A musician from North Carolina, Michael Smith, has been charged with using artificial intelligence (AI) and thousands of bots to manipulate music streaming platforms and fraudulently earn millions in royalties. This case marks the first of its kind, as prosecutors allege that Smith generated AI-created songs, artificially used bots to inflate streaming numbers, and collected significant profits over several years.
Smith, 52, faces multiple charges, including wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. Prosecutors claim that he defrauded music platforms from millions of dollars that should have gone to legitimate artists, songwriters, and other rights holders through his scheme. U.S. Attorney Damian Williams emphasized, “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.”
How the Scheme Worked
According to an unsealed indictment, Smith used hundreds of thousands of AI-generated tracks to manipulate streaming numbers across multiple platforms. Thousands of automated bot accounts, explicitly created to inflate streams, played his tracks billions of times, allowing him to fly under the radar of detection algorithms. The FBI’s investigation revealed that Smith claimed over $10 million in royalties from this elaborate scheme.
FBI acting assistant director Christie M. Curtis stated, “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.”
The Use of AI and Bot Networks
The indictment details that at one point, Smith was operating up to 10,000 bot accounts to stream AI-generated music. Beginning in 2018, he allegedly partnered with the CEO of an unnamed AI music company. This partnership provided Smith with thousands of AI-generated tracks each month in exchange for track metadata, such as song titles and artist names, as well as a share of the streaming revenue.
In an email in the indictment, the AI company executive stated, “Keep in mind what we’re doing musically here… this is not ‘music,’ it’s ‘instant music’ ;)”.
The technology used in the scheme improved over time, making it increasingly difficult for streaming platforms to detect the manipulation. By 2023, Smith reportedly boasted that his AI-generated tracks had garnered over 4 billion streams and $12 million in royalties since 2019.
Industry Impact and Legal Response
If found guilty, Smith faces decades in prison. His case follows a similar incident earlier this year in Denmark, where an individual was sentenced to 18 months for profiting from fraudulent music streaming royalties.
Platforms like Spotify, Apple Music, and YouTube have strict policies against artificially inflating streams to earn royalties. In response to growing concerns, Spotify recently changed its royalty policies. These changes include charging labels and distributors for artificial streams and raising the threshold of streams needed before royalties can be paid.
Growing Concerns Over AI-Generated Content
The rise of AI-generated music has sparked significant debate within the music industry. Artists and record labels are increasingly concerned about the impact of AI tools that create music using vast amounts of data, often needing proper attribution to the original creators. Some AI systems have been trained using copyrighted material, which has led to accusations of intellectual property theft.
In 2023, a viral track that cloned the voices of Drake and The Weeknd was swiftly removed from streaming services, highlighting the growing issue of AI-generated music mimicking famous artists. Earlier this year, prominent musicians such as Billie Eilish, Elvis Costello, and Aerosmith signed an open letter calling for stronger regulations to prevent AI’s “predatory” use in the music industry.
Conclusion
As AI advances and reshapes various industries, including music, cases like Michael Smith’s raise ethical and legal questions about the future of artistic creation and intellectual property. While AI tools offer new possibilities, they also present challenges, mainly when manipulating systems for financial gain. The outcome of this case may set a precedent for how the music industry and legal systems address the intersection of AI, creativity, and fraud.
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