A United States man is accused in the first criminal case involving collecting royalties on bogus music streams using AI-produced music and bots to rack up billions of fake streams.
Michael Smith, 52, is accused of a scheme to create hundreds of thousands of songs with artificial intelligence and the use of automated “bot” programs to repeatedly stream the songs on platforms like Apple Music, Amazon Music, Spotify and YouTube Music.
Federal prosecutors claim he collected more than $10 million in royalty fees for the fake traffic.
Smith faced a three-count criminal indictment in a North Carolina federal court on Thursday.
Each time a song is streamed through one of the streaming platforms, the songwriter who composed the song, the musician who performed it and in certain cases other rights holders, are entitled to small royalty payments.
The indictment states that royalty payments are made proportionately to musicians and songwriters, so that streaming fraud diverts funds from musicians and songwriters whose songs were legitimately streamed by real consumers.
Smith estimated that he could use the bot accounts to generate approximately 661,440 streams per day, yielding annual royalties of $1,207,128, according to prosecutors.
They say he spread his automated streams across thousands of songs to avoid anomalous streaming to any single song to avoid suspicions by the streaming platforms about manipulation.
Prosecutors say Smith started working with an unnamed CEO of an AI music company and a music promoter in 2018 to create hundreds of thousands of AI-generated songs for the scheme. The music company allegedly produced thousands of what it called “instant music” songs a week.
“Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed, U.S. Attorney Damian Williams claimed. “It’s time for Smith to face the music.”
Smith, of Cornelius, North Carolina, is charged with wire fraud conspiracy, which carries a maximum sentence of 20 years in prison; wire fraud, which carries a maximum sentence of 20 years in prison; and money laundering conspiracy, which carries a maximum sentence of 20 years in prison.
