In a significant case that underscores the evolving challenges of the digital music era, Michael Smith, a 52-year-old musician from Cornelius, North Carolina, faces serious charges related to an elaborate scheme that exploited music streaming platforms through artificial intelligence (AI). The U.S. Attorney’s Office for the Southern District of New York announced on Wednesday that Smith has been charged with wire fraud conspiracy, wire fraud, and money laundering conspiracy. This case draws attention to the complex interplay between technological innovation and intellectual property laws, providing a stark example of how AI can be misused in the creative industry.
Over a span from 2017 to 2024, Smith is alleged to have engineered an ambitious fraud by using AI to create music tracks and deploying automated bots to artificially inflate listen counts across various streaming services. The specifics of the platforms involved remain undisclosed. However, it is well known that major companies in the sector, including Spotify, Apple Music, and YouTube Music, compensate artists based on the popularity of their songs, calculated through streaming figures.
U.S. Attorney Damian Williams, in a press release, condemned Smith’s actions, stating, “Michael Smith fraudulently streamed songs created with artificial intelligence billions of times in order to steal royalties.” The indictment further elaborates that Smith’s fraudulent operations deprived legitimate musicians, songwriters, and rights holders of millions in royalties rightfully owed to them for their streamed music.
According to the indictment, Smith’s illicit gains were substantial, enabled by his production and streaming of hundreds of thousands of AI-generated tracks. Through the use of thousands of fake accounts and bots, Smith was purportedly able to amass around 661,440 streams per day, translating to approximately $1.2 million in annual royalties.
Smith reportedly advised his accomplices on the necessity of overwhelming the streaming platforms with a high volume of content to circumvent their anti-fraud measures, indicating a calculated attempt to exploit the digital streaming ecosystem. The Department of Justice argues that Smith’s eventual pivot to utilizing AI for generating music marked a deliberate expansion of his fraudulent scheme, aimed at increasing his illegal revenue streams.
The case also touches on broader industry concerns over AI-generated content. While not illegal per se, the use of AI in music creation has sparked debate regarding the ethics and legality of using AI to produce content that competes with human-made art. This is particularly contentious when considering the training data for these AI models, which may utilize existing music without compensating the original creators.
Among the peculiar aspects of Smith’s operation were the nonsensical titles and fictitious artist names attributed to the AI-generated tracks, which, despite their apparent absurdity, generated significant streaming numbers through the bot network. Even when confronted with allegations of artificially inflating stream counts, Smith denied any wrongdoing, maintaining his innocence in communications with his distributors.
This case not only highlights the potential for AI to disrupt traditional industries but also underscores the necessity for ongoing dialogues and potentially new regulatory frameworks to address the unique challenges posed by AI technology in the arts. Smith’s indictment, with each charge carrying a maximum sentence of 20 years in prison, signals a robust response from federal authorities to such sophisticated forms of digital fraud, emphasizing the serious legal repercussions for misusing technological advancements in the streaming domain.