Music Producer Accused of $10M Royalties Fraud On Streaming Platforms

A North Carolina man was arrested Wednesday and faces multiple felony charges for allegedly defrauding music streaming platforms out of over $10 million in royalties.

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According to the indictment, a 52-year-old man named Michael Smith reportedly used hundreds of thousands of AI-generated songs and bot accounts to carry out a scam. He allegedly created thousands of fake accounts on platforms such as Apple Music, Spotify, and Amazon Music to artificially stream the AI-generated music he uploaded. This resulted in approximately 661,440 streams per day, as reported by Variety. Smith was able to collect royalties from these streams. Initially, he streamed his own music, but this raised suspicions on the platforms due to an unusually high number of streams for certain tracks. To avoid detection by fraud monitoring systems, he switched to generating AI music instead.

The document also stated that the music producer wrote to two associates that they needed to get several songs out on the platforms to bypass the anti-fraud policies. He allegedly collaborated with an AI music company with another producer in 2018, working together to generate hundreds of thousands of songs and create fake email addresses for fake accounts. Smith also used a VPN service to hide that he was managing the scheme from his home.

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This is not the first time Smith has been accused of streaming fraud. In 2019, one platform accused him of increasing his streams artificially, but he denied the allegations. When questioned by the Mechanical Licensing Collective, he denied the use of AI.

Prosecutors have charged Smith with wire fraud, conspiracy to commit wire fraud, and money laundering in the Southern District of New York.

In a statement, Damian William, U.S. Attorney for the Southern District of New York 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.”