This US musician allegedly generated $10m using bots to rack up fake streams of AI songs. He could face decades in prison for wire fraud and money laundering

The US Department of Justice has indicted an individual over the suspected use of artificial intelligence to generate large amounts of fake music streams and generate more than $10 million in royalties.

The arrest marks the first criminal case involving artificially inflated music streaming, according to the US Attorney’s Office for the Southern District of New York, which announced the indictment on Wednesday (September 4) alongside the Federal Bureau of Investigation.

Michael Smith, a 52-year old resident of North Carolina, allegedly created “hundreds of thousands of songs” using AI. He then employed automated programs to create numerous fake accounts or “bots” to stream the songs billions of times on streaming platforms like Amazon Music, Apple Music, Spotify, and YouTube Music.

At one point, Smith estimated that he could use the bots to generate about 661,440 streams per day, generating annual royalties of $1,207,128, the indictment read, citing an email that Smith sent himself in October 2017.

According to the indictment, Smith employed a number of measures to boost streams, including using fake email accounts and cloud computer services, and paying for Family plans on streaming platforms.

“Although Smith was himself a musician and had access to a small catalog of music that he owned, that catalog was not nearly large enough for Smith’s streaming fraud,” the indictment read.

Smith is also believed to have attempted to sell his fake streaming plan to other musicians, offering to fraudulently generate or share royalties with him in exchange for fake streams of their music.

“Although Smith was himself a musician and had access to a small catalog of music that he owned, that catalog was not nearly large enough for Smith’s streaming fraud.”

DOJ indictment

However, the plan did not provide Smith with the vast number of songs needed to hide his fraudulent activity, the indictment said. He then turned to AI to expand his scheme by working with the CEO of an undisclosed AI music company and a music promoter in 2018 to produce songs.

To avoid suspicion, Smith allegedly played his songs on multiple accounts, spreading the fake plays across a number of songs. In December 2018, Smith allegedly emailed two partners saying, “We need to get a TON of songs fast to make this work around the anti-fraud policies these guys are all using now.”

The government said Smith “deceived” the streaming platforms by artificially inflating the number of streams and receiving royalties that should have gone to real musicians.

Smith is facing up to 20 years in prison on each of three charges: wire fraud conspiracy, wire fraud, and money laundering conspiracy.

“The defendant’s alleged scheme played upon the integrity of the music industry by a concerted attempt to circumvent the streaming platforms’ policies,” said FBI Acting Assistant Director Christie M. Curtis.

“The defendant’s alleged scheme played upon the integrity of the music industry by a concerted attempt to circumvent the streaming platforms’ policies.”

Christie M. Curtis, FBI

“The FBI remains dedicated to plucking out those who manipulate advanced technology to receive illicit profits and infringe on the genuine artistic talent of others.”

US Attorney Damian Williams added: “As alleged, Michael Smith fraudulently streamed songs created with artificial intelligence billions of times in order to steal royalties. Through his brazen fraud scheme, Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed.”

“Today, thanks to the work of the FBI and the career prosecutors of this Office, it’s time for Smith to face the music.”

“Through his brazen fraud scheme, Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed.”

Damian Williams, US Attorney

The Mechanical Licensing Collective, an organization created to issue a blanket mechanical license for qualified streaming services in the US, identified irregularities in Smith’s streaming data and withheld the associated royalty payments.

“Today’s DOJ indictment shines a light on the serious problem of streaming fraud for the music industry,” said Kris Ahrend, CEO of The MLC.

“As the DOJ recognized, The MLC identified and challenged the alleged misconduct, and withheld payment of the associated mechanical royalties, which further validates the importance of The MLC’s ongoing efforts to combat fraud and protect songwriters.”

The development comes a month after The MLC announced a new collaboration with music streaming fraud detection company Beatdapp to “complement and enhance” the MLC’s existing streaming fraud detection capabilities. Beatdapp in July said streaming fraud takes around $2 billion out of artists’ royalties per year.

Smith’s indictment comes amid a growing crackdown on streaming fraud in the US and overseas. The latest case highlights the sophistication of these illicit practices and the challenges faced by the music industry in fighting them.

In 2022, Swedish newspaper Dagens Nyheter (DN) exposed Firefly Entertainment, an indie label that generated revenue by releasing music under numerous fictitious artist names. DN identified over 800 fake artist names linked to Firefly and discovered that many of these artists had their music featured on Spotify’s official playlists.

Most recently, in March, a man in Denmark was sentenced to 18 months in prison, after he was found guilty of data fraud and copyright infringement. The man allegedly used bots to artificially inflate the stream count on 689 tracks he had uploaded to streaming platforms.

Pascal Bittard, founder of France-based independent distributor IDOL, wrote an op-ed saying, “Fake streams are nothing new, but the recordings business is only just waking up to the scale of the practice.”

Music Business Worldwide