Prison Time for Streaming Fraud? Trial Kicks Off in Denmark Over Alleged $635,000 Fake Stream Scheme

In what could be a first, a Danish man is heading to trial to battle charges stemming from an alleged $635,000 fake stream scheme.

Regional outlets such as DR just recently drew attention to the unique courtroom confrontation, the trial for which kicked off yesterday. With a verdict expected to arrive on or around the 27th, the case centers on alleged fake streams racked up between 2013 and 2019, per the outlet.

According to the same source, the defendant is alleged to have orchestrated the 689-track music streaming fraud scam, directing enough bot-produced plays to the works (across Spotify, Apple Music, Tidal, and many others) to score north of DKK 4.38 million (currently $635,010) in royalty payments.

Somewhat astonishingly, given the relatively small paycheck (divided over seven years) at hand, the underlying streams are said to have put the defendant on a similar level (by listenership) as “Danish world stars such as Lukas Graham and MØ.”

Of course, that point certainly didn’t dissuade third-party scrutiny; prosecutors are pushing for a fine and prison time alike on an aggravated data fraud charge. Even before the trial started playing out, however, the defendant’s counsel, Henrik Garlik, emphasized potential plans to appeal.

“Depending on the result,” reads the attorney’s translated remarks, “there is a possibility that both my client and the prosecution will appeal the verdict to the High Court. Nor will I deny that a case like this could reach the Supreme Court.”

At present, the situation is raising far-reaching questions about what exactly constitutes a “fake” stream; it wasn’t too long ago that Spotify blocked a substantial number of BTS plays resulting from Army diehards’ repeat, non-bot listening. Also worth considering are jurisdictional questions due to the possibility that the involved “bot farms” may have been based well outside of Denmark and Europe itself.

Beyond the data fraud allegations, the defendant is being charged under Denmark’s Copyright Act because he allegedly lifted existing protected tracks, modified them slightly, and then passed them off as his own when reuploading to streaming platforms. (“Phantom artists,” referring to throwaway artist profiles featuring stolen music on streaming services, made headlines last month as well.)

Bigger picture, the episode looks to be spurring local media discussions about the state of the pro-rata compensation model employed at Spotify and elsewhere. In brief, revenue is pooled under said model and then distributed based on one’s share of overall streams – to the particular benefit of companies and acts with billions upon billions of plays.

In keeping with recent years’ substantial user and stream-volume growth – and notwithstanding the comparatively recent implementation of price increases – that point has brought about a decline in the average per-stream royalty rate.

On the other hand, studies have found that adopting a user-centric model – which forwards each user’s monthly subscription payment or advert revenue to artists based on their percentage of the individual’s actual listening – could bring unintended royalty consequences.

But the approach’s appeal may grow in any event, especially because of alleged occurrences like that described above as well as the increasingly raw deal indie acts are receiving amid royalty pivots at Spotify and Apple Music.

Expanding on the latter point to consider the multifaceted topic from a different angle yet, it’s unclear exactly why some indie catalogs are being removed from streaming services over seemingly inaccurate fraud allegations while largescale fake stream operations reportedly continue to run rampant.