The 16% slice adds up to billions of dollars in unaccounted and missed streaming royalties annually, according to Legitary's latest stats (Photo: Pixabay)

The 16% slice adds up to billions of dollars in unaccounted and missed streaming royalties annually, according to Legitary’s latest stats (Photo: Pixabay)

Legitary has finally put a number on all those missing, incorrect, and fraudulent music streams. In its latest report, the streaming verification company reveals that up to 16% of streaming statements from DSPs are ‘suspicious,’ and the takeaways on streaming fraud are surprising.

Legitary’s latest finding is based on scans of over 700 billion music streams, with a staggering takeaway on just how much is being missed. The company’s AI-powered auditing platform identified a multitude of cases involving miscounted streams and anomalies — amounting to up to $3 billion in incorrectly tracked revenues for 2022.

The amount is eyebrow-raising, to say the least. Legitary’s report, shared with Digital Music News this month, is likely to raise pivotal questions about the accuracy and transparency of play counts on streaming platforms in an industry awash in trillions of streams.

Alongside the broader anomalies in the streaming industry, including streaming fraud, reporting errors, metadata discrepancies, and others, Legitary is also shedding light on other non-obvious issues, including unexplained drops in streams and zero-reported streams. But for all the focus surrounding streaming fraud, Legitary’s findings offer a surprisingly different assessment of the problem. Just recently, Legitary joined forces with DMN to further educate the industry on what their research is revealing.

Legitary’s findings take the issue of misreported streams beyond the typical discussions centered around streaming farms and streaming fraud. More importantly, it sheds light on the fact that fraud is only a modest part of the bigger anomaly pie.

Indeed, the different types of anomalies within the larger pie are unique and demand different solutions. Moreover, rectification of these anomalies requires a diverse set of approaches and strategies.

Nermina Mumic, CEO of Legitary, believes non-fraudulent anomalies are arguably the bigger enemy since they directly impact the IP owners involved. That’s not always the case with streaming fraud.

Streaming fraud tends to garner the most attention within the industry. However, Legitary noted that a far larger percentage of issues are unintentional or rooted in data errors. Most importantly, tackling those problems results in a one-to-one recovery of missing royalties and doesn’t involve chasing shadowy stream-farm operators.

Perhaps labels need to point their guns at a bigger boogeyman. With a substantial percentage of music streaming royalties potentially compromised by a broad number of potential issues, these hidden problems, Legitary believes, ‘do not receive the level of attention they deserve.’

“With streaming anomalies, we’re seeing royalties simply not getting generated, so the issue is harder to find, keep track of, and resolve,” Mumic explains, adding, “The music industry must delve into the occurrences and factors that could be contributing to exacerbating these anomalies. It’s absolutely imperative.”

While the issue is significant, Mumic is quick to point out that streaming platforms aren’t solely to blame for these anomalies.

Legitary’s report also notes that with far superior data quality, major labels account for fewer streaming anomalies compared to discrepancies recorded for indie label artists.

“There are many possible problems with missing stream payments, and suspicious stream counts don’t necessarily arise due to streaming platforms. Instead, the missing revenues stem from reporting issues, flawed data, and overall inaccuracies within the industry. In some cases, we’re seeing significant unexplained drops in streams, and at some points, no streams recorded at all.”

“Streaming fraud creates some indirect issues. But there’s also a direct leverage point of fixing streaming anomalies with direct remedial action.”

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