Musician Arrested for $10 Million AI Streaming Fraud

In a case that highlights the evolving challenges of the digital music era, a North Carolina man has been arrested and charged with using artificial intelligence to generate millions of fake music streams, defrauding streaming platforms of over $10 million in royalty payments.

Michael Smith, 52, a musician himself, allegedly created hundreds of thousands of AI-generated songs under fictitious artist names. He then used a network of bots to stream these songs billions of times, artificially inflating their popularity and triggering royalty payouts.

The scheme, which prosecutors say ran from 2017 to 2024, targeted major streaming platforms like Spotify, Amazon Music, Apple Music, and YouTube Music. Smith's operation was sophisticated, involving the purchase of thousands of fake email addresses to create streaming accounts and the development of software to simulate listening activity from various locations.

The indictment alleges that Smith initially uploaded his own music but turned to AI-generated tracks when he realized the need for a massive volume of content to maximize his fraudulent earnings. He even partnered with the CEO of an AI music company and a music promoter to expand his catalog of fake songs.

Smith's alleged actions underscore the potential for misuse of AI in the music industry. While AI is increasingly used for legitimate creative purposes, this case demonstrates how it can also be exploited for financial gain. The incident raises concerns about the integrity of streaming platforms' royalty systems and the need for stronger safeguards against fraudulent activity.

The charges against Smith include wire fraud conspiracy, wire fraud, and money laundering conspiracy, each carrying a maximum sentence of 20 years in prison. This case serves as a stark reminder that even in the digital age, criminal activity can have serious consequences.