Man Arrested for Making $10M With Crazy AI
The rise of artificial intelligence has introduced many advancements, but it has also given rise to unique scams. One such case is the recent indictment of Michael Smith, a 52-year-old man from North Carolina, who allegedly used AI to create fake bands and songs, generating millions in royalties by using bots to stream his music. Here's a look at how Smith pulled off this fraudulent scheme and the consequences he now faces.
Artificial Accomplices
According to the Department of Justice, Smith is accused of running a seven-year scheme that resulted in over $10 million in revenue. Using AI, Smith created hundreds of thousands of songs, uploaded them to major streaming platforms like Spotify®, Apple Music®, and Amazon Music®, and then used bots to inflate the number of streams on his tracks. These fake streams translated into real royalty checks, which Smith and his accomplices pocketed.
Smith didn't work alone. He collaborated with a music promoter and the CEO of an AI music company, both of whom remain unnamed. Together, they worked to exploit the streaming platforms, bypassing fraud detection systems and creating a sophisticated network of fake accounts and songs.
The Mechanics of the Scam
Smith's strategy was surprisingly simple but highly effective. Using the AI-generated tracks, the songs were given random names like "Zygotic" and "Zyme Bedewing," while the artists had equally random names such as "Calvin Mann" and "Calorie Event," according to Futurism. These names were uploaded onto streaming platforms, where the bots streamed them billions of times, earning Smith massive royalties.
Smith also used multiple fake accounts to upload these songs, making it look like the music came from different artists. By generating an estimated 661,440 streams per day, Smith avoided detection for years, circumventing fraud detection measures put in place by streaming services.
In an email exchange with his co-conspirators in 2018, Smith emphasized the urgency of producing "a TON of songs" to stay ahead of anti-fraud systems, as reported by Futurism. The scheme continued until 2023, when Smith was finally confronted by the Mechanical Licensing Collective, a nonprofit responsible for ensuring musicians get their rightful royalties. The organization flagged the unusually high number of streams tied to Smith's accounts, leading to a deeper investigation.
What the AI Scam Means for the Music Industry
Smith's scam highlights how technology can be manipulated for financial gain. AI has opened doors for creativity in the music industry, but it also offers opportunities for those looking to exploit the system. Smith's alleged manipulation of these platforms robbed legitimate artists of their rightful revenue and tarnished the integrity of streaming services.
When confronted, Smith maintained his innocence, calling the accusations "crazy" and claiming there was "absolutely no fraud going on," according to Futurism. Despite his denial, Smith now faces charges of wire fraud conspiracy, wire fraud, and money laundering conspiracy. Each of these charges could lead to up to 20 years in prison, signaling that the consequences of his actions may be far-reaching.
The Future of AI and Streaming Fraud
As AI continues to evolve, this case serves as a cautionary tale for both artists and the music industry. Fraudulent schemes like Smith's reveal the vulnerabilities in streaming services and highlight the need for better fraud detection and prevention measures. While Smith's alleged scam is an extreme example, it highlights the importance of protecting creative content and ensuring that artists are fairly compensated for their work.
With Smith's arrest, the music industry faces new questions about the role of AI in both legitimate and fraudulent music production. Could this be the first of many similar scams, or will the industry learn from this case and implement stronger defenses against AI-generated fraud? Only time will tell.
References: Man Arrested for Creating Fake Bands With AI, Then Making $10 Million by Listening to Their Songs With Bots | 'Musician' Arrested for Using AI Songs and a Bot Army to Scam Spotify for Millions in Royalties
