$3 Billion Stolen From Artists: Fraud, Money Laundering, and the Dark Side of Streaming

This article is part of the series Who Pays the Artist?. Based on facts from Darknet Diaries episode 171: Melody Fraud.

Is This OK?

Let's start with a direct question: Is it OK that $3 billion is stolen from real artists every year? That the money from your Spotify subscription ends up with fraudsters, organized crime, and in the worst case, terrorist organizations?

No? Good. Because that's exactly what's happening right now – and most of us have no idea.

How Streaming Fraud Works

In Darknet Diaries episode 171, Andrew Batey – co-founder of Beatdapp, the only company in the world with full access to all major streaming services' data – explains how he accidentally discovered a massive fraud problem.

Beatdapp was originally built to accurately count plays using blockchain technology. But when they went live, they discovered something far worse:

The Pro Rata Pool Problem

To understand why this is so devastating, you need to understand the pro rata model: All streaming services' revenue from subscriptions and advertising is pooled together. Each month, the money is distributed based on the share of plays.

If you're an artist and your songs make up 10% of all streams that month, you get 10% of the pool. But if fraudsters pump millions of fake streams in, your share shrinks – even though your real listeners haven't changed.

Office Space in the Music Industry

The method is genius in its simplicity – directly inspired by the movie Office Space: Steal pennies from millions, and nobody notices.

Fraudsters create hundreds of fake artists under different names, labels, and distributors in different countries. They then upload thousands of songs to streaming services via legitimate distribution platforms like DistroKid, TuneCore, and Symphonic.

The key is staying under the radar: 3,000-4,000 streams per artist. No charts, no attention. But in aggregate? Billions.

Account Takeovers: Your Account Is a Weapon

The newest and fastest-growing method is account takeovers: Fraudsters use leaked passwords from data breaches to log into your Spotify account, play 5-6 songs, and disappear. Your normal listening activity automatically hides the fraud.

Andrew Batey demonstrated to streaming executives that he could obtain 100,000 hijacked accounts on every major streaming service within minutes – straight from the darknet. There's even an API service that creates the fraud for you: You specify the parameters, and they ensure no single account is overused.

"It is a fully professionalized, industrialized supply chain for fraud at this point."
— Andrew Batey, Beatdapp (Darknet Diaries ep. 171)

From Spotify to Terror Financing

This is where it gets truly dark. Streaming fraud isn't just about cheating for a little extra income. It has become a global money laundering tool.

According to Andrew Batey, senders typically lose 40-50% of the money in the process. But it's still better than alternative money laundering methods – and the music industry was a perfect target because it was growing so fast that nobody was watching.

"Terrorist organizations [...] could move money from Colombia to Doha through the streaming service. It'll all be washed and clean through the streaming services themselves, directly funding terrorist activity."
— Andrew Batey (Darknet Diaries ep. 171)

Artists' music is stolen from unhacked Dropbox accounts and unreleased tracks that were never fingerprinted. It's the perfect crime: Nobody knows the music is stolen because it never existed digitally before.

Spotify Accuses Drake of Billions of Fake Streams

If you think it's only obscure fraudsters, think again. In the episode, Jack mentions that Spotify has officially accused Drake of forging billions of streams. And Andrew adds that he knows a major artist – nominated for Grammys – whose entire debut album was based on fake streams.

It's not just the small players cheating. It's a systemic problem that permeates the entire industry.

What Can You Do?

You can't stop organized crime with a single click. But you can choose where your money ends up. Here's the simple truth:

Read our in-depth article about how to support artists directly with cratedigger.fm and Bandcamp.

Listen to the Full Episode

This article is based on Darknet Diaries episode 171: Melody Fraud – one of the most eye-opening episodes about the dark side of the music industry. We highly recommend listening to the full episode for the complete picture.

🎧 Darknet Diaries ep. 171: Melody Fraud – Listen directly or find the podcast in your favourite podcast app.

Sources and Further Reading

Om forfatteren

Ras 'Kata' Kjærbo

Ras Kjærbo is an Ableton Certified Trainer and one of the driving forces behind Rumkraft. He teaches Ableton Live and music production, and is passionate about sharing his knowledge on everything from sound design to live performance techniques.

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