Real artists struggle for pennies while this guy used AI to rake in millions in just seven years.
Michael Smith, a 52-year-old musician from North Carolina, has become famous for facing charges of wire fraud and money laundering. The allegations? Using artificial intelligence to game the system and earn over $10 million in ill-gotten royalties after a seven-year scheme.
Smith was arrested on September 4, marking the first criminal case of its kind.
How the Scam Worked
According to the U.S. Department of Justice, Smith created a complex system in this scheme. This involves the use of AI-generated music and bots to fake streaming numbers on platforms like Amazon Music, Apple Music, Spotify, and YouTube Music.
At first, he used his own small set of songs. But he soon realized he needed more to make his fraud work on a bigger scale.
So, by 2018, he started working with the CEO of an AI music company, which gave him up to 10,000 songs each month. Then, he used bots and made about 10,000 fake profiles to stream these AI songs billions of times.
In emails from December 2018, Smith talked about needing to change the scam to get around new anti-fraud measures by streaming platforms.
“We need to get a TON of songs fast to make this work around the anti-fraud policies these guys are all using now.” he said.
Here are some of the techniques he used:
- He named these tracks with random titles like “Zygophyllum” and “Zygotic Washstands”
- He spread out the streaming activity across many songs. This way, no single track had too many plays.
- He also used fake email accounts, cloud services, and even paid for family plans on streaming platforms to avoid detection.
And, when making these fake accounts became too much work, Smith hired others to help.
He estimated in one email that his plan could generate 661,440 streams per day. This would mean more than $1.2 million in yearly royalties.
By June 2019, Smith was making around $110,000 each month.
But, Smith didn’t stop there.
The indictment revealed that he also attempted to sell his fake streaming plan to other musicians, offering to boost their streams if they gave him some of their royalties.
This additional layer of deception further increased the scale of the scam, making it one of the largest and most complex cases of streaming fraud.
Royalties Stolen From Real Artists
The real victims of Smith’s scam are the real artists and musicians.
Smith’s fraud took millions of dollars in royalties from real musicians, songwriters, and rights holders. He made over $10 million from his scam, with money that should have gone to real artists whose songs were actually streamed.
The Mechanical Licensing Collective (MLC), a group that oversees royalty payments, played a big role in spotting odd patterns in Smith’s streaming data.
Distribution companies first noticed something off about Smith’s streaming patterns in 2018.
After seeing these strange patterns, the MLC started holding back royalty payments linked to the fake streams. This stopped Smith from making more money through their system.
In response to accusations, Smith forcefully denied any wrongdoing, in a strongly worded email:
Even so, his fake scheme kept going for years, unnoticed by many platforms, until he was arrested in 2024.
The Legal Battle Ahead
The arrest was finally made possible through the collaboration between the FBI and the U.S. Department of Justice, who investigated the full extent of his operations.
By tracking his fake activities, law enforcement got enough proof to charge him, leading to his September 4 arrest.
Smith now faces serious legal trouble. He’s charged with wire fraud conspiracy, wire fraud, and money laundering conspiracy.
If found guilty, he could go to prison for up to 60 years—20 years for each charge.
“Michael Smith fraudulently streamed songs created with artificial intelligence billions of times in order to steal royalties,” said U.S. Attorney Damian Williams.
“Thanks to the work of the FBI and the career prosecutors of this office, it’s time for Smith to face the music.”