A North Carolina man, Michael Smith, was sentenced to 18 months in prison after using thousands of automated bots to manufacture streams of AI-generated songs. This took place over the space of 7 years and allowed him to obtain over $8 million in royalties. This was declared by the US Justice Department as conspiracy to commit wire fraud.
It is worth establishing that the royalty payout system in the music industry today is not entirely fair. The pro-rata model used by many streaming platforms pools royalties and distributes them according to each artist’s share of total streams. This means that fraudulent streams can divert revenue away from legitimate artists and further reduce their already limited earnings.
Smith used up to 10,000 bot accounts at once by creating fake accounts on streaming platforms, fake email addresses, and fraudulently obtained debit cards to generate streams. Around 2018 he began working with the CEO of an AI music company and a music promoter that provided him with thousands of songs to upload to streaming platforms each week. The scale of the fraud is clear in the figures. In April 2023 Taylor Swift, one of the most streamed artists of all time, received 9.3 million streams of her entire discography on YouTube Music, whereas Smith’s bot accounts streamed his AI-generated music 80.9 million times, over 7 times more than Swift’s. In their correspondence, Smith and the executive justified their actions by claiming “this is not ‘music,’ it’s ‘instant music’ ;)”.
This prosecution is an important step towards protecting artists’ rights by recognising streaming fraud as a criminal offence, whilst also exposing the shortcomings of these platforms. The fact that this activity flew under the radar for so long highlights streaming platforms’ failure to accurately detect fraudulent streams, particularly when they are generated at scale using AI-generated music.
However, tackling fraud of this scale could have unintended consequences. The case has increased scrutiny of AI-generated music and fraudulent streaming, potentially prompting platforms to introduce stricter payout rules and safeguards against artificial streams. These measures could disproportionately harm smaller, independent artists, who already struggle to earn much from platforms that favour established artists.
Ultimately, the case raises a wider question about whose interests streaming platforms ultimately serve. While tackling fraudulent streams is essential to protecting artists’ earnings, independent musicians also rely on these platforms to reach audiences without the backing of major labels. If the industry is serious about protecting creativity, it must ensure that combating AI-driven fraud does not come at the expense of the artists it claims to protect.
