A North Carolina musician has been arrested for orchestrating a large-scale scheme to swindle royalties from music-streaming platforms using AI-generated songs.
Michael Smith, the accused, allegedly generated over $10 million by uploading thousands of these songs to services like Spotify and Apple Music and using automated bots to play the tracks, federal investigators reported. This marks the first criminal case involving “artificially inflated music streaming,” according to the Justice Department.
Smith Exploits Streaming Royalties with Bots
Smith’s scheme took advantage of the payout system used by streaming platforms, which rewards artists a fraction of a cent per play, typically between $0.003 and $0.004. Federal investigators noted that Smith’s actual music catalog wasn’t large enough to generate substantial earnings through legitimate streams, leading him to use fraudulent methods starting in 2017.
He acquired thousands of email accounts from bulk vendors and used them to create fake user accounts on streaming platforms. Additionally, he spent over $1.3 million on debit card numbers to associate with these accounts. The indictment claims that Smith ran as many as 10,000 bot accounts, which he distributed across a large number of songs to avoid detection.
In December 2018, Smith emailed his co-conspirators, stressing the need for a large number of songs to bypass the anti-fraud measures used by streaming platforms. His solution was to collaborate with the CEO of an AI music company, which allowed him to generate hundreds of thousands of songs for his operation. By mid-2019, Smith was reportedly earning $110,000 a month through these bots and AI-generated tracks.
Suspicious Streaming Numbers Trigger Investigation
Smith went to great lengths to make his activities appear legitimate, including naming his tracks with randomized file names and scientific-sounding terms such as “‘n_7a2b2d74-1621-4385-895d-b1e4af78d860.mp3″, “Zygophyceae”, “Zygophyllaceae”, “Zygophyllum”, and more. However, some music distributors grew suspicious of his activity by 2018 and began to question his streaming metrics.
If convicted on all charges, including wire fraud and money laundering, Smith could face up to 60 years in prison.
Featured Image courtesy of Emma Farrer/Getty Images
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