series of three panels to the little understood area of fraud.
Recent studies have concluded that around 80% of fraud is financially motivated and the remaining 20% is “perception” motivated — artists and their teams trying to puff up numbers to appear more popular. Financially-motivated music fraud often manifests as savvy teams or individuals who claim to represent or own songs that aren’t theirs on various platforms, from YouTube to ASCAP and BMI. They then siphon off royalties from the true rights holders. It’s an effective and pervasive practice, given the difficulty associated with managing royalty collection and rights management across so many different revenue streams. Independent and older talent are especially vulnerable to these quiet attacks, given that these groups typically have less savvy and smaller teams to monitor their rights management.
In August, Billboard published an investigation into one of the largest known music royalties fraud instances in history. Two men falsely claimed to own or control 50,000 Latin music copyrights on YouTube specifically. The four year scheme resulted in $23 million in unclaimed royalties stolen from Spanish-speaking talent including Daddy Yankee and Julio Iglesias, as well as smaller regional acts. Though most scammers only reach a fraction of the scale of this one, it is telling of the state of fraud in the music industry today.
All sources of music royalties, including ASCAP, BMI and other PROs, deal with these type of bad actors who take credit and money from the talent which rightfully deserve it. The two PROs task force represents a strengthening industry response to fraud.
“Fraud is a complex global challenge that all collective management organizations and DSPs must confront with increasing frequency,” said Elizabeth Matthews, CEO of ASCAP, in a statement. “Building on the strength of our Songview partnership and leveraging our expertise in building an interconnected data platform, ASCAP and BMI are uniquely positioned to lead this collaborative and proactive approach to enhance the integrity of data in the music industry and to protect the rights and royalties of music creators.”
BMI president and CEO Mike O’Neill added, “The integrity of our data is paramount and something we spend an enormous amount of time and effort to protect. Given the explosion of music being uploaded to digital platforms and the speed in which that information connects to databases around the world, we felt it made sense to join forces with ASCAP to address these concerns. Bad actors don’t just limit themselves to one company, or one territory, and the more we can collaborate on this issue, the better it is for everyone involved.”
A cross-functional team of copyright, technical, distribution, legal, business and product experts from BMI and ASCAP are participating in the new task force aimed at mitigating and preventing fraud or erroneous activities associated with but not limited to the registration of musical works that can result in financial loss or operational inefficiencies. The team will focus on maintaining data integrity within the volumes of registration requests and protocols around identity verification and validation, among other areas. In addition to raising awareness around suspicious activity and schemes, the task force will work with other partners around the globe to share best practices and information that is not deemed competitively sensitive.”
