Our Latest Podcast: Fraud In the Music Industry — How Big of a Problem Is This?

Nermina Mumic, information analyst at Rebeat Innovation, discusses accounting irregularities and fraud on the Digital Music News fices (photograph: Digital Music News)

It’s a scary query — with a probably horrifying reply.

Streaming music has created an avalanche royalty information, with billions line objects throughout hundreds of thousands statements.  Now, persons are attempting to determine simply how correct these royalty statements are.

That features a staff in Austria, who’re steadily determining a method to detect fraud and irregularities in statements issued to artists, songwriters, publishers, and labels.

Guenter Loibl and Nermina Momich are half Rebeat Innovation, based mostly exterior Vienna.  They began investigating fraud, errors, and different accounting irregularities, and realized they have been onto one thing large.

A extremely large trade downside, that’s.

I requested Guenter: how large an issue is that this iceberg?

It’s lots larger than all of us suppose, he instructed me.

But this isn’t nearly intentional fraud.  It’s extra broadly about errors — intentional or in any other case — and how you can each detect them and repair them (perhaps even earlier than they happen).

Then once more: no person actually is aware of how large this downside is till hundreds of thousands royalty statements have been audited.  Nobody’s out checking these things.  So it’s not possible to inform if the streams are counted accurately, the funds on these streams are correct, or if the promoting is being cut up accurately.

You simply should belief it — a minimum of for now.

I raised some hair-raising episodes involving streaming music platforms, together with Spotify.  But Guenter didn’t suppose that firms like Spotify or Apple are out dishonest anybody.  And streaming scams and heists are getting plugged.

But that doesn’t imply there aren’t errors.

And what about everybody else: labels, publishers, advert networks, and many others.?  Unfortunately, there’s no person on the market checking these things, auditing statements for accuracy, or fering any degree accounting certification.

It’s nonetheless the Wild West — which suggests there’s a really significant issue to be solved.  But after this interview, I began realizing that perhaps that is all heading to an ideal place, the place the expertise that created this potential situation may clear up it.

Or a minimum of audit it.

Here’s our newest podcast interview.