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AII-1002-44153
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Musician charged with $10 million streaming fraud using AI-generated songs

Michael Smith was indicted for operating a $10 million streaming fraud scheme using bot accounts and hundreds of thousands of AI-generated songs on major streaming platforms from 2017 to 2024. Smith created fake bot accounts to fraudulently stream the AI music billions of times, stealing royalties that should have gone to legitimate musicians and songwriters.

4 September 2024 Β· Michael Smith Β· Fraud, scams and manipulation
4 September 2024
AII-1002-441535 sources ↓
Quick facts
Category
Fraud, scams and manipulation
Country
United States
Source
Variety
Date
4 September 2024
Drafted by
Raidu Incident Detection

What happened

Michael Smith, 52, of Cornelius, North Carolina, was arrested and indicted by federal prosecutors on charges of wire fraud conspiracy, wire fraud, and money laundering conspiracy for operating a streaming fraud scheme from 2017 to 2024.

Smith created thousands of bot accounts on music streaming platforms including Spotify, Apple Music, Amazon Music, and YouTube Music, and used software to make these accounts continuously stream songs he owned. He collaborated with an unnamed CEO of an AI music company and a music promoter to generate hundreds of thousands of AI-generated songs starting in December 2018.

To avoid detection, Smith spread his automated streams across thousands of songs rather than concentrating them on single tracks, estimating he could generate about 661,440 streams per day. When confronted by music distribution companies and streaming services, he allegedly denied involvement in streaming fraud and lied to the Mechanical Licensing Collective, claiming the music was his and not computer-generated.

Reported impact

Smith fraudulently obtained over $10 million in royalty payments through the scheme. The Mechanical Licensing Collective's CEO stated the indictment 'shines a light on the serious problem of streaming fraud for the music industry' and validates efforts to combat fraud and protect songwriters.

Index analysis

Smith used AI-generated music as a tool to execute fraud at scale, generating hundreds of thousands of songs without human creativity to populate his bot streaming scheme. The indictment describes how he deliberately adopted AI music generation in 2018 when initial strategies of using a publicist's catalog and attempting to sell streams to artists failed.

Governance controls

Streaming services and music distribution companies have detection systems to identify fraudulent activity, but Smith allegedly evaded these by spreading streams across thousands of songs to keep individual track stream counts below suspicious thresholds. The indictment details instances where distribution companies and streaming platforms were deceived by Smith's false claims about the nature of his music catalogs.

Classification

Category
Fraud, scams and manipulation
Industry
Media, social platforms and marketing
Country
United States
Harm status
Actual harm
Intent
Intentional
Timing
Unknown
Harm types
Economic or property
Harmed
Business, Workers
Failure modes
Manipulation or dark pattern
Consequences
Litigation
AI systems
AI music generation service

Sources and evidence

This record was researched and written by the Index, based on the following original reporting.

Variety
Music Producer Accused of Using AI Songs to Scam Streaming Platforms Out of $10 Million in Royalties
4 September 2024
Rolling Stone
Feds Indict Musician on Landmark Massive Streaming Fraud Charges
4 September 2024
U.S. News & World Report
North Carolina Musician Arrested, Accused of Artificial Intelligence-Assisted Fraud Caper
4 September 2024
ca.news.yahoo.com
Musician charged with $10 million streaming fraud using AI-generated songs
breitbart.com
Musician charged with $10 million streaming fraud using AI-generated songs