The $10 million scam. A story about a musician who created songs with the help of AI.
52-year-old Michael Smith from North Carolina, using 10 thousand bots, broadcast songs generated by artificial intelligence on various streaming services. About this writesRolling Stone
The musician began his fraudulent activities in 2017, and in 2018 he began to cooperate with a music company that began to provide thousands of songs generated by AI in violation of copyright. The head of the company provided Smith with thousands of tracks every month in exchange for metadata and a percentage of the streaming revenue.
During this time, Smith streamed songs billions of times on platforms such as Spotify, Amazon Music, Apple Music, and YouTube Music, earning at least $10 million, the court documents say. Using the profiles, he automatically generated up to 661 thousand daily plays of his tracks.
Smith used fake email addresses and VPN services to hide his activities. He instructed his accomplices to be “invisible” while setting up wiretaps. In emails from 2018, Smith wrote about the need to quickly create a large number of songs to circumvent the platforms’ new anti-fraud policies.
In the indictment, federal prosecutors in Manhattan charged Michael with three counts: wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.
“Through his brazen fraudulent scheme, Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were lawfully streamed,” said U.S. Attorney Damian Williams.
Over time, Smith’s AI scheme began to attract more and more attention from various participants in the show business and music market. In 2023, the Mechanical Licensing Collective (MLC) stopped paying royalties to Smith and launched an investigation.
Ref: Mechanical Licensing Collective (MLC) is a non-profit organization in the United States that licenses music for digital platforms.
Smith and his representatives have repeatedly denied the allegations of fraud.
The man now faces decades in prison. Prosecutors say this is the first time they are considering a criminal case of this kind.