Federal prosecutors have charged North Carolina musician Michael Smith in a landmark case involving the fraudulent use of bots and AI-generated songs to manipulate music streams and earn over $10 million in royalties from major platforms like Spotify and Apple Music. The indictment, brought by the U.S. Attorney’s Office for the Southern District of New York, is the first criminal case involving artificially inflated music streaming, marking a significant development in the evolving music industry.
According to the indictment, Michael Smith, 52, allegedly ran a sophisticated music streaming manipulation scheme for over seven years. Prosecutors claim that Smith used hundreds of thousands of AI-generated songs, which were streamed billions of times by bot accounts he controlled. By inflating the number of streams, Smith fraudulently earned massive royalties that were intended for legitimate artists.
At the height of his operation, Smith estimated that he could generate approximately 661,440 streams per day, resulting in annual royalties of over $1.2 million. Smith now faces charges of wire fraud conspiracy, wire fraud, and money laundering conspiracy. If convicted, he could face up to 60 years in prison.
The U.S. Attorney for the Southern District of New York, Damian Williams, stated, “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.”
The rise of AI in music, while showing promise, has sparked concerns in the music industry. AI-generated songs, coupled with streaming fraud, dilute the royalty pool and reduce the earnings of genuine musicians. Major record labels have been vocal about the challenges posed by both AI and streaming manipulation, which make it harder for legitimate artists to receive fair compensation.
In response to increasing cases of streaming fraud, platforms like Spotify have implemented stricter policies. Starting this year, Spotify requires a song to achieve at least 1,000 streams before its creator can earn any revenue. This move is designed to prevent manipulation of the system by fake streams, but as this case shows, determined fraudsters like Smith have found ways to circumvent the system.
The prosecution of Michael Smith highlights the seriousness with which authorities are taking streaming fraud, signaling that future cases could follow as the music industry adapts to technological advancements like AI and bot accounts.
The case also touches on broader discussions about AI’s role in music production. While AI tools can assist musicians and offer creative possibilities, they also open the door to fraudulent practices. AI songs, generated at the click of a button, can flood platforms with content, making it easier for bad actors to inflate streaming numbers and siphon off royalties from hard-working artists.
Despite these concerns, the music industry is cautiously optimistic about AI’s potential. When used responsibly, AI can enhance music creation and production processes. However, this case serves as a reminder of the need for robust monitoring and regulation to ensure that royalties flow to the right individuals.
The indictment of Michael Smith sets a critical precedent for the music industry, as federal authorities continue to crack down on streaming fraud. As AI and bot technology evolve, platforms and regulators will need to work together to safeguard the industry’s financial ecosystem and protect the livelihoods of legitimate artists.
