Music Producer Accused of Using AI Songs to Scam Streaming Platforms Out of $10 Million in Royalties

A music producer was arrested Wednesday and charged with multiple felonies for allegedly scamming more than $10 million in royalties using hundreds of thousands of AI-generated songs.

Michael Smith, 52, of Cornelius, N.C., is alleged to have created thousands of bot accounts on platforms like Spotify, Amazon Music and Apple Music. According to the indictment, he used the accounts to automatically stream AI music he had placed on the platforms, generating as many as 661,440 streams per day.

Smith allegedly orchestrated the scheme to get around the platforms’ fraud detection systems. Prosecutors allege that he initially engaged in fraudulent streaming of music that he owned. But the streaming platforms could detect likely fraud if a particular piece of music was streamed a billion times.

He then moved on to generating as much music as possible, according to the indictment.

“We need to get a TON of songs fast to make this work around the anti fraud policies these guys are all using now,” he wrote to two co-conspirators, according to the indictment.

Smith is accused of working with an AI music company, beginning in 2018, as well as with a music promoter to generate hundreds of thousands of songs. He also bought vast quantities of email addresses to set up fake accounts and used a VPN service to disguise that he was controlling them all from his house, the indictment states.

According to the indictment, Smith denied engaging in streaming fraud when confronted by the Mechanical Licensing Collective, which distributes streaming royalties. The MLC raised doubt in 2023 about how he could generate so much music so quickly without using AI.

“We have clearly demonstrated that Mike Smith’s works are not AI-generated, but rather they are human-authored,” a representative told the MLC, according to the complaint.

One of the platforms also accused him of streaming fraud in 2019, which he denied.

“I have never done anything to artificially inflate my streams,” he told the platform.

Prosecutors contend those denials are false. Smith has been charged in the Southern District of New York with money laundering, wire fraud and conspiracy to commit wire fraud.