Why Is There So Much Fraud in Music Distribution — And How Do We Solve It? (Guest Column)

The rise of DIY music distribution platforms like TuneCore and DistroKid has been undeniably transformative for artists – enabling them to reach listeners without traditional label constraints.

However, while democratization has opened the doors for countless artists, it has also opened the floodgates to an equally pernicious, unintended byproduct – rampant fraud and copyright infringement. For context, Luminate reported that in 2023, over 120,000 new songs were uploaded daily, a sharp increase from 93,000 per day in 2022. The increase is mainly due to two things: the ubiquity and growth of the DIY distribution sector, and the proliferation of consumers – dealing with music production resources. This relatively nascent landscape has dramatically increased not only the volume of content but also the industry's exposure to unauthorized and infringing material.

Universal Music Group's recent $500 million lawsuit against TuneCore and its parent company Believe underscores the seriousness — as well as a tipping point. The lawsuit alleges that these platforms illegally benefit from large-scale copyright infringement, where both the distributor and the unethical user are guilty of spreading and monetizing the unauthorized IP. Ultimately, this case highlights a wider, systemic failure, exacerbated by inadequate monitoring, accountability and control safeguards. But the ecosystem has become too big, too uncontrollable, and too profitable for some of its stakeholders to fix on their own. Reform is overdue.

Democratic Distribution

DIY distribution was originally designed to level the playing field by allowing any artist to release music on platforms like Spotify, Apple Music and YouTube. However, open access has had side effects – most notably, rampant IP abuse. The sector has become fertile ground for exploitation. Malicious users take advantage of the low barrier to entry by uploading pirated, remixed or slightly modified versions of copyrighted songs. Collectively, these uploads generate significant revenue, with a portion of that going to the distributors that host them.

This is far from an isolated issue. With millions of tracks uploaded annually, there is a huge challenge in verifying each song. While some platforms claim to have anti-fraud systems, policing measures often fall short. The sheer volume of uploads makes scalable monitoring difficult, in turn creating a laissez-faire approach that indirectly allows hacking to thrive.

Unique challenge for YouTube Royalty Collections

Nowhere is this problem more pervasive than YouTube, where scale and visibility are inherently even more challenging. Some users deliberately circumvent YouTube's copyright policies by uploading and distributing mixes, slow-down/speed-up remixes, or near-identical versions, specifically to bypass Content ID. Detection is difficult and most of this breach goes unnoticed. Even when violations are flagged, recovery of misused payments is impossible. Artists are left to navigate an opaque, complex system and often leave their rights exposed and their profits minimized. For many independent artists, YouTube is a major, major revenue stream, and copyright fraud takes that income away with little recourse.

Industry-wide implications

Valuing volume over quality control creates a system ripe for exploitation because the current model often benefits the offender. But solving the underlying issue requires more than an increase in lawsuits. There must be enforceable quality control metrics that are clearly communicated and actively prevent fraud while protecting rights holders. Transparent protocols that ensure that flagged content does not generate income for infringers, as well as improved early detection systems will help standardize accountability and visibility. A workable and sustainable assurance system will:

A. Prevent infringing content from reaching listeners at all
B. Mandate greater transparency in case of breach and
C. Ensuring Legal Compensation for Rights Holders.

Closing the knowledge gap and developing industry-wide standards are also necessary for meaningful change. With public awareness, the provision of a forum where artists and rights holders can report infringement, and increasing pressure on the industry, the path to reform is possible — and similar to regulations that have been implemented to curb other forms of online piracy.

A plea for collective responsibility

Setting clear deadlines for reform will hold platforms and distributors accountable while improving transparency. Essentially, and despite the challenges of volume, even mass DIY distributors must demonstrate a basic respect for intellectual property and prioritize rights holders/artists while identifying (and deterring) bad actors who undermine them.

With collective efforts across the industry, digital music distribution can become a sustainable model that supports independent artists while protecting their rights. A system that empowers artists while maintaining integrity is essential to preserving the value of music and protecting it from exploitation.

George Karalexis is co-founder/CEO of Ten2 Media. His expertise as a media executive, strategic consultant, and serial entrepreneur spans 15+ years of leadership in multiple fields, with an emphasis on music, marketing strategy, and tactical team building. Donna Budica is Co-Founder/COO of Ten2 Media. With a degree in finance from The Wharton School and an MBA from USC Marshall, he leads the corporate strategy and operations of Ten2 and its subsidiaries.

Ten2 Media is a rights management and content marketing company specializing in asset monetization, audience development and content optimization on YouTube. Ten2's YouTube expertise and decades of experience in the music industry are the foundation of its unique approach to maximizing revenue and marketing music for the world's top artists and labels.