Spotify will start issuing fines to labels and distributors if any tracks they have delivered are found to have been subject to heavy stream manipulation. The fine will be €10 for each offending track and will apply if 90% of the plays of that track are found to be fraudulent.
According to Billboard’s sources, the proposed fines got a mixed response at a recent meeting of DIY distributors, with Distrokid boss Philip Kaplan being critical of the move.
One exec who spoke to Billboard summarised Kaplan’s position as follows: “We can’t determine if a new client is going to hire a marketing service that’s going to bot streams until they’ve done it. It’s like you can’t determine if your neighbour is going to commit a crime”.
Both Spotify and Deezer have made a number of new commitments to battle stream manipulation and fraud alongside their plans for changing the way revenues are allocated to individual tracks each month. The proposed new fine is one of Spotify’s new commitments.
It’s no secret that various entities employ various tactics to artificially inflate the number of streams enjoyed by any one recording, either to make a track look more popular than it really is, and/or to pull more money out of the royalty pool. Some of the fraud is done by scammers outside the music industry, but plenty of stream manipulation occurs within the industry too.
As stream manipulation reduces how much money is allocated to legitimate streams, the music industry has been putting pressure on streaming services to do more to stop the fraud. The services have in turn been putting pressure on the distributors - and especially the DIY distributors - to identify and block bad actors among their userbases.
The big DIY distributors are keen to crack down on steaming fraud too and earlier this year they formed the Music Fights Fraud Alliance to better coordinate that work. Spotify’s new anti-fraud measures were seemingly discussed at a recent meeting of that Alliance, including the new fines for heavily manipulated tracks.
Expanding on his criticism of that plan, Kaplan argued that the steaming services are best positioned to identify the stream manipulation once it is underway. This means, he added, that with the proposed new fines the distributors will be penalised for something they can’t anticipate and which the services are best positioned to track.