The Western High Court of Denmark has increased the sentence of a 54-year-old man convicted of orchestrating one of the largest streaming fraud schemes, raising his prison term to 24 from 18 months.
In March last year, the Eastern Jutland resident was found guilty of data fraud and copyright infringement after using bots to artificially inflate the stream count on 689 tracks he had uploaded to streaming services including Apple Music, Spotify, andYouSee Musik.
At the time, the court ordered DKK 2 million (USD $276,000) to be confiscated from the defendant, and added a DKK 200,000 ($27,600) fine.
Most recently, following an appeal, the Western High Court increased the man’s sentence “as there is evidence of extensive fraud amounting to no less than DKK 3.5 million” that should have gone to artists, according to the Danish Rights Alliance.
The scheme involved releasing edited versions of music copied from Danish musicians under his own name.
“WE FIND IT DEEPLY REGRETTABLE THAT THE COMPENSATION CLAIMS OF RIGHTS HOLDERS ARE NOT INCLUDED IN THE CASE.”
MARIA FREDENSLUND, RIGHTS ALLIANCE
Of the two-year sentence, the convicted individual will serve three months for “aggravated data fraud and copyright infringement.” The court ordered substantial financial penalties, including the confiscation of DKK 1.5 million from the defendant personally and DKK 2 million from his company. Additionally, the company faces a DKK 300,000 fine.
Maria Fredenslund, CEO of Rights Alliance, which initially reported the case in 2018 on behalf of various music industry organizations, welcomed the increased sentence, while expressing concern about the handling of compensation claims.
“The ruling also sends a crucial signal that such actions will be punished. At the same time, we find it deeply regrettable that the compensation claims of rights holders are not included in the case. This results in unnecessary resource consumption for rights holders, the convicted individual, and the judicial system.
“Given that this case has already dragged on since our initial report in 2018, it is unfortunate that it must now continue in civil court. If even a high-profile case like this – where massive fraud has impacted the entire Danish music industry – does not lead to compensation, we fear that in practice, obtaining restitution is not a real possibility for rights holders.”
The case has drawn attention from major figures in Denmark’s music industry. Gorm Arildsen, CEO of collection society Koda, described the ruling as “an important step in the fight against fraud and the manipulation of streaming in the music industry,” while IFPI‘s Communications Director, Lasse Lindholm, said the verdict represents “crucial support for those who dedicate their lives to creating music for all of us to enjoy.”
The development comes as streaming manipulation becomes increasingly sophisticated, particularly with the rise of AI in music production. In July, music data tracking firm Beatdapp Software said streaming fraud takes around $2 billion out of artists’ royalties per year, distributing that money to the owners of low-quality content designed to skim cash from streaming revenues.
Beatdapp partnered with Tuned Global in October to tackle streaming fraud in music apps.
In the US, a North Carolina musician was indicted in September for allegedly generating over $10 million in fraudulent royalties using “hundreds of thousands of songs” and bot accounts.
Over 1 million manipulated tracks are estimated to exist on major streaming platforms like Spotify, Apple Music, and TIDAL, according to Pex‘s analysis of copyrighted content. Some of these tracks have garnered millions of listens.
The music industry has rolled out measures to address streaming fraud. In July, music distributor and artist services company Amuse unveiled a feature called ‘Stream Check’ that lets artists know if their streams are being artificially inflated through streaming fraud.
In October, MBW reported that TikTok’s decision to shut down its negotiations with Merlin was partly due to “concerns” about streaming fraud.
“This isn’t about bad blood with Merlin. By doing direct deals, if we detect any kinds of content copyright issues, we can address it directly. It’s that simple,” Ole Obermann, Global Head of Music Development and IP at TikTok, said.
Source: MBW
