The TIDAL Scandal Shows Why We Need More Transparency In the Music Business

The issue here is not whether TIDAL did or did not do what is claimed. The issue is that we may never know.
May 11, 2018

The music world was rocked this week by a damning report out of Norway claiming streaming music service TIDAL purposely inflated the streaming activity of Kanye West and Beyoncé.

If true (and it’s not fully clear yet it is) the entire affair has major implications for not only TIDAL, but the streaming music business at large. Ultimately, it serves as a stark warning against the music industry’s status quo of hoarding, rather than sharing, information.

Quick background… Norwegian newspaper Dagens Næringsliv published the report, which Music Business Worldwide summarized for the English-speaking world. It outlines how TIDAL reportedly manipulated user accounts to give Kanye and Beyoncé hundreds of millions more streams than users actually requested.

The report is based primarily on evidence gained from a hard drive purportedly obtained from the TIDAL service. The Norwegian University of Science and Technology’s Cyber and Information Security division conducted a forensic examination of it and found the following:

  • 1.3 million user logs show signs of manipulation designed to inflate the streams of both artists
  • This manipulation was conducted on the same days, at the same time.
  • That it is “highly likely” the manipulation took place internally.

TIDAL claims the report is based on stolen and manipulated information. Which sheds light on perhaps the biggest issue this whole story raises—the lack of transparency in the music business.

Information on what users are streaming and who gets paid for those streams is not something anyone can know. Each service treats its usage information as proprietary data. Each service reports this data only to the labels/publishers representing those artists played (and in the publishing case… only sometimes). The labels then report that data to each artist individually, who only learn how their music performed but not the context of how it performed against others.

This is incredibly opaque, and makes it easy for TIDAL to simply claim the report is false. There’s no third-party monitoring service to verify it. And that’s the problem…

The issue here is not whether TIDAL did or did not do what is claimed. The issue is that we may never know.

Here’s why.

Although TIDAL paid for each of these streams, the way streaming services compensates artists means that other artists were denied payment as a result.

Artists do not get paid solely based on the individual streams of their songs. Payments are related to market share. Streaming services collect a fixed revenue stream based on the number of subscribers they have, each of whom pay a flat monthly fee for unlimited access. These subscription fees go into one big pool, which is then divvied up and paid out proportionally to the labels (and subsequently, artists) based on the number of streams they generate.

In other words, artists are all competing in a sense for a bigger slice of a fixed pie. If TIDAL did in fact inflate the numbers for Beyoncé and Kanye, it means they paid out a higher proportion of this pool to those two artists than they deserved, which means other artists who generated legitimate streams got paid less.

This is why transparency and access to information is so important.

If there was ever a case that shows why labels should not be keeping this information to themselves, this is it. While digital streaming allows for far better tracking and reporting of music usage than the analog days, the sheer volume of streaming activity makes it very difficult to compile all that data.

As a result, it’s relatively easy to hide shady activity like this. If not for this report, the labels may never have realized their artists were getting fleeced.

Now this is a somewhat unique case in that TIDAL is owned by many of the very artists it streams (including Kanye). That means there is more motivation to juice streams in favor of those artists than there would be from other streaming services.

But another streaming service might be motivated to boost the activity of an artist threatening to pull content from their site for whatever reason. Or perhaps to mollify labels during licensing negotiations.

Who knows? The point is that bad actors thrive in environments where information is not transparent. The music industry has thrived for decades on a lack of transparency, where only those with access to information do well. Those lacking access to information do worse.

It’s time for that to change.

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