North Carolina musician Michael Smith has pleaded guilty to collecting over $10 million in royalty payments through a massive streaming royalty fraud scheme on Spotify, Apple Music, Amazon Music, and YouTube Music.
54-year-old Smith bought hundreds of thousands of songs generated using artificial intelligence (AI) from an accomplice, uploaded them to these streaming platforms, and used automated AI bots to stream the AI-generated tracks billions of times.
According to court documents unsealed when he was charged in September 2024, Smith fraudulently inflated listening stats on his songs on these digital platforms between 2017 and 2024 with the help of an unnamed music promoter and the Chief Executive Officer of an AI music company. To avoid detection by anti-fraud systems, Smith also had the bots access the streaming platforms using virtual private networks (VPNs).
On October 4, 2018, he emailed his coconspirators to say, “to not raise any issues with the powers that be we need a TON of content with small amounts of Streams,” and added that, “We need to get a TON of songs fast to make this work around the anti fraud policies these guys are all using now.”
At the peak of the operation, Smith was using over 1,000 bot accounts to artificially boost streams. On October 20, 2017, he also emailed himself a financial breakdown outlining how he operated 52 cloud service accounts, each with 20 bot accounts.
He estimated that each bot could stream around 636 songs per day, for a total of approximately 661,440 streams per day. With an average royalty rate of half a cent per stream, the daily earnings would reach $3,307.20, the monthly earnings would reach $99,216, and the annual earnings would exceed $1.2 million, according to Smith.
“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times. Although the songs and listeners were fake, the millions of dollars Smith stole was real,” said U.S. Attorney Jay Clayton on Wednesday. “Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud.”
Prosecutors said that Smith fraudulently collected over $10 million in royalty payments after having his bots stream hundreds of thousands of AI-generated songs billions of times. In a February 2024 email, confirmed these claims bosting that the songs generated “over 4 billion streams and $12 million in royalties since 2019.”
Smith has agreed to pay $8,091,843.64 in forfeiture and faces a maximum sentence of 5 years in prison after pleading guilty to one count of conspiracy to commit wire fraud.
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