Twenty years ago, piracy was an existential threat to the music industry. Illegal download sites were at their peak, creators were seeing royalty payments plummet, and the question facing everyone was how the industry would compel fans to pay for music again.
Enter streaming music companies like Pandora, which flipped piracy on its head by making music accessible and affordable in a way that revived the industry and drove it to amazing new heights. Today, paid music streaming subscriptions top 100 million households and music fans generate more than $10 billion for the music industry, with major labels and publishers alike seeing double-digit revenue growth.
But now the industry is facing a new threat – streaming fraud – and once again we’re at the forefront of efforts to combat this threat affecting creators across the music business. SiriusXM and Pandora are investing time and resources to protect the integrity of the amazing music ecosystem of today. Here’s how:
Streaming Manipulation & Spin Fraud – What It Is and How it Works
To appreciate why streaming fraud has become one of the top concerns facing the music industry, it’s important to first understand how rightsholders – labels and publishers, artists and creators – get paid. Generally, all the subscription money collected by a service such as Pandora is pooled together and then divvied up based on how many spins a song received.
That system works when it’s based on real listeners and licensed, authentic content. But as with every industry-changing innovation, bad actors are quick to exploit or take advantage of technology in order to illegally line their pockets. There has been a growing effort by fraudsters to flood the system with illegally uploaded content that they do not have the rights to or computer-generated content that is nothing more than computer sounds and white noise that makes its way onto streaming services. Once these fraudulent “songs” are uploaded, these criminals hire automated bot rings to exploit the system, creating fraudulent accounts, using stolen credit card numbers, and attempting to play illegal songs thousands or millions of times with the hope of generating lucrative paydays from illegally generated royalties. As a member of Pandora’s content licensing team described it, “it’s a constant game of whack-a-mole with surprisingly sophisticated actors
The scale of this challenge is immense: Pandora has observed these bot rings attempting to distribute the same piece of fraudulent content 25 to 50 times, using different distributors in a short period. They’ll try switching up the song metadata, artist info, and other characteristics that services such as Pandora use to identify songs and make sure the proper rightsholder receives the royalties they’ve earned.
Tackling this issue is our priority because it impacts our community members – our listeners and creators. Spin fraud deprives legitimate artists and creators of the royalties they deserve. And this fraudulent content, if not identified and rooted out, can make it harder for fans to discover and connect with the songs and artists they like.
Turning the Tide
SiriusXM and Pandora are taking action to stem this tide and minimize its effect on creators and fans. Spin fraud is a sophisticated series of attacks where the methods are constantly evolving, and so we are just as sophisticated in our response.
That’s why SiriusXM and Pandora work with third-party fraud measurement providers that have helped us develop a range of internal red flags to help detect fraudulent activity. This is the first layer of protection, allowing us to quickly identify new threats and work with our internal teams to mitigate them as soon as possible. In addition, working with these external providers we’ve become skilled at identifying which incoming traffic on our platform is likely to be non-human. In response, we’ve deployed technology to identify these phony users when they try to log in or sign back into our systems; the result: we can better stop bots from accessing our platform in real-time.
Pandora’s music ingestion process also plays a role in stemming the flow of illegal uploads, as keeping illegal or fraudulent music out of the system is the best way to alleviate this type of criminal activity. A combination of human and machine curation is utilized to ensure that songs uploaded onto Pandora have complete and accurate metadata, that each version of a song is legitimate, and that we are delivering real music from real artists to their fans. By investing in technology and making a commitment to a focused screening process, we can take important strides towards limiting the influx of illegal content before it even hits our systems.
Still, with tens of thousands of songs uploaded daily, it is a constant battle. That’s why Pandora has a dedicated, cross-functional team focused on addressing the challenge of spin fraud. These data divers help police the system by reviewing spin logs and royalty reports for any suspicious activity, using bespoke methods that Pandora has developed to identify and stop payment of potentially fraudulent royalties. On average, these efforts save more than $10 million annually in royalties that are preserved for legitimate creators rather than fraudsters.
These are just a few of the ways that SiriusXM and Pandora are working every day to ensure that real music from real artists is being delivered to real fans. But despite these efforts and the serious investment we’re making, combating this type of fraud will require collective action across the industry to address. The integrity of this system is critical to stakeholders, which is why it will benefit everyone in the industry if we’re able to stamp out this issue.