Feds Charge Man with “Music Streaming Fraud” for Distributing AI-Made Songs
Smith used automated “bots” to stream AI-generated songs billions of times, according to a press release by the U.S. Attorney’s Office, Southern District of New York.
“As alleged, Michael Smith fraudulently streamed songs created with artificial intelligence billions of times to steal royalties,” said U.S. Attorney Damian Williams. “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.”
Is AI-Generated Music a Form of Fraud?
Whether AI-generated music is by nature dishonest is still up for debate, but setting up fake user accounts to falsely earn royalties is fraudulent, say the feds. And much like other types of “click fraud,” it violates streaming platforms’ user agreements.
Starting in 2017 and lasting until 2024, Smith allegedly used online streaming platforms like Amazon Music, Apple Music, Spotify, and YouTube Music to stream songs he generated using AI. He received royalty payments every time someone streamed one of these songs, according to the indictment.
Federal prosecutors have accused Michael Smith of manipulating platforms by creating fake user accounts to stream music he created using AI, according to an indictment obtained by The Daily Muck.
To take it a step further, he then generated hundreds of thousands of user streams every day using bots— up to 661,440 streams per day. That resulted in annual royalty payments of over $1.2 million, say prosecutors. Smith allegedly used fake names to open bot accounts to avoid getting caught by the platforms. He hid the IP addresses of the bot accounts with a VPN.
‘Tons of Content’
On Oct. 4, 2018, Smith sent an e-mail to two co-conspirators with the instructions that they’ll need a ton of content to avoid getting caught by the platforms, according to the indictment.
On December 26, 2018, Smith added, “We need to get a TON of songs fast to make this work around the anti-fraud policies these guys are all using now.”
Less than six months later, on May 9, 2019, he added, “I can’t run the bots without content. And I need enough content so I don’t overrun each song. That’s the problem. If we get too many streams on one song, it comes down.”
Six Decades in Prison
If found guilty on counts of wire fraud conspiracy, wire fraud, and money laundering, Smith could spend 60 years in prison.
The defendant’s alleged scheme played upon the integrity of the music industry by a concerted attempt to circumvent the streaming platforms’ policies,” said Christie M. Curtis, an FBI Acting Assistant Director. “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.”
A Similar Case in Sweden
Interestingly, this is not the first case that involved artificial intelligence and streaming platforms. In October 2023, the Swedish daily newspaper Svenska Dagbladet reported that gangs from Sweden used these tactics to launder money previously obtained through drug deals, contract killings, and robbery.
“I can say with 100% certainty that this goes on. I have been involved in it myself”,” said one of the gang members, referring to the manipulating AI-created content.
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