The AI Music Scam: The Aftermath

The US Department of Justice arrested a 52-year-old resident of North Carolina, Michael Smith, who allegedly conducted an extensive scheme of AI-generated music and fraudulent streaming activities for seven continuous years.

This is a recent development in the news of accusations against Smith for using AI to fabricate hundreds of thousands of fake songs, fooling the streaming platforms into creating fake plays that earned him upwards of US$10 million in royalties through illegitimate means. He now faces charges of wire fraud and money laundering, each carrying up to 20 years in prison. Read more

The Scheme Unveiled

According to the press statement issued by the DOJ, Smith hatched a scheme with two unnamed alleged co-conspirators-one a music promoter and the other the CEO of an AI music company-to deceive the digital platforms Spotify, Apple Music, Amazon Music, and YouTube Music.

Prosecutors said Smith utilized bots to make it appear that those AI-generated tracks were getting a higher number of plays, thereby evading anti-fraud measures and reaping millions of dollars in royalty payments. Emails showed the scheme of how Smith and his co-conspirators churned out millions of low-quality, AI-generated music created just to dupe streaming platforms into issuing royalties.

How the Fraud Was Conducted

Authorities investigating this case learned that in an email back in 2018, Smith asked his team to produce songs in great volume so that they might not be detected through fraud policies that are kept up to date.

The CEO of the AI music company provided him with thousands of those, bearing randomly generated file names, Smith renamed those to give them the sound of being from real people. So, from "Zygotes" to "Zyme Bedewing," the list of names of titles went on and on, while some of the artists were "Calvin Mann" and "Calorie Event," among others. There you have the virtual set of songs and artists that constituted the elaborate ecosystem that helped the scheme go on flying under the radar for such a long time.

Smith's Denial and Legal Consequences

The DOJ presented some pretty significant evidence against Smith, such as emails and fudged data about streaming. Smith has denied all charges. In a statement to the New York Times, he said that he was "incredulous and indignant" that there had been "no fraud" committed and it was not an actual case against him.

Broader Implications and What's Next

This case underlined some of the critical vulnerabilities in fraud detection mechanisms concerning the streamers' industry and begged questions about where AI can go in misusing digital platforms. This investigation will probably be followed by more revelations about the scope of such fraud and eventual reforms that may be taken within the industry.