In a shocking development that has sent ripples through the music industry, federal authorities have arrested 52-year-old Michael Smith of Cornelius, North Carolina, for allegedly masterminding an elaborate AI-aided music streaming fraud scheme. The scheme, which ran from 2017 to 2024, is said to have netted Smith over $10 million in fraudulent royalty payments.
The Scheme Unveiled
Smith stands accused of leveraging artificial intelligence to create an astounding “hundreds of thousands of songs” and subsequently using sophisticated “bots” to stream these AI-generated tunes billions of times across major platforms including Amazon Music, Apple Music, Spotify, and YouTube Music.
The alleged fraudster didn’t work alone. Investigators reveal that Smith collaborated with the CEO of an AI music company and a music promoter to produce the vast library of AI-generated songs. To execute the scheme, Smith reportedly created thousands of “bot accounts” on various streaming platforms, programming them to continuously play the songs he owned.
Crafty Tactics to Avoid Detection
In a bid to fly under the radar, Smith employed several clever tactics:
- He spread the automated streams across tens of thousands of songs, ensuring no single track exceeded a billion streams.
- Smith used fake names and false information to create the bot accounts.
- He agreed to platform terms and conditions prohibiting streaming manipulation, all while violating them.
These actions caused streaming platforms to falsely report billions of streams for Smith’s music, when in reality, these plays came from his army of bots rather than genuine human listeners.
The AI-Generated Lineup
Smith’s scheme involved a roster of fictitious artists with AI-generated names, including:
- Calliope Bloom
- Callous Humane
- Calm Baseball
- Calm Innovation
- Calm Knuckles
These randomly generated names were designed to lend an air of legitimacy to the AI-created tracks.
Legal Consequences
The charges against Smith are severe. He faces counts of wire fraud conspiracy, wire fraud, and money laundering conspiracy, each carrying a potential 20-year prison sentence.
U.S. Attorney Damian Williams didn’t mince words about the gravity of the offense: “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.”
Industry Implications
This case has thrust into the spotlight growing concerns about AI’s role in the music industry and its potential for abuse. While streaming services have measures in place to combat artificial boosting of stream counts, Smith’s sophisticated operation managed to slip through the cracks for years.
The incident raises critical questions about the fairness of compensation in an era where AI-generated music is becoming increasingly prevalent. It serves as a stark warning to the industry about the need for more robust fraud detection systems and clearer guidelines on the use of AI in music production and distribution.
As the case unfolds, it’s clear that the repercussions will be felt far beyond the courtroom, potentially reshaping how the music industry approaches AI and streaming verification in the years to come.