Feds charge AI music maker to fake streams in $10 million plan

A Cornelius, North Carolina musician has been charged with wire fraud, wire fraud and money laundering in a years-long takeover of music streaming platforms and pocketing more than $10 million in royalties from AI-generated songs.

From 2017 to 2024, Michael Smith, 52, allegedly used AI to generate songs and automated bots to increase listenership on music streaming platforms. While the services used are not disclosed, major players such as Spotify, Apple Music and YouTube Music pay royalties to artists based on how popular they are.

The indictment against Smith was announced Wednesday by the U.S. Attorney's Office for the Southern District of New York.

“Michael Smith fraudulently distributed billions of songs created by artificial intelligence to steal royalties,” US Attorney Damian Williams said in a public press release. “Through his egregious fraud, Smith stole millions in royalties that should have been paid to musicians, songwriters and other rights holders whose songs were legally transmitted.”

Pricing is typically a fraction of a penny per listen—so raising a large sum requires an incredible number of streams.

Smith's method involves printing hundreds of thousands of computer-generated tracks. Then, using thousands of fake accounts and bots, Smith was able to generate about 661,440 streams a day — translating to about $1.2 million in annual royalties, the lawsuit said.

Smith told his colleagues that the plan was to flood the platforms with content. “We need to get more songs out quickly to make this work around the anti-fraud policies that everyone is using now,” he said in an email cited in the complaint.

“The defendant ultimately turned to artificial intelligence to expand his fraud scheme, and in turn, his illicit funds,” the DOJ argued. “In or around 2018, Smith began working with an AI music company CEO and music promoter to create hundreds of thousands of songs using artificial intelligence. [he] Then it can be spread fraudulently.”

Smith's collaborators knew that such audio generation did not count as music in its purest form. They called their experiment “fast music,” according to emails cited by the DOJ.

There is no mention of the AI ​​service used to generate songs, but there are very advanced music generators that can create enough music in seconds. Udio and Suno are two of the most popular, but some open-source tests like Stable Audio 2 can be trained and fine-tuned based on specific user preferences.

But this is dark ground. AI music isn't completely banned and Smith isn't being sued for using AI. In fact, AI music is allowed on streaming platforms as long as it doesn't violate the policies that apply to artificial songs. There are also platforms that focus entirely on streaming AI music and other AI-generated content.

However, some artists are already questioning the legitimacy of AI generations, arguing that the training datasets used to develop such sophisticated models are abusing the results of their work without compensation or permission.

The lawsuit details the corruption of some of Smith's AI-generated songs, featuring titles like “Zygophyllaceae” and “Zymotechnical,” and credits to fake artists like “Calypso Xored” and “Camel Edible.” Despite their nonsensical nature, these tracks have garnered a flood of streams thanks to Smith's bot network.

When media outlets pointed out his suspicious activity, Smith denied wrongdoing. In a statement to one of his distributors, he said in the lawsuit, “I have done nothing to artificially increase the streams of my two albums…I have done nothing to illegally transmit my music.”

However, in a February 2024 email cited in the lawsuit, Smith boasted that his music “has generated over 4 billion streams and $12 million in royalties as of 2019.”

Each of the charges against Smith—conspiracy to commit wire fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering—carries a maximum sentence of 20 years in prison.

“Thanks to the work of the FBI, it's time for this office's career prosecutor, Smith, to face the music,” Williams said.