For every big fish, there’s always a leech on the belly. In almost every industry, as long as someone is successful or thriving, there is always someone who seeks to exploit that for their personal gain. From car insurance to the gaming industry, someone somehow manages to cheat the system at the expense of others, all for a quick buck, and rarely do they get punished for it. However, sometimes scammers can also take advantage of those who are new to the business as easy pickings.
We can all collectively agree that there is nothing more satisfying than someone getting their comeuppance. This is why people rejoiced after a prolific YouTube scammer, infamous in both the YouTube and music scenes, was finally arrested just recently. The criminal was identified as Jose Teran, the man who spearheaded the largest music royalty scam in history that netted him US$23 million over the course of five years.
YouTube’s Legality Loophole
Back in YouTube’s early days, you’d often see music videos, movie clips, anime episodes chopped up into three parts, and other things just hanging about on YouTube that people could easily watch. However, this posed a major threat, both for the still-budding platform and the industry, whose copyrights YouTube was infringing upon. Banning and taking down videos were the earlier solutions, and they worked, but even that reached its limits as there were simply too many videos.
Among all the solutions, copyright claiming was enough to appease the industry at large, as it allowed the video to remain online, but any profit from ad revenues and such would go straight to the person who claimed the copyright. It is a nice system that offers a compromise that lets both parties be happy, but it still isn’t perfect. Many people have exploited this system, and many more will join their ranks because of YouTube’s carelessness. YouTube is infamously known to be primarily run by bots that automate services, so when someone claims copyright on a video that they don’t even own or create, the bot will immediately side with the accuser and give them the royalties.
MediaMuv & AdRev Case
Los dueños de #MediaMuv (Webster Batista Fernandez y Jose Chenel Teran) y el “cantante” con quien lavan dinero en #MusikaInc llamado OVII. Actualmente viven en Miami, si los miras denuncialos. pic.twitter.com/971G1xNkek
— F*CK MEDIA MUV · WEBSTER BATISTA (YENDDI) (@FUCKMEDIAMUV) February 3, 2019
Translation: “The owners of #MediaMuv (Webster Batista Fernandez and Jose Chenel Teran) and the “singer” with whom they launder money in #MusikaInc called OVII. They currently live in Miami, if you see them report them.”
Teran may not be the oldest player in this scam game, nor was he the first, but he sure is the biggest, and he wasn’t alone. In a court filing earlier this year, Teran admitted to conspiring with Webster Batista Fernandez “to steal royalty payments for roughly 50,000 song titles” and pleaded guilty to conspiracy, wire fraud, and money laundering.
The operation began in 2017, when Teran and Fernandez formed a record label called MediaMuv and began seizing unearned royalties by claiming ownership of songs on YouTube. They did this by hiring as many as eight employees and searching YouTube “for recorded songs that were not actively monetized.” The team would then manipulate YouTube’s bots in order to claim the payout the original artists would have received.
Over the course of five years, he fraudulently claimed over 50,000 songs and reaped US$23 million (RM106,869,477.06) in royalty as a result. The team primarily targeted Latin artists, largely because of their obscurity in mainstream music and because they are overseas, making it harder for them to chase after MediaMuv. Furthermore, they partnered up with a management group called AdRev that helped enforce the scam’s façade of being a credible figure in the industry.
The IRS & Teran’s Arrest
However, the IRS launched an investigation into MediaMuv due to the company’s multiple bank accounts under fake names. There, MediaMuv’s inner workings were revealed, and Teran was subsequently arrested. Teran is said to have “obtained more than US$6 million (RM27,878,994.01) in personal profits” and continued to line his pockets with US$190,000 (RM882,834.81) in stolen royalties – which he hid from officials – even after he was indicted for the fraud. Authorities have considered that Teran may be a repeat offender and have thus given him a 5-year sentence. At the time of writing, AdRev and YouTube have yet to be served any papers, the former for their cooperation with MediaMuv and the latter for not acting on this scam sooner.
Now that the steps and process of this scam have been fully exposed, people worry that there may be those who choose to emulate it and that YouTube will finally set up countermeasures against it. Teran is said to have been working with five other conspirators, whose identities have yet to be discovered. Additionally, they are also trying to contact foreign artists who were victimised by this scam to help create a stronger case against MediaMuv.
Despite being classified as a “significant sentence,” many believe that 5 years of jail time, given the number of people harmed and revenue seized from them, isn’t enough and requires a much more severe punishment fitting for them. At the time of writing, it is unclear if Teran and his associate will receive additional sentences or the like until further notice.