Man with AI song catalog ‘defrauds’ streaming services of $10 million

Streaming services have come under fire from musicians for their low revenue sharing policies. In 2021, over 97 percent of Spotify’s artists made less than $1,000. Michael Smith from North Carolina is currently facing charges for allegedly scamming streaming platforms like Spotify and Apple Music out of over $10 million in royalties by using bots and AI-generated songs. These platforms explicitly prohibit streaming fraud through artificially boosting play counts. Despite the low payout per stream, Smith’s scheme involved using thousands of bots to play AI-generated songs billions of times over nearly 8 years to accumulate earnings.

Smith’s operation was labor-intensive, involving the manual sign-up of bots for streaming services and a complex system of funding debit cards to continue the scheme. He allegedly detailed the financial breakdown of the operation, which included streaming thousands of songs to fly under the radar of monitoring systems. The quality of AI-generated songs has improved over the years, making them harder to detect.

Despite some issues with streaming platforms detecting artificial plays, Smith’s scheme reportedly continued until 2024, generating over 4 billion streams and $12 million in earnings. If convicted, Smith faces up to 20 years in prison for wire fraud conspiracy, wire fraud, and money laundering conspiracy.

The FBI has condemned Smith’s actions, stating that the scheme undermined the integrity of the music industry. Prosecutors emphasize that the funds should have gone to the songwriters and artists whose work was legitimately streamed by real consumers.