Man Pleads Guilty To Stealing $8 Million In Royalties From Streaming Platforms Using AI-Generated Listeners And Artists

A North Carolina-native has been found guilty of stealing over $8 million in royalties from streaming platforms through the use of AI artists and listeners. He was found to have created thousands of bot accounts which he used to then stream the songs of the AI-generated artists he had created fake streaming accounts for. This led to "streaming fraud diverts funds from musicians and songwriters whose songs were legitimately streamed by real consumers to those who use automation to falsely create the appearance of legitimate streaming."

The U.S. Attorney's Office in New York issued a press release that stated they were announcing "the guilty plea today of Michael Smith for his role in a scheme to defraud music streaming platforms and musicians of royalty payments." Companies like Amazon Music, Apple Music, Spotify, and YouTube Music were specifically named in the press release.

The release from the U.S. Attorney's Office said that Smith fraudulently obtained $8 million (USD) by creating "hundreds of thousands of songs with artificial intelligence and used automated programs called “bots” to fraudulently stream his AI-generated songs billions of times, in an effort to mimic the genuine streaming activity of real consumers. Smith pled guilty today to conspiracy to commit wire fraud before [a] U.S. District Judge."

The U.S. Attorney in charge of the case, Jay Clayton elaborated in the statement that: “Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times. Although the songs and listeners were fake, the millions of dollars Smith stole was real. Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud.” The fake listener-accounts streamed the fake artists cumulatively billions of times which led to a forfeiture from Smith to the parties defrauded of $8,091,843.64.

Ultimately, Smith pled guilty to one count of conspiracy to commit wire fraud. He hasn't been sentenced yet and is due to be on July 29th, but this conviction can lead to a maximum of five years in prison.

It does raise a bigger question as to whether or not streaming platforms are willing to put safety barriers in place to not only protect the artists and their consumers, but themselves.