Summarised by Centrist
A North Carolina man, Michael Smith, has been indicted on fraud charges after allegedly using AI-generated music to steal several million dollars in royalties from streaming platforms like Spotify, Apple, and Amazon Music.
Smith now faces charges of wire fraud and money laundering, which could lead to a 60-year prison sentence if convicted.
According to federal prosecutors, Smith manipulated streaming numbers by using bot accounts to fraudulently rack up billions of streams.
Streaming platforms operate on a pro-rata model meaning that the alleged fraud diverted royalties from legitimate artists, thereby harming the integrity of the music industry.
“Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed,” said Damian Williams, US Attorney for the Southern District of New York.
Smith allegedly used thousands of fake accounts and worked with an AI music company to release thousands of AI generated songs each month. In return, the CEO of the AI company received 15% of the fraudulent royalties.
By February 2024, Smith’s scheme had reportedly netted over USD$12m in royalties from over 4 billion streams.
