Federal prosecutors have charged a North Carolina musician with wire fraud and money laundering after alleging he used bot accounts and hundreds of thousands of AI-generated songs to fraudulently earn more than $10 million in royalties from streaming services like Spotify and Apple Music.
Rolling Stone Reports The United States Attorney's Office for the Southern District of New York has indicted Michael Smith, a 52-year-old musician from North Carolina, for allegedly running a complex music streaming manipulation scheme. According to the indictment, Smith used bot accounts and hundreds of thousands of AI-generated songs to fraudulently profit from billions of streams, earning more than $10 million in royalties from major streaming services over the past seven years.
Smith has been charged with wire fraud conspiracy, wire fraud and money laundering conspiracy, which together carry a maximum sentence of 60 years in prison if convicted. “Through this brazen fraudulent scheme, Smith stole millions of dollars in royalties that should have been paid to musicians, songwriters and other rights holders for songs that were lawfully streamed,” U.S. Attorney Damien Williams said in a statement.
According to the indictment, Smith obtained thousands of email accounts through a bulk account seller and at one point had around 10,000 bot accounts on streaming services including Spotify, Apple Music and Amazon Music. To make the process easier, Smith allegedly paid people both inside and outside the U.S. to help him set up the accounts. Smith also allegedly purchased family plan accounts as a cheap way to register his bots, and used a New York-based service that provided debit cards to employees to make the payments seem more legitimate.
To avoid detection by streaming services, Smith allegedly spread the streams from his bot accounts across thousands of tracks. After his initial strategy of using his publicist's music catalog to sell streams to artists failed, he turned to artificial intelligence in 2018. Smith allegedly worked with an unnamed CEO of an AI music company and a music promoter to produce hundreds of thousands of AI-generated songs.
The indictment details multiple instances in which Smith denied engaging in streaming fraud when confronted by music distributors and streaming services. He allegedly lied to the Mechanical Licensing Collective (MLC) by claiming the music was his and not computer-generated. MLC CEO Chris Arend said the indictment “highlights the seriousness of streaming fraud as an issue for the music industry” and validates the importance of the industry's efforts to combat fraud and protect songwriters.
Streaming fraud and AI-generated music have become major concerns for the music industry in recent years. Major record companies worry that streaming fraud diverts royalties from legitimate artists, and that AI-created songs with minimal effort will exacerbate these issues. In response, Spotify introduced a new policy earlier this year, stipulating that creators need at least 1,000 streams before they can start earning revenue from their songs.
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Lucas Nolan is a reporter for Breitbart News covering free speech and online censorship.
