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A North Carolina man is facing fraud charges after uploading hundreds of thousands of AI-generated songs to streaming services and using bots to play them billions of times.
Michael Smith reportedly earned more than $10 million in royalties since 2017.
Smith, 52, was arrested Wednesday on charges including wire fraud and money laundering, according to an indictment unsealed the same day.
Smith is accused of using bots to steal royalties from platforms including Spotify, Apple Music and Amazon Music.
Each charge (wire fraud and money laundering) carries a maximum penalty of 20 years in prison.
The U.S. Attorney’s Office for the Southern District of New York says this is the first criminal case involving the use of bots to artificially inflate music streaming numbers.
Prosecutors accused Smith of creating thousands of bots to stream songs. He initially allegedly uploaded his own music to streaming services, but realized his catalog wasn’t large enough to generate significant revenue. After other efforts failed, he turned to AI-generated music in 2018.
The FBI-backed investigation revealed that in 2018, Smith hired a music promoter and an AI-based music creation company to source hundreds of thousands of songs, give them random names and associate them with fictional artists so they appeared to be created by real people.
According to the indictment, he deceived streaming services by making the bot accounts appear to be legitimate when in fact they were “programmed to stream Smith’s music billions of times.” Smith allegedly tried to cover his tracks by using fake email addresses and VPNs, and insisted his co-conspirators be “undetectable.”
Source: Engadget - https://ar.rt.com/y93s
"Happinass" Editor additional information:
There have been other cases of music streaming fraud similar to Michael Smith's, where individuals or companies manipulated streaming numbers to collect inflated royalties. Some notable examples include:
Firefly Entertainment (Sweden): In 2022, Swedish media exposed Firefly Entertainment, an independent label, for generating revenue through fake artist names. The label allegedly used bots to inflate streams across over 800 fictitious artist profiles. These fake artists even appeared on official Spotify playlists, raising questions about platform oversight.
Danish Streaming Fraud Case: In 2023, a man in Denmark was sentenced to 18 months in prison for data fraud and copyright infringement. He used bots to inflate stream counts on 689 tracks uploaded to streaming platforms. The case highlights how widespread this kind of fraud has become, even in smaller markets.
Beatdapp's Efforts: A company called Beatdapp, specializing in streaming fraud detection, has estimated that streaming fraud could siphon as much as $2 billion annually from legitimate artists' royalties. They are actively working with organizations like The Mechanical Licensing Collective to combat this growing problem.
These cases reflect a growing challenge for the music industry as streaming fraud evolves with new technologies, particularly through the use of bots and AI.
Source: Music Business Worldwide
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