When Morgan Hayduk and Andrew Batey founded Beatdapp — a company which helps streaming services, labels, and distributors detect streaming fraud — at the end of 2018, they faced a major obstacle: The music industry was reluctant to acknowledge that streaming fraud was a problem.
“It used to be verboten to speak publicly about [it],” Hayduk told Billboard last year. “It was all behind closed doors. But I don’t think you can fix a problem until you accept its existence.”
The climate has changed dramatically recently. Last year, Universal Music Group began calling for changes to the streaming model, arguing that fraud and things like white noise and rain sounds were scooping up royalty income that should be going to actual artists. And Beatdapp announced on Friday (Jan. 19) that it’s entering into a strategic collaboration with UMG as well as partnering with SoundExchange (which collects performance royalties from digital radio stations and broadcast companies like SiriusXM) and the streaming service Napster.
“We’re at a point now where there’s a consensus that we have to address the problem” of streaming fraud, says Michael Nash, chief digital officer and executive vice president for Universal Music Group. “Beatdapp have really focused on understanding the problem and working with a number of different platforms to provide a very clear perspective about the scope of the problem. Providing that kind of leadership, driven by data analysis, has been really important.”
Hayduk defines streaming fraud as the leveraging of “bots, stolen accounts or manipulated platform features” to steal streaming income. The practice “hurts everyone who makes a living in the music industry and, left unchecked, creates this promotional race to the bottom where everyone believes they have to cheat to succeed,” he told Billboard last year.
“In an industry where it’s already hard to make something and then promote something and then get paid,” Batey added, “you should at least get paid correctly.”
As Beatdapp widens its network of partners, it gets access to more streaming data — the company was analyzing 2.2 trillion streams in 2023, up from hundreds of billions in 2022 — which in turn allows the company to improve its understanding of how fraudsters manipulate the streaming ecosystem and get better at identifying suspicious listening patterns.
“Napster provides Beatdapp with a daily feed of all usage on Napster’s services, and Beatdapp then uses its detection filters to identify likely stream manipulation activity based on certain (high) confidence levels,” explains Matthew Eccles, the streamer’s svp and general counsel. “Napster will then ensure that the streams identified by Beatdapp are removed from royalty reports for all licensors so that the market share calculations for all labels are not affected.”
Napster’s view is that it is helpful to engage a third party to detect stream manipulation because “it eliminates potential questions of bias when the results come back,” Eccles continues. “Third parties can help achieve consistency across the industry in relation to what is and what is not considered to be streaming fraud.”
Beatdapp also announced on Friday that it had raised an additional $17 million, money that will go towards hiring new data scientists and senior leadership and expanding into Europe and Asia.
“With the volume [of music on streaming services] jumping the shark over value — more than 150 million tracks and more than 100,000 uploaded every day — this has created a lot of issues,” Nash notes. “That level of volume has created a context for a lot of bad actor activity.”
Tackling these issues is complicated, but cracking down on fraud is “the least controversial item on the agenda,” Nash adds. “There aren’t a lot of advocates for fraud.”
