This story was published as part of of Billboard music technology newsletter “Engineering Lessons”.
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Last week, Universal Music Group filed a $500 million lawsuit against TuneCore and its parent company Believe for alleged copyright infringement of UMG's recordings. The lawsuit presented two main issues: first, that bad actors used TuneCore to upload songs to streaming services that were simply sped-up or remixed versions of UMG copyrighted recordings, often listed with slight misspellings of the actual artist, such as “Kendrik Laamar” or “Ariana Gramme”. Second, it alleged that “Believe exploited the content management claims system” at YouTube “to divert” and “delay … the payment of royalties” belonging to record labels.
If you've been following the issues in this case over the past few years, this lawsuit seems like a long time coming, and the concerns UMG is raising are definitely not just TuneCore-specific issues — they're industry-wide DIY distribution issues. With the sheer scale of songs being uploaded through these companies and the crews too small to catch every bad actor, pirated material has, according to almost everyone, flooded the streaming services.
Distributors also know it's a problem. That's why TuneCore, DistroKid, CD Baby, Symphonic, Downtown and others formed the Music Fights Fraud coalition in 2023 and say they're increasingly invested in preventing fraud and infringement. Unfortunately, Beatdapp, the industry leader in streaming fraud detection, believes the problem has only gotten worse since then. UMG also isn't convinced TuneCore is doing enough, saying the company's business model incentivizes them to “turn a blind eye” to this harmful activity.
Below, I've condensed some of the arguments I've heard among industry leaders both for and against DIY distribution as it exists today. I'll leave it to you to judge which result is better.
Argument #1: Why it is necessary to protect the DIY distribution as is
It's easy to take for granted today that anyone who wants to release a song can do it themselves, but that wasn't always the case. When physical records were dominant, record deals often favored the companies involved and rarely went the way of the artists. At the time, artists were essentially forced to sign to a record label if they wanted a chance to get shelf space – especially around the world. This left artists vulnerable to unequal label deals that locked them in for multiple albums, while the label took the lion's share of royalties and copyrights, often in perpetuity.
When Distrokid, CD Baby, TuneCore and the like emerged in the 2000s, they allowed anyone to sign up for distribution services on digital outlets like the iTunes Store for a flat fee and changed the power dynamic forever. Today, the playing field has been significantly leveled: hobbyists can broadcast their music to the world, and artists with professional aspirations can wait as long as they want before having to hand over a single percentage point of their master recordings to a label. These companies helped shift bargaining power to artists and for the first time began the process of allowing music fans to decide which songs were released, rather than labels pandering to gatekeepers working in radio, retail and the press.
The turnaround also presented a new, lucrative business opportunity. Music companies no longer need superstars in their rosters to make their numbers. In fact, no directories are needed at all. A company can now make money by providing services such as distribution to the previously overlooked masses of music hopefuls, relying on volume to make up the numbers.
But that volume has allowed fraud to proliferate, which is a problem that's evolving every day, and bad guys will always find loopholes. Already, most distributors have implemented common sense regulations and controls to limit fraud and have invested in quality control teams. But for many experts, it is impossible to completely solve the problem. As it is commonly said, this is an endless game of “wack-a-mole”.
But if the barriers to DIY distribution are too significant — such as limiting the number of releases, restricting who can use it, raising the cost of the platform, adding a streaming cap, or slowing down release time — it could take away the power from the independent musicians they are used to. Such a move would be a step backwards for artistic freedom, and the cost of enforcing these regulations could threaten to put some of the smaller distributors out of business. Less choice and competition in DIY distribution is not better for users.
It's impossible to put the DIY dispensing genie back in the bottle. Artists, used to the current system, would still find ways to get their music out quickly and cheaply — fraudulent or not. Most likely, this music would be released on social media or social streaming hybrids like YouTube and SoundCloud, which pay royalties and can still be scammed. Streaming services like Spotify, Apple and Amazon would risk losing audience and music discovery to social media platforms – something they're already struggling with in today's TikTok era – and it might not even solve the problems which he aimed at.
Argument #2: Why the DIY distribution system needs serious reform
Currently, over 120,000 songs are uploaded to streaming services every day, a rate that has been growing rapidly for years and will likely continue to do so. This is mainly due to DIY distributors. While it's great that aspiring artists can get their music out cheaply and easily, it's also led to rampant fraud and copyright infringement that puts too much of a burden on rights holders to police their own catalogs online. What happens when we inevitably reach a point where 1 million songs are uploaded every day? We cannot continue as we are now and we need serious reforms.
While DIY distributors have announced initiatives like Music Fights Fraud and hosted panels at industry conferences to explain the new methods they're using to stop bad actors, some people say these companies have an incentive for at least one part to escapes their watch. since their business models are based on getting paid in exchange for uploading as many songs as possible. Self-policing is not enough, considering that this problem seems to be getting worse.
The introduction of genetic artificial intelligence has made this issue even more pressing. While it's impossible to know how much of the music uploaded today comes from AI, and to date streaming services don't have regulations for it, it certainly contributes to the growing number of songs released on streaming services per day. AI songs are believed to be exploited by bad actors to commit streaming fraud, as seen in the September lawsuit alleging that a musician named Michael “Mike” Smith stole $10 million in streaming royalties by uploading AI-generated songs using a distributor and then bots were used to transmit them. Bad actors mass-upload AI songs to spread artificial currents and make their designs harder to detect.
It's hard to argue that it improves a user's streaming experience when a platform has a huge number of AI songs and tracks that not a single person has streamed, and it's clear that these songs, largely from DIY distributors, are reducing the pool rights at the expense of what some stakeholders call “professional artists”. The negligible payouts earned by hobbyists who have amassed hundreds or just a few thousand streams are sometimes lower than the fees that would result from transferring the rights to their bank account.
These distributors, the argument goes, should be penalized for the bad actors they let through. This has been proposed in many forms so far, including a financial penalty imposed by streaming services, requirements for significant “know your customer” checks to slow uploads and verify user identities, a minimum stream count threshold before artists they are entitled to compilation rights, a limit on the number of songs a user can upload at a time, an additional fee for storing bulk uploads on streaming services, and more.
It's not a viable business if you rely on a massive scale of song downloads but can't afford the right staff and tools to police them.
from our partners at https://www.billboard.com/pro/diy-distribution-reform-weighing-pros-cons-why-analysis/
