Federal prosecutors have indicted Michael Smith, a North Carolina musician, for allegedly orchestrating a scheme to defraud major streaming platforms. Smith stands accused of creating fake songs and bands using AI, generating nearly $10 million in royalties from platforms like Spotify, Apple Music, and Amazon Music over a span of seven years.
Fabricated Music and Artists
According to the indictment, Smith used AI to produce hundreds of thousands of tracks, attributing them to imaginary bands such as “Callous Post,” “Calorie Screams,” and “Calvinistic Dust.” These tracks, featuring outlandish titles like “Zygotic Washstands” and “Zymotechnical,” were repeatedly streamed billions of times by bots programmed by Smith.
Damian Williams, U.S. Attorney for the Southern District of New York, highlighted how Smith's plan siphoned millions from genuine musicians and rights holders. Smith faces serious charges, including wire fraud and conspiracy to commit money laundering, both of which could result in up to 20 years in prison if convicted.
Current Status
Smith has been arrested and is awaiting trial. Attempts to reach him or his legal team have been unsuccessful. The case marks a precedent for the Manhattan U.S. Attorney's office in addressing concerns about the authenticity of content on digital music platforms.
Smith's scheme involved the creation of thousands of accounts on various streaming platforms to continuously stream his AI-generated tracks. He estimated these streams would garner around 661,440 plays daily, leading to annual royalties topping $1.2 million. To minimize detection, he distributed these automated streams across numerous tracks.
In carrying out this fraud, Smith worked with the CEO of an AI music company and a music promoter, creating hundreds of thousands of AI-generated tracks. These tracks were disguised with randomized file names and attributed to fictitious artists. Smith also falsely represented himself on streaming platforms, creating bot accounts and agreeing to terms that prohibited manipulation.
Music AI and Legal Status
Music companies have been spooked by the rise in AI audio content, which is capable to effectively mimicking established artists. In October 2023, Universal Music Group sued AI firm Anthropic. The lawsuit claims that Anthropic used UMG's songs as raw material for creating new music.
Anthropic's website says that its AI models can generate original music in various genres and styles, based on user preferences. Users can also upload their own audio files and have the AI models remix them or add new elements. The lawsuit alleges that Anthropic's service is based on UMG's songs, which are protected by law.
Music giants Universal Music Group (UMG), Sony Music Entertainment, Warner Records and other record labels, later filed lawsuits against AI developers Suno and Udio, accusing them of widespread copyright infringements. In response, the two companies invoked fair use rules to try and skirt the legal action.
