The $10 Million AI Music Scam: How a Musician Used Bots to Exploit Streaming Platforms Such as Spotify and Apple Music

A Mastermind Scheme of Deceptive Melodies

Michael Smith, a 52-year-old musician from North Carolina, is facing federal charges for orchestrating a sophisticated fraud involving artificial intelligence.

Over the span of seven years, Smith allegedly created a staggering number of fake songs from non-existent bands, subsequently exploiting digital streaming platforms like Spotify, Apple Music and Amazon Music to amass an illicit fortune.

According to the indictment unsealed on Wednesday, Smith utilised AI technology to generate music and then played these tunes billions of times using programmed bots, deceiving platforms into paying out $10 million in royalties.

The Art of Deception: Crafting an Artificial Music Empire

Smith's scheme revolved around the creation of thousands of fake streaming accounts, which he acquired through purchased email addresses.

He reportedly established up to 10,000 accounts, outsourcing the task to co-conspirators when the workload became unmanageable.

The fraudulent activity involved developing custom software designed to stream his AI-generated music repeatedly from various computers.

This manipulation gave the impression of diverse individual listeners tuning in from different locations, masking the true nature of the scheme.

Smith's precise calculations in a 2017 email revealed that he could stream his music 661,440 times per day, potentially earning $3,307.20 daily and up to $1.2 million annually.

How He Created The Illusion of Authenticity

To evade detection, Smith employed a methodical approach of distributing his streams across a vast array of fake songs, ensuring no single track was excessively played.

The names of these fabricated artists, such as "Callous Post," "Calorie Screams," and "Calvinistic Dust," along with song titles like "Zygotic Washstands" and "Zymotechnical," were meticulously crafted to blend in with genuine music industry nomenclature.

Traces of the pages can still be found online but content has been removed.

Despite the bizarre and seemingly random nature of these names, they managed to circumvent the scrutiny of digital streaming platforms.

From Original Music to AI Domination

Initially, Smith uploaded his own original compositions to streaming services but found that his modest catalog yielded insufficient returns.

To expand his operations, he briefly collaborated with other musicians, offering to play their music for a share of the royalties.

However, these endeavors did not produce the desired results.

In 2018, Smith pivoted to leveraging AI technology, partnering with an unnamed CEO of an AI music company and a music promoter to build an extensive collection of fake songs.

This shift in strategy proved highly lucrative, as Smith's email correspondence from February of this year boasted of reaching 4 billion streams and accruing $12 million in royalties since 2019.

A Desperate Denial – “There is absolutely no fraud going on whatsoever!”

The fraudulent activity came to light when a music distribution company in October 2018 flagged Smith's account for "multiple reports of streaming abuse" and planned to remove his songs from their platforms.

In response, Smith vehemently denied any wrongdoing, exclaiming,

"This is absolutely wrong and crazy! There is absolutely no fraud going on whatsoever! How can I appeal this?"

His defense was in vain, as federal prosecutors have charged him with wire fraud and money laundering conspiracy, each carrying a maximum sentence of 20 years in prison if convicted.

The case, which marks the first criminal prosecution of its kind by the U.S. Attorney for the Southern District of New York, highlights the growing intersection of technology and legal boundaries in the music industry.

Rethinking the Integrity of Digital Music

Smith's case forces us to question the robustness of digital platforms and the integrity of automated systems in the music industry.

As technology rapidly evolves, can we rely on algorithmic measures to protect creative industries from sophisticated fraud?

Spotify's current AI dilemma further emphasises this issue, revealing the platform's struggle with a surge of AI-generated music.

These artificial creations, often disguised as legitimate covers or pseudonymous artists, are infiltrating playlists and amassing millions of streams.

This trend poses a threat to the authenticity and integrity of the music ecosystem, prompting questions about whether AI content should be allowed on streaming platforms.

While AI-generated tracks offer a lucrative opportunity for Spotify, they also risk undermining the value of original artistry and confusing listeners.

Through this prosecution, system exploitation has become evident, highlighting the urgent need for robust oversight and creative safeguards to prevent repetition.

The future of digital music may hinge on how effectively we can balance technological advancement with genuine artistic integrity.