You can't say that no one is getting rich from streaming. In an indictment unsealed in early September, federal prosecutors charged musician Michael Smith with fraud and conspiracy in a scheme in which he used AI-generated songs streamed by bots to collect $10 million in royalties. He reportedly received rights to hundreds of thousands of songs, at least hundreds of which listed the CEO of Warner Music Group-backed company AI Boomy as a co-writer. (The CEO, Alex Mitchellhas not been charged with any crime.)
This is the first criminal case of streaming fraud in the US, and its size may make it extreme. But the frightening ease of creating so many AI songs and using bots to create royalties with them shows just how vulnerable the streaming ecosystem really is. This isn't news to some executives, but it should be a wake-up call for the industry as a whole. And it shows how the streaming subscription business model with analog distribution of rights that now powers the recorded music industry is broken — not beyond repair, but certainly to the point where serious changes need to be made.
One great thing about music streaming platforms, like the internet in general, is how open they are — anyone can upload music, just like anyone can make a TikTok video or write a blog. But this also means that these platforms are vulnerable to fraud, manipulation and spam that erodes the value of the overall experience. (I don't mean things I don't like — I mean spam and attempts to manipulate people.) And while the pros and cons of this openness are impossible to quantify, there's a sense in the industry and among creators that this has gradually become less of a feature and more error.
At this point, more than 100,000 new tracks are uploaded to streaming services every day. And while some of it reflects an inspired burst of amateur creativity, some of it is, sometimes literally, noise (not the artistic kind). Millions of these tracks are never heard, so they offer no value to the consumer – they just clutter the interfaces of streaming services – while others are broadcast a few times a year. From the perspective of some rights holders, part of the solution may lie in an “artist-centric” royalties system that favors more popular artists and tracks. Even if this can be done fairly, though, this only addresses the financial issue — it does nothing for the user experience.
For users, finding the song they want can be like searching for “Silver Threads and Golden Needles” in a rapidly growing haystack. A search for this song on Apple Music turns up five listings for the same Linda Ronstadt recording, several listings of another Ronstadt recording, and several versions of some other performances. In this case, they all appear to be professional recordings, but how many of the listings are for her? It's not obvious at all.
From the perspective of major labels and most indies, the problems with streaming are about ensuring that consumers can filter out “professional music” from tracks uploaded by amateur creators — bar bands and hobbyists. But this prioritizes sellers over consumers. The truth is that the streaming business is broken in a number of ways. The big streaming services are very effective at directing users to big new releases and mainstream pop and hip-hop, which is one reason the majors like them so much. But they don't do a good job of serving consumers who aren't as interested in new mainstream music or old favorites. And rights holders aren't exactly pushing for change here. From their point of view, under the current pro rata system, it makes economic sense to focus on the mainly young users who spend hours a day streaming music. Those who listen less, who tend to be older, are literally worth less.
It shows. If you're interested in new cool rock bands—and a significant number of people still seem to be—the streaming experience isn't as good. Algorithmic suggestions are not great. Less popular genres are not well served either. If you're looking for John Coltrane — almost an obscure artist — Spotify offers icons for John Coltrane, John Coltrane & Johnny Hartman, the John Coltrane Quartet, the John Coltrane Quintet, the John Coltrane Trio, and two for the John Coltrane Sextet, as and some others. It's hard to know what that means from an accounting standpoint — one record for Sextet has 928 monthly listeners and the other has none. If you want to hear John Coltrane, though, it's not a great experience.
What does this have to do with stream fraud? Not much – but everything. If streaming services' goal is to offer as much music as possible, then they're kicking ass. But most consumers would prefer an experience that is easier to navigate. This should mean less music, with a limit on what can be uploaded, which some services already have. the sheer amount of music Smith had online should have indicated trouble, and it seems it did after some time. It should mean rethinking the pro-rata royalty system so that everyone's listening habits generate money for their favorite artists. And it should mean spending some money to make streaming services look more like a record store and less like a swap table.
These ideas may not be popular—streaming services don't want the burden or cost of curating what they offer, and most labels so eager to crack down on fraud also fear losing the pro-rata system that disproportionately benefits them. their greatest artists. (In this industry, an illegal play for a song is cheating, but a system that underpays unpopular artists is a business model.) But the industry needs to think about what consumers want — easy ways to find the song they want, music discovery that works across genres and a royalty system that benefits listening artists. Shouldn't they get it?
