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Michael Smith arrested for AI-powered music streaming scam

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Michael Smith arrested for AI-powered music streaming scam

Michael Smith, 52, was arrested by federal authorities for allegedly orchestrating an AI-powered music streaming fraud scheme from 2017 to 2024 that earned him $10 million in royalties.

A North Carolina man is accused of creating “hundreds of thousands of songs using artificial intelligence” and using “bots” to stream the AI-generated tunes billions of times, federal prosecutors announced.

Michael Smith, 52, of Cornelius, North Carolina, fraudulently obtained more than $10 million in royalties through the scheme he orchestrated from 2017 to 2024, according to an indictment filed in the Southern District of New York.

Smith was arrested Wednesday and charged with conspiracy to commit wire fraud, wire fraud and money laundering, the Justice Department said in a news release. Each offense carries a maximum penalty of 20 years in prison.

“As alleged, Michael Smith fraudulently streamed songs created with artificial intelligence billions of times to obtain royalties,” U.S. Attorney Damian Williams said in the press release. “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 lawfully streamed. Today, thanks to the work of the FBI and this office’s prosecutors, the time has come for Smith to face accountability.”

No defense attorney was listed for Smith in court records.

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How did Michael Smith implement the plan?

To carry out the plot, Smith created thousands of “bot accounts” on music streaming platforms – including Amazon Music, Apple Music, Spotify and YouTube Music – according to the indictment. He then used software to cause the accounts to constantly stream the songs he owned, the court document says.

Smith estimated that he was able to use the accounts at times to generate about 661,440 streams per day, earning annual royalties of $1,207,128, the Justice Department said in a statement.

To avoid streaming a single song, Smith spread his automated streams across thousands of songs, the indictment says. He was aware that streaming a single song a billion times would arouse suspicion among streaming platforms and music distribution companies, the court document continues.

A billion fraudulent streams spanning tens of thousands of songs would be harder to detect because each song is streamed fewer times, prosecutors said. Smith soon realized he needed more songs to stay under the radar, the Justice Department said.

On or about December 26, 2018, according to prosecutors, Smith sent an email to two co-conspirators, writing, “We need to get a LOT of songs fast so we can get around the anti-fraud policies these guys are all using now.”

Prosecutors: Michael Smith used AI to keep the system running

To ensure Smith had the required number of songs he needed, he eventually turned to AI. In 2018, according to the indictment, he began working with the CEO of an AI music company and a music promoter to use artificial intelligence to create hundreds of thousands of songs that he could then fraudulently stream.

The organizer would provide Smith with thousands of songs every week that he could upload to the streaming platforms and manipulate the streams, the charging document states. In a 2019 email to Smith, the organizer wrote: “Remember what we do here musically… this is not ‘music’, it’s ‘instant music’ ;).”

Using hundreds of thousands of the promoter’s AI-generated songs, Smith created randomly generated song and artist names for audio files, making it look like the music was created by real artists, the indictment says.

According to the U.S. Attorney’s Office, the stage names generated by the AI ​​included “Calliope Bloom,” “Calliope Erratum,” “Callous,” “Callous Humane,” “Callous Post,” “Callousness,” “Calm Baseball,” “Calm Connected,” “Calm Force,” “Calm Identity,” “Calm Innovation,” and “Calm Knuckles.”

As part of the scheme, Smith lied to streaming platforms, including using false names and other information to create bot accounts and agreeing to abide by terms prohibiting streaming manipulation, the Justice Department said. He also caused the streaming platforms to falsely report billions of streams of his music when in reality he knew the streams came from his bot accounts and not from real human listeners, prosecutors said.

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