Section 1.1: The Fugitive Music Producer

Michael Smith, dubbed the "music producer," has been charged with fraud for allegedly orchestrating a scheme involving fake "AI bands" and counterfeit music aimed at defrauding streaming platforms of substantial royalties.

The Department of Justice has unveiled a complex seven-year operation led by Smith from Cornelius, North Carolina. His fraudulent activities have reportedly exceeded $10 million, comprising the creation of thousands of bogus AI accounts on platforms like Spotify, Amazon Music, and Apple Music.

According to the indictment, Smith's AI accounts generated an astonishing 661,440 streams per day for the music he uploaded. He has been charged with three counts: "wire fraud," "conspiracy to commit wire fraud," and "conspiracy to commit money laundering," each carrying a potential sentence of up to 20 years.

Should he be convicted on all counts, Smith could face a staggering total of 60 years in prison, effectively spending the rest of his life behind bars. This situation starkly contrasts with the plight of genuine artists, who often rely on platforms such as Spotify to earn meager incomes from their music.

Spotify statistics indicate that tracks with annual plays between 1 and 1,000 typically earn just $0.03 each month. A single stream generates an artist approximately $0.003, resulting in an average monthly income of merely $0.25 per song. Many artists find their earnings so low that they cannot even withdraw their royalties from distributors.

In stark contrast, Smith, aided by two accomplices—one a music promoter and the other the CEO of an AI music company—managed to produce "hundreds of thousands of songs" and promote these counterfeit tracks deceitfully.

Section 1.2: A Scheme Built on Deception

In an email dated 2018, Smith emphasized the urgency of generating a substantial number of songs quickly, stating they needed to "work around the anti-fraud policies." Around the same time, the CEO of the AI music company began supplying Smith with “thousands of tracks weekly.” Utilizing AI, Smith generated fake listeners for these subpar songs.

In a revealing email, the CEO remarked, “Remember, what we’re doing here isn’t music; this is instant music.”

Section 2.1: The AI-Fueled Streaming Crisis

Smith allegedly employed AI bots to fabricate traffic for these counterfeit tracks, resulting in billions of fake streams. This artificial traffic has compelled streaming platforms to enforce stricter policies regarding royalty payments and artificial streaming.

Earlier this year, Spotify announced it would "eliminate payments for songs with fewer than 1,000 annual streams," aiming to combat fraudulent streams and reduce payouts to such "noise" content.

Ironically, despite being under investigation, Smith defended himself when approached by The New York Times regarding the accusations. “This is absolutely wrong and insane!” he exclaimed, dismissing the claims as unfounded. “There is absolutely no fraud! How can I appeal this?”

The second video, "Musician ARRESTED for Making MILLIONS Off AI Generated Music?! - YouTube," delves into the broader implications of Smith's actions and the rise of AI-generated music scams.

Section 2.2: A Growing Problem

Smith’s case is not an isolated incident; similar scams are becoming increasingly prevalent. The ease of generating music in the AI age has allowed "pseudo-musicians" to flood platforms with low-quality tracks.

In a related incident, Slate reported on a group of disgruntled country music fans who orchestrated a streaming theft scheme, integrating AI-generated covers into legitimate music playlists to inflate streams deceptively.

Discussions on Reddit have uncovered common traits of such schemes: uninspired band names, lack of original songs, bland personal profiles, and a clean social media presence.

To investigate further, Slate contacted record label 11A, only to find that its domain had expired. A representative claimed to have evidence of human artists involved in creating album covers but failed to provide substantial proof. The situation escalated when all AI-generated covers disappeared amid the investigation.

Spotify's response was underwhelming: “Spotify has no policy against artists using AI tools to create content, as long as it doesn’t violate other policies.” They added, “In this case, the content provider has already removed the material.”

Section 2.3: The Path Forward

The issue of AI music scams is not restricted to country music; it spans various genres, including ambient, electronic, and jazz. A Reddit user noted that these fraudulent activities have persisted for years. The blog Metal Sucks also highlighted a similar scam in the metalcore genre, where AI-generated tracks appeared to hijack legitimate bands.

Given Spotify’s seemingly lenient approach toward AI-generated music, only the artists whose work has been wrongfully replicated can currently defend their rights. Or, as seen in the case of the fake country music artists, the culprits may eventually confess.

In any event, exposing these AI music scams will be a challenging journey ahead.

This article is published by Generative AI. Stay connected with us on LinkedIn and follow Zeniteq for the latest updates on AI developments. Subscribe to our newsletter and YouTube channel to remain informed on generative AI news.