Why the TuneCore Lawsuit Could Change Digital Music Forever

Yesterday, Universal Music Group (UMG), ABKCO Music and Concord Music filed a copyright infringement lawsuit against the music distribution company TuneCore.

According to the allegations, TuneCore has not taken steps to prevent misuse of its services. As such, fake versions of UMG-owned tracks have appeared on various digital platforms, including YouTube, Spotify and Apple Music.

The lawsuit highlights a variety of tracks that the plaintiffs allege TuneCore infringed. They are seeking $500 million in damages.

Though the lawsuit caught some off guard, the truth is that it has been a long time coming. This battle has been brewing behind the scenes for many years. The only change is that enough has come together for UMG to feel comfortable taking its shot.

This could result in a major change in the digital music landscape, especially for independent artists hoping to get their work on major platforms.

To understand why that’s the case, we must first understand the parties involved and the lawsuit’s purpose.

The Basics of the Case

You have two options if you’re an independent artist looking to offer their music on streaming services and digital stores. First, you can seek out a traditional record and publishing deal or use a music distribution service.

DIY musical distribution services, such as DistroKid, CDBaby and TuneCore, handle the distribution of your music for a fee. They also offer other services, such as synch licensing, cover design, etc. They also handle musician royalties, taking a portion for themselves.

While all this is great for legitimate artists, it’s also an easily abused system.

In July, we examined how some pirates were abusing these distributors to profit from pirated movies on YouTube. They would upload “new” music to the distributors and then embed the audio in pirated films uploaded to YouTube. Those pirated movies would then indirectly produce royalties for the uploaders.

However, according to UMG’s lawsuit, the abuse goes well beyond that.

UMG alleges that some TuneCore users have taken a much more direct approach. They have often uploaded infringing versions of popular songs and distributed them, often modified slightly, including speeding up or slowing down.

To make matters worse, the names used by these “artists” are often pretty transparent. TuneCore has published music by “Jutin Biber, ” “Arriana Grarnde” and “Llady Gaga” to name a few.

For UMG, this has been especially problematic on YouTube, where TuneCore has faced disputes over music tracks. However, even after losing those disputes, TuneCore continues distributing the infringing tracks on other platforms.

While the lawsuit may seem surprising, the truth is it’s been a long time coming. Simply put, this issue has been brewing for many years.

The Lengthy Build-Up

For as long as there has been streaming music, people have been trying to game it. Back in 2016, there was a lot of concern over click fraud in streaming services. In those cases, musicians would create fake listens to inflate their royalties.

However, where some scammers were looking to inflate listens, others were looking to claim uncollected royalties. In 2017, Jose Teran and his partner launched MediaMuv, a music distribution company created to claim royalties to music on YouTube that wasn’t monetized.

Over the next five years, they collected an estimated $23 million in unearned royalties. Teran was eventually arrested. In June 2023, after pleading guilty, he was sentenced to 70 months in prison.

However, the case brought music fraud to the forefront and showed how easy it was to perpetuate.

As that case unfolded, Billboard reported that some music executives believed Create Music Group was similarly abusing YouTube’s system to claim unearned royalties.

But things came to a head last month when TikTok announced it would not renew its licensing deal with Merlin. Merlin is a collective of some 30,000 independent music companies. That license expired on October 31 of this year.

According to TikTok, their main issue was fraud. They allege that “fraudulent behavior” existed in too much of the music covered under the Merlin license. As such, they wanted to negotiate with the labels individually.

To be clear, TuneCore is not part of Merlin. Instead, the case shows how the battle over music fraud has started to boil over in recent months.

Now, it seems, things have finally come to a head.

Fighting Back Against Fraud

In June 2023, CD Baby, its parent company Downtown, TuneCore, its parent company Believe, and DistroKid joined forces with several streaming services to create the Music Fights Fraud Alliance (MFFA).

According to their release, the goal was to fight both streaming fraud and streaming manipulation. One component was preventing bad actors from just moving on to a different service after being kicked off one for fraud.

However, if the lawsuit is any indication, TuneCore has not been very successful. The lawsuit highlights several cases where the infringement should have been abundantly clear to any examiner.

To make matters worse, it also highlights times when TuneCore failed to remove fraudulent songs from other platforms after losing rights disputes on YouTube. In these cases, TuneCore clearly should have been aware of the issue.

That is why UMG decided to move forward with this lawsuit. However, it is unclear if it will be the only one. TuneCore has competitors like DistroKid and CD Baby that use a similar business model. They likely have similar issues with fraud.

However, the most likely outcome of this lawsuit is a settlement. That happened in 2020 when Round Hill Music, a New York-based publisher, filed a similar lawsuit against TuneCore. Though the lawsuit was much smaller, with 219 tracks and $33 million in damages sought, both sides still had strong motivations to settle.

But even if this case settles, it will likely have a major impact on the music industry, especially for smaller, independent musicians.

Bottom Line

The problem is simple. The major record labels will no longer tolerate music fraud from DIY distributors.

Though all of the major DIY distributors have a clause in their agreement that indemnifies them from infringement by their users, it is unclear how much protection that clause will grant them. This is especially true since the lawsuit targets actions taken or not taken by TuneCore itself. Between that and allegations of willful blindness, TuneCore must answer some tough questions.

However, the most likely outcome is still a settlement. A ruling on this is unlikely, though not impossible.

Ultimately, the big question is what changes TuneCore and other providers will or will not make due to this lawsuit.

This case could force companies like TuneCore to adopt new practices to filter out more fraudulent music. Those practices will cost time and money. This means it could take longer to go through a service like TuneCore and cost more, particularly in up-front fees.

The DIY path to digital publishing is likely to get more difficult. How much more difficult depends on how the case shakes over the next few months or years.

As such, this is a case that independent musicians need to watch very closely.