An American music producer was arrested Wednesday, Variety reports, charged with three felonies for allegedly scamming music streaming platforms out of more than US$10 million in royalties using AI-generated songs and bot streams.
North Carolina-based producer Michael Smith is alleged to have created thousands of bot accounts on streaming platforms like Amazon Music, Apple Music, Spotify and YouTube Music, that automatically streamed the vast catalogue of AI-generated music he is accused of placing on the platforms. An email sent by Smith in 2017 and quoted in the indictment indicates the bots could generate as many as 661,440 streams per day, bringing in a total of over US$10 million in royalties between 2017 and 2024.
The 52-year-old has been charged with wire fraud conspiracy, wire fraud and money laundering conspiracy in the Southern District of New York (SDNY), prosecuted by the Complex Frauds and Cybercrime Unit. SDNY has jurisdiction over most of the major financial institutions in the US and is known for its prosecution of high-profile white-collar crime.
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Smith allegedly developed the AI-generated music scheme after a failed attempt at fraudulent streaming of music that he owned. Billions of streams of a small selection of songs are more likely to be detected by streaming platforms, leading Smith to email two co-conspirators in 2018 to urge them “to get a TON of songs fast to make this work around the anti-fraud policies,” according to the indictment.
Smith denied engaging in streaming fraud when confronted by a platform in March 2019 and again when accused by the Mechanical Licensing Collective (MLC) in early 2023. A non-profit created in 2018 to issue blanket mechanical licences to qualified streaming services in the US, MLC began distributing royalties to rights owners in January 2021. They withheld royalty payments from Smith based on the alleged misconduct, which led Smith and his representatives to repeatedly lie about his conduct, the indictment suggests.
After the announcement by SDNY, MLC said in a statement that the indictment “shines a light on the serious problem of streaming fraud for the music industry.” Each of the three crimes Smith is charged with carries a maximum prison sentence of 20 years.
