At a time when theartificial intelligence is revolutionizing many sectors, from healthcare to entertainment, it is no surprise that even themusic industry has been overwhelmed by this technology. Innovation, however, does not always bring with it only advantages but is increasingly exploited for illicit purposes. An example of this is the Michael Smith Case, 52 years old, resident of Cornelius, a town of 30.000 inhabitants in North Carolina, accused of using AI and thousands of bots to create fake streaming ratings and fraudulently obtain millions of dollars in royalties.
Fake Music Made With AI: Earned Over $10 Million
According l 'indictment filed in the Federal Court for the Southern District of New York, Smith is charged with wire fraud, money laundering and conspiracy. Federal authorities allege that Smith orchestrated a sophisticated scam between 2017 and 2024, generating “hundreds of thousands of songs” with the help of artificial intelligence and using bots to play these songs on platforms like Spotify, Apple Music and Amazon Music.
His plan led Smith to earn over $10 million in royaltiesThe Justice Department has called the case the first of its kind involving the use of AI to manipulate music streaming platforms. Each count carries a maximum sentence of 20 years in prison, meaning Smith could face up to 60 years behind bars.
How Smith's scheme worked
Il mechanism devised from Smith it's a lot as ingenious as it is illegal. Using thousands of fake accounts, created by bulk purchasing emails and prepaid debit cards, Smith set up an automated system of bots that continuously played the songs he uploaded to streaming platforms. Investigators estimate that Smith was able to generate up to 661.440 streams per day, racking up about $1,2 million in royalties each year.
The main problem for Smith was the volume of music required to keep his scheme under the radar. Streaming platforms have sophisticated fraud detection algorithms designed to spot suspicious behavior like millions of plays on a single track coming from low-activity accounts. To avoid attracting attention, Smith diversified its strategy, generating tens of thousands of songs with the help of an artificial intelligence company.
These pieces, composed automatically, were loaded with fictitious names and artists, such as “Calm Baseball” or “Callous Post.” Smith’s large catalog of songs allowed him to distribute streams evenly across all tracks, reducing the chance of being discovered by platforms.
How Royalty Payments Work
Il royalty system In the world of streaming music, it's pretty simple: every time a song is played on platforms like Spotify, Amazon Music, Apple Music, and YouTube Music, a fraction of a cent is paid to the artists and rights holders. Theamount per listen is, however, so low (between $0,003 and $0,004 per stream) that only songs with millions of streams manage to generate significant figures. This is why Smith's scheme, which took advantage of automation In order to generate billions of fake streams, he managed to pocket millions of dollars that should have gone to legitimate artists and songwriters.
The discovery of the musical scam
Despite the sophistication of the plan, in 2018 some warning signs have begun to emerge. The Mechanical Licensing Collective (MLC), a nonprofit that manages streaming music licensing in the United States, noticed a surprising number of new songs quickly generating huge streams. This led to a deeper investigation, which ultimately exposed Smith's scheme.
According to the indictment, Smith not only exploited bots to increase his ratings, but also openly lied to streaming platforms, declaring false personal data to register accounts. In some cases, he even accepted the platforms' terms and conditions, which explicitly prohibit any form of manipulation of ratings.
Michael Smith, arrested and awaiting trial, continues to deny any wrongdoing, claiming that all the songs generated were “human origin”. The evidence gathered by federal prosecutors, however, seems overwhelming, and the “music creator” could face a heavy sentence. Prosecutor Damian Williams said that the case serves as a warning for anyone who intends to exploit the technology for fraudulent purposes: “Thanks to the work of the FBI and our prosecutors, Smith is now being held accountable for his actions.”
The use of Artificial Intelligence in music
While artificial intelligence is rapidly becoming a useful tool for musical creation — as demonstrates the last Beatles song, completed thanks to this technology — the case of Michael Smith raises serious concerns on how this technology can be exploited for illicit purposes. Using software to create tracks at scale is not illegal in itself, but when combined with the manipulation of listening metrics, it can become a means to defraud platforms and deprive legitimate content creators of their just earnings.
As for the accusation against Smith, it remains to be seen what the outcome will be. One could say that he operated in the gray areas of the system, exploiting the existing loopholes to the maximum. As someone ironically commented: "His only fault is that he used 100% of his brain."
