North Carolina Man Charged With AI Music Scheme Which Raked In $10M In Royalties

 A North Carolina man has been arrested and charged with multiple crimes after allegedly using bots and artificial intelligence (AI) to generate songs to collect $10 million in royalties.

Michael Smith, 52, was arrested on Wednesday on charges of wire fraud conspiracy, wire fraud, and money laundering conspiracy, according to the U.S. Attorney for the Southern District of New York. Each charge has a maximum sentence of 20 years in prison.

Smith’s complex scheme involved using automated programs, also known as “bots,” to stream songs created with artificial intelligence, the federal indictment said. He used the bot accounts to stream those AI-generated songs billions of times across multiple streaming platforms, including Spotify, Apple Music, and Amazon Music, per The New York Times. The revenue he received from these plays resulted in royalty payments exceeding $10 million.

 

Smith began using the illegal tactics in 2017 and continued through 2024 before being caught. His methods are said to have diverted money from other artists on the platform who had legitimate listeners and fans.

“Through his brazen fraud scheme, Smith stole millions in royalties that should have been paid to musicians, songwriters and other rights holders whose songs were legitimately streamed,” Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement. “Today, thanks to the work of the FBI and the career prosecutors of this Office, it’s time for Smith to face the music.”

The defendant used software to continuously stream songs he owned, and he is accused of paying co-conspirators and individuals living overseas to sign up for bot accounts. Smith avoided detection by creating the bot accounts using false names and using debit cards issued to fake people to pay for them.

Smith had hundreds of thousands of AI-generated songs, each with a nominal number of listeners so they wouldn’t be noticed. Smith estimated that he could use the bot accounts to generate about 661,440 streams per day, resulting in annual royalties totaling $1,027,128.

 

Some songs had unusual names, such as “Zygotes” and “Zymoplastic.” The fake artists were called things like “Calm Baseball,” “Calorie Screams,” and “Camel Edible.”

The Southern District of New York Office’s Complex Frauds and Cybercrime Unit is prosecuting the case. Smith has been ordered to appear before a U.S. Magistrate Judge in North Carolina on an undisclosed future date.