A US musician has been charged for the first time with fraudulently obtaining millions in streaming revenue using AI and bots. The case sheds light on the darker aspects of AI use in the music industry.
Michael Smith from North Carolina is accused of purchasing hundreds of thousands of AI-generated songs from an accomplice and then streaming them billions of times on platforms like Spotify, Apple Music, and YouTube Music using up to a thousand bot accounts.
Prosecutors allege that over several years, he illegally obtained more than ten million dollars in royalty payments. This money was diverted from artists whose works were actually streamed by real users to Smith for his fake streams.
Violating streaming platform guidelines
To hide his alleged fraudulent activities, Smith allegedly registered the bot accounts under fake names and spread the manipulated streams across many songs. The AI-generated music tracks Smith used for the scam had randomly generated song titles and artist names.
According to the indictment, streaming platforms and collecting societies forbid practices that artificially increase stream numbers. However, Smith and his accomplices repeatedly denied involvement in streaming manipulation to streaming services, music distributors, and collecting societies, despite knowing about the fraud.
Prosecutors have charged Smith with wire fraud, wire fraud conspiracy, and money laundering conspiracy. If found guilty, Smith could go to prison and lose the money and property gained from his alleged crimes.
Drawbacks of AI use in the music industry
While Smith's case is only indirectly related to new AI music generators like Udio or Suno, it likely supports critics who believe that AI-generated music, especially the flooding of these songs, is eroding artists' already low income from streaming platforms.
In early April, more than 200 musicians, including Billie Eilish and Katy Perry, signed an open letter from the Artist Rights Alliance urging AI companies not to use technology that violates artists' rights.
According to the letter, many professional musicians fear for their livelihoods if their work is used to train AI models that then produce large amounts of music and dilute royalties.
