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Federal authorities have charged a North Carolina man with fraudulently earning streaming royalties through a scheme involving bots and AI-generated music.
The man, identified by the U.S. Attorney's Office for the Southern District of New York as Michael Smith, is charged with wire fraud conspiracy, wire fraud and money laundering conspiracy.
His indictment was unsealed this week, according to a press release from the U.S. Attorney's Office.
Prosecutors allege that North Carolina man Michael Smith “ultimately turned to artificial intelligence” to get the number of songs he needed to pull off his streaming royalty fraud scheme. (REUTERS/Dado Ruvic/Illustration/File Photo/Reuters Photo)
Authorities allege that Smith set up “thousands” of “bot accounts” on streaming platforms and automated them to “continuously stream songs he owned” to earn royalties for himself.
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Prosecutors alleged that the defendants “ultimately turned to artificial intelligence to obtain the number of songs necessary to succeed in their scheme.”
According to prosecutors, the AI-generated songs, which Smith obtained through the CEO of an AI music company and a music promoter, had “randomly generated” song and artist names to give the false impression that they were created by real musicians.
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Prosecutors alleged that Smith earned more than $10 million in royalties from streaming “hundreds of thousands” of AI-generated songs “billions of times” on his “bot accounts.”
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The platforms he allegedly used in his scheme included Amazon Music, Apple Music, Spotify and YouTube Music, according to prosecutors.
According to prosecutors, Spotify was one of the platforms through which Michael Smith allegedly carried out his scheme. (Nikos Pekkiaridis/NurPhoto via Getty Images/Getty Images)
Smith also faces allegations of “numerous misrepresentations” against the streaming platform.
“The defendants' scheme violates the integrity of the music industry with a coordinated attempt to circumvent the policies of streaming platforms,” FBI Acting Director Christy Curtis alleged.
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Each of the three charges carries a maximum prison sentence of 20 years.
“The charges set forth in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty,” a press release from the prosecutor's office said.
