A North Carolina man is facing charges for allegedly using bot accounts and AI-generated songs to fraudulently earn over $10 million in streaming royalties. Prosecutors accuse Michael Smith of creating thousands of bots to stream his own music, generating billions of plays and reaping the financial benefits.
Michael Smith, a North Carolina resident, has been charged with wire fraud conspiracy, wire fraud, and money laundering conspiracy in connection with an elaborate scheme to fraudulently earn streaming royalties. According to the indictment unsealed this week, Smith employed bot accounts and AI-generated songs to manipulate the royalty system.
AI-Generated Music Fraud: North Carolina Man Faces Charges for $10M Streaming Scam
Prosecutors allege that Smith created "thousands" of automated bot accounts on streaming platforms, such as Amazon Music, Apple Music, Spotify, and YouTube Music. These bots were programmed to continuously stream songs that Smith owned, generating royalties that he pocketed.
To obtain the necessary number of songs for his scheme, Smith "eventually turned to artificial intelligence," prosecutors claim. He allegedly worked with an AI music company CEO and a music promoter to generate AI-generated songs. These songs were given randomly generated song and artist names to create the illusion that they were made by actual musicians.
AI-Generated Music Fraud: North Carolina Man Faces Charges for $10M Streaming Scam
The indictment further alleges that Smith used numerous misrepresentations to the streaming platforms in order to profit from his scheme. He claimed the songs were written and performed by third parties, falsely inflated the number of streams, and concealed the use of bots.
Prosecutors estimate that Smith earned over $10 million from this fraudulent scheme. The royalties generated by his "Bot Accounts" streaming "hundreds of thousands" of his AI-generated songs "billions of times," according to the attorney's office.
AI-Generated Music Fraud: North Carolina Man Faces Charges for $10M Streaming Scam
FBI Acting Director Christie Curtis denounced Smith's alleged scheme as an assault on the integrity of the music industry. "The defendant’s alleged scheme played upon the integrity of the music industry by a concerted attempt to circumvent the streaming platforms’ policies," she said.
Smith faces up to 20 years in prison for each of the three charges against him. The charges are merely accusations at this point, and Smith is presumed innocent unless proven guilty.
Streaming platforms have taken steps to combat such fraudulent activity. Spotify has recently implemented new measures to detect and remove bots. Apple Music has also pledged to crack down on fake streams. Despite these efforts, the prevalence of AI-generated music scams continues to be a concern.
Experts warn that AI-generated music can be indistinguishable from human-generated music, making it difficult to detect fraudulent streams. As AI technology continues to advance, it is crucial for streaming platforms and law enforcement agencies to develop more sophisticated tools and strategies to combat these scams and protect the integrity of the music industry.
