How I deal with users who steal

I built an online service called DistroKid that makes it easy for musicians to get their music into iTunes, Amazon, Spotify, and Google Play.

It costs $19.99/yr for musicians to use, or is free if you refer 5 new users. The referral system works well, and is responsible for about 30% of daily new users.

Some users fake it though. They “refer” 5 people by making 5 bogus DistroKid accounts using the referral link we give them.

It’s pretty easy for us to detect when a user does this. But we let them get away with it because I love seeing people use the system, whether they’ve paid for it or not. It’s one of the most complex things I’ve ever built and I’m really proud of it. And there’s nothing like telling a musician, “Congrats! Your music is in stores.” Plus we get to send people money (100% of royalties) when someone buys their music. And sending people money they’ve earned is always a nice feeling.

Even when the user thinks they’ve scammed a free account out of us.

What’s more, these sneaky users get the same level of service that legitimate users get. That means we respond to their customer service emails, work with stores if there are any problems with the music they’ve uploaded, and pay royalties monthly (all the accounting and finance happens on our end — it’s a beast.)

But I was recently inspired by a story I saw about a police officer in Florida. She caught a woman shoplifting from a grocery store. Turns out the woman, who had no criminal record, was broke and didn’t have food for her kids. So instead of taking the shoplifter to jail, the officer bought the shoplifter $100 worth of groceries, charged the woman with a minor misdemeanor, and let her go.

http://www.youtube.com/watch?v=q10AmL87oK4

It’s possible some of the musicians who want free DistroKid access can’t afford it. Or maybe they’re unable to get a credit card.

I’m happy to give these musicians the opportunity to get their music into stores. And maybe they’ll even earn a living from it — the best art comes from struggle.

So today we’re launching “Scholarship” accounts. When the system detects that you’ve just created 5 bogus referrals, you’ll be presented with a notice that we caught you, but here’s an option: Either pay the $19.99/yr, or sign up for a free Scholarship account if you can’t afford it.

I think musicians will give these options some thought and choose the one that’s right for them.

There’s a discussion about this on Hacker News.