A North Carolina musician was arrested on Wednesday, accused of using artificial intelligence to generate hundreds of thousands of songs, which he streamed billions of times to collect more than $10 million in fraudulent royalty payments, according to authorities in New York.
Michael Smith, 52, of Cornelius, North Carolina, faces federal fraud and conspiracy charges that could lead to a sentence of up to 60 years in prison if convicted. U.S. Attorney Damian Williams stated that Smith’s actions deprived legitimate musicians and songwriters of royalties that were rightfully theirs, spanning from 2017 to 2023.
Authorities said Smith manipulated the system by streaming AI-generated songs billions of times, siphoning off royalty payments meant for other artists. The royalties came from funds that streaming platforms are required to allocate based on the number of streams each recording receives.
Smith, who had a limited collection of his own music, is accused of using thousands of fake accounts on streaming platforms to continuously stream his AI-generated songs. This process reportedly earned him $1.2 million annually, with over 661,000 streams occurring daily.
Christie M. Curtis, head of New York’s FBI office, explained that Smith exploited automated features to repeatedly play his songs, allowing him to unlawfully collect royalties. Curtis emphasized the FBI’s focus on preventing the misuse of technology for financial gain.
The indictment reveals that Smith began collaborating with the CEO of an AI music company and a promoter in 2018, using artificial intelligence to create a vast music catalog. This allowed his operations to go unnoticed by streaming services and distribution companies.
By early 2023, Smith allegedly boasted that his scheme had produced over 4 billion streams and generated more than $12 million in royalties since 2019.
In 2018, after being flagged for potential fraud by a distribution company, Smith denied any misconduct, maintaining that his activities were legitimate.
The investigation into the case is ongoing, and Smith’s attorney has not yet responded to requests for comment. This incident highlights concerns about the potential for fraud in the music industry as technology, particularly artificial intelligence, becomes more widespread.
