“I feel like that guy in Don't Look Up,” he says Andrew Bateyco-CEO/co-founder of streaming fraud detection company Beatdapp. “I've been shouting about the comet coming for years and so many people haven't taken it seriously. Now, I think it has arrived.”
On November 4, Universal Music Group sued TuneCore and its parent company Believe for $500 million in a copyright infringement lawsuit, claiming that TuneCore's “business model” of allowing users to upload huge volumes of songs for a low flat rate factor is fueled “by rampant piracy and that TuneCore “makes little effort to hide its illegal actions.”
According to the lawsuit, some of those uploads are remixed or sped-up versions of UMG hits and have titles with slight misspellings of the infringing artists or works — such as “Kendrik Laamar,” “Arriana Gramde,” “Jutin Biber” and “Llady Sleepless .” UMG also alleges that TuneCore “exploited the content management claims system” at YouTube “to divert” and “delay… the payment of royalties” belonging to record labels.
The nine-figure lawsuit serves as a scathing indictment of how one of the world's largest DIY distributors allegedly conducts business. It's also seen as an indictment of the DIY distribution business model as a whole because, like Jamie Hart — founder of publishing management company Hart & Songs — explains, “These problems are certainly not unique to TuneCore.” Throughout her career, Hart has spent time at SoundCloud and YouTube rights aggregator Downtown AdRev (now part of FUGA), learning about the intricacies of online rights management and why it can get so confusing. “This is happening to all self-upload distribution companies at a high rate and has been happening for years.”
Along with users benefiting from content containing copyrighted material they don't own (sometimes referred to as “spoofing,” “fraudulent content” or “modified audio” in some contexts), experts say DIY distributors it's also usually the distributors who leave an excess of songs to be used in “streaming fraud” schemes — a term used to describe the process of artificially juicing streaming metrics to siphon money from the rights group.
Batey and co-founder/co-CEO of Beatdapp Morgan Hajduk see that this is the beginning of a serious crackdown on distribution companies like TuneCore, with “a small window for [distributors] to get on board' and clear up their issues with breach and fraud before it leads to serious consequences. For those unwilling to put in the extra effort to prevent much of the illegal activity on their services, Beatdapp leaders fear that financial penalties from streaming services or lawsuits from rights holders like UMG could be pretty harsh to put some of the small players. out of business and lead to consolidation.
“We don't want to see consolidation,” says Hayduk. “It's healthy to have multiple distributors in the market, both for users and for our business. We want to see them clean up their act, but they have to start now.”
In recent years, many efforts have been made to address the growing problems in DIY distribution — from streaming fraud to copyright infringement to sheer volume. Last year, TuneCore, Distrokid, CD Baby, Symphonic, Downtown and more came together to form the Music Fights Fraud coalition, an effort to self-police these issues through a shared database. (Since then, Beatdapp claims there has only been an increase in streaming fraud across the industry.) Spotify also announced new tweaks to its royalty payment models in an effort to curb these issues, including financial penalties for distributors and labels that perpetuate fraud .
But this fall, a series of high-profile cases of anti-fraud regulation began to emerge in quick succession. In September, federal prosecutors charged a North Carolina musician in the first federal streaming fraud case, alleging he used two distributors to upload “hundreds of thousands” of AI-generated tracks and then used bots to stream them, earning more than $10 million as of 2017.
Then in October, TikTok cited “fraud” issues as the reason for pulling out of its license renewal with Merlin, a digital license coalition representing thousands of indie labels and distributors. Instead, TikTok reached out to Merlin members individually — something TikTok says could help them limit fraud by specific members, but which Merlin calls an excuse to “fractionate” its membership and “minimize” the TikTok charges for indie music.
Experts are divided on whether or not the problems in these DIY dispensers will be easy or difficult to fix. One DIY distribution employee, who requested anonymity, says that stopping bad activity is a never-ending game of “wack-a-mole” and that it's “impossible to catch everything” even with a quality control team. “There's so much content being pushed at once that a lot of it gets lost.” They add, however, that there is too much emphasis on “quantity over quality” at these companies and that they need to hire more quality control staff than they have now.
But Larry Millssenior sales representative at Pex, a company that provides tools for content identification and rights management, believes that “it's actually not that hard to solve the problem. Some distributors and DSPs simply make a business decision to use smaller technologies that aren't geared towards finding modified audio or covers until they have to.”
Beyond contracting with a third-party service like Pex or Beatdapp, or spending millions on more full-time employees, there are also much simpler steps that can be taken. Greg HirschhornCEO/founder of distributor Too Lost and member of the Music Fights Fraud coalition, said in an interview in October that his company has seen significant success by simply requiring users to submit a photo ID and a selfie before uploading songs to Too Lost. “There's no hiding from it, and it's easy,” says Hirschhorn. “If you break the law using our site, I have your information and can just send it to local law enforcement or the streaming service.” Hirschhorn claims he has offered to implement the same service to other MFF members, but says no one has taken him up on it.
According to Mills, UMG's new lawsuit against Believe has encouraged more action. “Thankfully, people are starting to take it seriously. Our phones definitely ring more than they did then [the UMG lawsuit]”, he says.
An employee at one of the DIY distributors has also seen a change in attitude about these problems in light of the UMG lawsuit. “Many of us [in distribution] they've talked about this lawsuit,” this person says. “This is a systemic issue in distribution. No company is blameless…Other distributors should be nervous.”
For those involved in helping artists and writers collect their rights online, such as Hart and Jon Hichbornfounder of the copyright monitoring company Records on the Wall, “There is too much responsibility on the rights holder,” as Hichborn puts it, to protect their copyright. “It's confusing. I track rights 24/7. Imagine if I wanted to be a musician who wrote and played? There wouldn't be enough time in the day to do it all.”
However, the continued dysfunction and challenges posed by DIY distributors have created a profitable cottage industry for companies like Pex, Beatdapp, Hart & Songs, Records on the Wall and others designed to clean up the mess that protects copyright and collecting rights on the internet today. “My business, unfortunately, thrives on being fooled,” laughs Hichborn. “It will never go away.”
It's unclear what the future looks like for DIY distributors. While Beatdapp predicts “elimination” for non-compliant distributors, Hirshhorn predicts big change “in the degree of quality control, the amount of KYC [“know your customer” checks]the amount of diligence required', but doesn't see it as an apocalyptic fact. As he found with the implementation of authentications, even if the scale of songs released by a distributor drops a bit, a distributor can still thrive. Too Lost, he says, is doing better than ever, earning more than $50 million in annual revenue this year.
“At the end of the day, you just shouldn't be able to make money online—whether it's from music, games, or the creator economy—if you don't reveal exactly who you are,” says Hirshhorn. “That makes perfect sense… The music industry is always slow to adopt any changes, but that's the way the future will be.”
from our partners at https://www.billboard.com/pro/umg-lawsuit-believe-regulation-diy-distribution/
