A U.S. grand jury has formally charged 52-year-old Michael Smith with conspiracy to commit wire fraud, wire fraud, and money laundering after allegedly buying AI-generated music, posting them on streaming platforms, and then using thousands of bots to stream his posts. This act allowed him to earn millions of dollars in royalties from 2017 through 2024. According to the unsealed indictment from the Justice Department, Mr. Smith claimed in February 2024 that his “existing music has generated at this point over 4 billion streams and $12 million in royalties since 2019.”
This meant he made approximately $2.4 million annually by buying AI-generated tracks, uploading them on various streaming platforms like Spotify, Apple Music, and YouTube Music, and creating bots that allowed his tracks to gain millions of fake streams. With royalty payments often falling at less than one cent per stream, Mr. Smith likely garnered over 240 million streams yearly, most of them through bots.
The music industry, in general, prohibits artificially boosting streams as it will negatively impact artists and musicians, where the money that the streaming company should pay them is funneled into accounts that use bots to increase the listening count of their tracks artificially.
The act is similar to the payola scandal in the 1950s, where DJs and radio stations received money from publishers to give their songs more airtime, artificially inflating their popularity to drive record and album sales. The only difference today is that radio stations have since been replaced by streaming platforms, DJs by user accounts, and artists by AI.
Michael Smith’s acts were severe enough for the FBI to get involved during the investigation. Christie M. Curtis, the Acting Assistant Director in Charge of the New York FBI Field Office, said, “Michael Smith allegedly produced hundreds of thousands of songs with artificial intelligence and utilized automatic features to repeatedly stream the music to generate unlawful royalties to $10 million.
U.S. Attorney Damian Williams also said, “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. Today, thanks to the work of the FBI and the career prosecutors of this Office, it’s time for Smith to face the music.” Smith was arrested last September 4, 2024, and now faces up to a maximum of 20 years imprisonment for each charge if found guilty.
