Jay-Z's TIDAL Under Investigation on Streaming Fraud......Several HUNDRED MILLION false plays...
TIDAL ‘FAKE STREAMS’: CRIMINAL
INVESTIGATION UNDERWAY OVER POTENTIAL DATA FRAUD IN NORWAY
BY TIM INGHAM
In an explosive story
last year, TIDAL was placed at the center of a major alleged ‘fake streams’
scandal.
Norwegian financial
newspaper Dagens Næringsliv said it had obtained an internal TIDAL company
hard drive which proved the streaming platform’s play-counts for two major
albums from 2016 – Beyoncé’s Lemonade and Kanye West’s The Life Of Pablo – had
been artificially inflated.
DN reported:
‘Beyoncé’s and Kanye West’s listener numbers on TIDAL have been manipulated to
the tune of several hundred million false plays… which has generated massive
royalty payouts at the expense of other artists.’
TIDAL CEO Richard Sanders subsequently “rejected
and denied” DN’s claims, but TIDAL opened an internal review into a potential
data breach anyway. This review, announced eight months ago and undertaken
by a third-party cyber security company, aimed to “aggressively [pursue]
multiple avenues available to uncover what occurred”. No results have been
publicly published to date.
In response to DN’s
story, Norwegian collection society Tono, which represents around 30,000
songwriters, filed an official police complaint against TIDAL.
Today (January 14)
brings big news: Dagens Næringsliv has revealed that
Norway’s National Authority for Investigation and Prosecution of Economic and
Environmental Crime (Økokrim) has begun an investigation into potential ‘fake
streams’ at TIDAL.
Økokrim’s Chief
Public Prosecutor, Elisabeth Harbo-Lervik, confirmed that Norwegian
authorities launched this ongoing investigation – aiming to prove or disprove
the suspicion of streaming volume manipulation within TIDAL – in the
fall/autumn of 2018.
According
Harbo-Lervik, Økokrim’s inquiries are “still in an early stage”.
Yet at least four former TIDAL employees have been interrogated before a
judge as part of the investigation so far, says DN, facing over 25 hours of
questioning in total.
“WE’RE STILL WAITING FOR TIDAL TO OFFER INFORMATION
THAT WILL [TELL US] ANYTHING ABOUT A POSSIBLE MANIPULATION.”
ELISABETH HARBO-LERVIK, ØKOKRIM
Of this group, reports DN, three people left TIDAL abruptly
and simultaneously in the second half of 2016: two held Business Analyst roles
at the platform, while the third was TIDAL’s Head of Business Intelligence –
responsible for analyzing streaming figures.
DN claims that, while
still employees of TIDAL in Norway, this trio recognized signs of manipulation
regarding the relevant Kanye West and Beyoncé albums; the group then contacted
a lawyer before informing TIDAL management about their findings, after which an
internal meeting was held.
All three individuals
subsequently resigned from TIDAL after signing what a DN source calls “the gold
standard of confidentiality contracts”.
“[TIDAL] has
previously stated that they consider themselves to be insulted by [DN’s
allegations, so the company] should have a vested interest in getting
information on the table that will [tell us] anything about a possible
manipulation,” said Harbo-Lervik to DN (translated). “But we’re still
waiting for them to offer this information.”
TIDAL’s lawyer,
Fredrik Berg at the law firm Fend, commented: “TIDAL is at this time not a
suspect nor has there been filed charges. We have an ongoing dialogue with
Økokrim. It would not be right to share the contents of this discussion with
the press.”
TIDAL parent Project
Panther Bidco Ltd filed its annual accounts in the UK earlier this month (see
below) for the year ended December 31, 2017. The Companies House document
showed annual revenue growth of 13% to $116.8m, alongside a slightly reduced
operating loss of $40.6m. (You can real TIDAL’s full 2017 accounts through here.)
In January 2017,
Softbank-owned telco Sprint acquired 33% of TIDAL for $200m.
According to DN’s original report into ‘fake streams’, at least
320 million TIDAL plays across both The Life Of Pablo and Lemonade in 2016 are
believed to have been manipulated. DN interviewed individual TIDAL subscribers
who said there were plays of these albums recorded on their accounts which they
didn’t recognise.
DN further reported that it had gained access
to record company royalty payment reports revealing that TIDAL paid Sony
in excess of $4 million across April and May of 2016. Of this, Lemonade – a Billboard 200
No.1 album – accounted for an estimated $2.5 million.
“TIDAL IS AT THIS TIME NOT A SUSPECT NOR HAS THERE
BEEN FILED CHARGES.”
FREDRIK BERG, FEND
Likewise, according to DN, in
February and March 2016, TIDAL paid Universal a total of €3.2 million ($3.4m) . Of this, The Life of Pablo approximately
delivered approximately €2 million ($2.1m).
DN hired the NTNU’s
Center for Cyber and Information Security (CCIS) to forensically investigated
the data it obtained on TIDAL’s plays. This report – which you can download in full here – concluded:
“We have through advanced statistical analysis determined that there has in
fact been a manipulation of the [TIDAL] data at particular times. The
manipulation appears targeted towards a very specific set of track IDs, related
to two distinct albums.”
The Jay Z-led Project
Panther Bidco acquired Norway-based streaming service WIMP in 2015 for
€50m, via a buyout of WIMP’s parent company, Aspiro.
WIMP was then
rebranded as TIDAL. Founding artist shareholders of TIDAL included Nicki Minaj, Rihanna, Kanye West, J Cole, Jack White, J
Cole, Beyoncé, Coldplay, Jason Aldean, Madonna and Deadmau5.
Sources at the time
that these star supporters were each given 3% equity in TIDAL in return for
their public declaration of loyalty to the service. Kanye
West later reportedly disassociated himself with TIDAL, claiming
the company owed him $3m.
TIDAL has recently
focused on its international expansion, launching in regions including Uganda and Brazil.
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