Artists and Labels Reportedly Losing $300 Million in Potential Revenue to Fake Streams

In a new report from Rolling Stone, Hopeless Records founder Louis Posen claims that artists and labels are losing a suspected "$300 million in potential revenue" thanks to fake streams. Recently, the use of what's known as "computerized click farms and bots" have become a rising concern for those in the music industry, with generated streams coming from potentially fake users.

Posen first noted that a song the label released suddenly got "35,000 streams a day for three consecutive days" after it was added to six different playlists on Spotify. "It couldn’t be more suspicious," Posen added, before confirming he launched an investigation. "The playlists were created recently; they gained a bunch of followers in one week; they’ve never gained another follower since then; and all the plays happened in a three-day period."

There's a number of ways streaming figures have been manipulated outside of click farms, perhaps most notably with paid playlist placements. "Playlisters create a network, and are like, ‘I have access to a million monthly listeners,'" an anonymous source in digital distribution explained. "Artists pay for [access to] that." However, the generated streams have prove to be a bigger concern.

Posen added that people have supposedly been "hacking into legitimate accounts and streaming from those accounts when they’re not streaming music," easily disguising "fake streams" as legitimate. Of course, people have also gotten away with uploaded leaked tracks from popular artists on streaming services such as Spotify and Apple Music, as most recently was the case with Rihanna.

Earlier this year, an unofficial release of Rihanna songs was pulled from iTunes, although not before it managed to crack the top 100 on the Worldwide iTunes Chart. The money gained from the streams did not go to Rihanna or her label, but to a mysterious user named "Fenty Fantasia." Not only that, but last month Playboi Carti topped Spotify's US Viral 50 Chart with an unreleased song he didn't even upload to the streaming service.

"We’re dealing with a technology that’s grown faster than the protections, just like Facebook and the other social media platforms," Posen added. "[Streaming services] got so big, they don’t have the resources to make sure people aren’t abusing the platform."

Posen has also estimated that "three to four percent of global streams" are, in fact, fake or illegal. "It’s in the early stages of people understanding it," he said. "Talk to labels and artists: They don’t have any idea that money is being taken out of their pockets."