A music producer was arrested on Wednesday and charged with multiple felonies for allegedly defrauding over $10 million in royalties through the use of hundreds of thousands of AI-generated songs.
Michael Smith, 52, from Cornelius, North Carolina, is accused of creating thousands of fake accounts on platforms such as Spotify, Amazon Music, and Apple Music.
According to the indictment, these accounts were used to automatically stream AI-generated music he uploaded, resulting in as many as 661,440 streams per day.
Prosecutors claim that Smith devised this scheme to bypass the platforms’ fraud detection systems. Initially, he allegedly began by fraudulently streaming music that he legitimately owned.
However, streaming platforms were likely to detect potential fraud if any particular song was streamed excessively—up to a billion times.
The indictment reveals that Smith then shifted his focus to producing vast amounts of music.
“We need to get a TON of songs fast to make this work around the anti-fraud policies these guys are all using now,” Smith reportedly wrote to two co-conspirators.
Smith is accused of collaborating with an AI music company starting in 2018, along with a music promoter, to produce hundreds of thousands of tracks.
AI Songs (Photo: Getty Images)
He allegedly bought large volumes of email addresses to create fake streaming accounts and used a VPN to hide the fact that he was controlling the operation from his home, according to the indictment.
When confronted by the Mechanical Licensing Collective (MLC), the organization responsible for distributing streaming royalties, Smith denied any involvement in fraudulent activity.
In 2023, the MLC raised concerns about how he was able to produce such a large volume of music without the use of AI.
“We have clearly demonstrated that Mike Smith’s works are not AI-generated, but rather they are human-authored,” a representative for Smith stated to the MLC, according to the complaint.
One of the streaming platforms had previously accused him of streaming fraud in 2019, which he also denied. “I have never done anything to artificially inflate my streams,” he told the platform.
However, prosecutors argue that these denials are false. Smith is now facing charges in the Southern District of New York, including money laundering, wire fraud, and conspiracy to commit wire fraud.
The MLC responded to the indictment with a statement, highlighting the issue of streaming fraud in the music industry.
“As the DOJ recognized, The MLC identified and challenged the alleged misconduct, and withheld payment of the associated mechanical royalties, which further validates the importance of The MLC’s ongoing efforts to combat fraud and protect songwriters,” said Kris Ahrend, CEO of The MLC.
