Fake streams can cost your label money even when you did nothing wrong
A track on your label suddenly jumps in streams. A few weeks later, your royalty statement shows a deduction you did not expect, and your distributor tells you the track has been flagged for artificial streaming. You never bought a single stream. Maybe the artist hired a cheap playlist service, or a bot network used your track to hide its activity. Either way, the penalty lands on your label.
This is now a real operating risk for independent labels. The good news is that most of it is preventable with a few simple habits. This guide explains the penalties, how they reach you, and what to do to protect your catalogue.
Why this matters for labels right now
Streaming platforms are cracking down hard. Since 1 April 2024, Spotify has been charging labels and distributors per track when it detects flagrant artificial streaming on their content. Deezer says up to 85 percent of streams on AI-generated music were detected as fraudulent in 2025, compared with 8 percent across its whole catalogue, and it demonetises every fraudulent stream it finds.
As detection improves, more tracks get flagged, including some that were targeted by bad actors without the label knowing. As the rights holder, your label is the one expected to answer for it.
The penalties you could face
Penalties escalate depending on how serious and how repeated the activity is. According to Spotify’s own guidance, the consequences include:
Withheld royalties. Artificial streams earn nothing, and the royalties tied to them are withheld.
Corrected stream counts. Fake streams are removed from public numbers and charts, so a track can visibly lose plays overnight.
Playlist removal. Flagged songs can be pulled from Spotify playlists, including editorial ones you worked hard to land.
Per-track fees. Spotify charges the label or distributor for each affected track. FUGA, the distribution infrastructure used by many independent labels, confirms the charge is 10 euros per track per month.
Takedowns and suspension. Distributors can remove content or suspend accounts, and Spotify can remove content from the platform entirely for repeated or egregious cases.
Ten euros may sound small. Multiply it across several tracks and several months, and on a release that earns modest streaming income it can wipe out the revenue completely.
How the penalty reaches your label
Spotify does not bill the artist. It charges the distributor, and the distributor passes the cost on to the label. FUGA, for example, deducts the fee from royalties, and it appears as an adjustment on your self-billing invoice rather than as a line in your raw royalty reports. That makes it easy to miss if you only look at stream data.
FUGA also runs a zero tolerance policy. If a track is flagged, you are expected to investigate internally, and you may be asked to take the track down from all platforms. Keeping a flagged track live can mean the fee repeats every month.
Step 1: Vet every promoter before anyone pays them
Most artificial streaming problems start with a promotion service. Spotify is clear that any service offering guaranteed streams or guaranteed playlist placement in exchange for money breaks its terms. Before you or your artists hire anyone, ask them exactly how they generate plays. Walk away if they promise a set number of streams, listeners, or followers, or if they cannot name the playlists and curators involved.
Legitimate promotion earns attention. It never guarantees numbers.
Step 2: Put promotion rules in your artist agreements
Your artists may be spending their own money on promotion without telling you. Add a clause to your agreements that requires artists to get approval before hiring third party promoters, bans services that guarantee streams, and sets out who covers any penalties caused by their activity. Take legal advice on the wording, but make the expectation clear from the first conversation.
Step 3: Check your data every week
The industry body IMPALA’s streaming manipulation guidance recommends that labels monitor their data regularly. In Spotify for Artists, look for: Sudden spikes in streams or followers over a short period with no release, press, or campaign to explain them. Listeners concentrated in countries or cities where the artist has no audience. High stream volumes from unknown or low quality playlists.
Lots of streams with little real engagement, such as saves, follows, or growth in monthly listeners.
If you spot a suspicious playlist, report it through Spotify’s playlist reporter and tell your distributor straight away. Flagging it early shows good faith.
Step 4: Keep a paper trail
Keep records of every campaign you run: ad spend, press outreach, playlist pitches, radio plays, and the promoters you used. If a track is flagged by mistake, Spotify asks you to go to your distributor with documentation of the methods you used to promote it. Labels that can show their working are in a far stronger position.
What to do if a track is flagged
Act quickly. The longer a flagged track stays unresolved, the more fees can build up.
First, talk to your distributor and find out which tracks are affected, since when, and what the penalty is.
Second, investigate. Ask the artist directly whether they or anyone on their team paid for promotion, and check your data for the patterns above.
Third, decide on the track. If the streams came from a service someone paid for, taking the track down may be the only way to stop the monthly fee. If you believe the flag is wrong, send your distributor your campaign records and ask them to raise it.
Finally, fix the cause. Update your agreements, brief your roster, and make promoter checks part of every release plan.
Protect the catalogue you have built
Artificial streaming penalties are a distribution problem, and they are much easier to handle when your distributor knows your catalogue and picks up the phone. If you want a partner who works with you on releases rather than leaving you to decode an invoice alone, talk to MN2S Label Services about distribution for your label.