Experts have well-documented the perils of artificial intelligence. (Not that it has slowed anyone down from making it more and more powerful.) One concern about the use of advanced AI is that it could fall into the wrong hands, and bad actors could use it for nefarious purposes.
Case in point: A North Carolina man used artificial intelligence to create songs, inflate the streaming numbers, and illegally earn over $8 million in royalties. It was the first-ever AI-streaming fraud case in the United States.
In 2024, the Department of Justice (DOJ) accused the man named Michael Smith of using artificial intelligence to produce hundreds of thousands of songs, which automated bots then streamed billions of times.
“As alleged, Michael Smith fraudulently streamed songs created with artificial intelligence billions of times in order to steal royalties,” the Department of Justice wrote in a statement. “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. Today, thanks to the work of the FBI and the career prosecutors of this Office, it’s time for Smith to face the music.”
How did he use AI to create fake music and earn millions of dollars?
According to the DOJ, Smith calculated that he could utilize the bot accounts to produce about 661,440 streams daily at one point during the charged time period, earning $1,207,128 in royalties annually.
To prevent unusual streaming numbers for any one song, Smith dispersed his automated streams across thousands of tracks. Smith knew that if someone played a single song a billion times, for instance, the music distribution businesses and streaming platforms would suspect manipulation of the streams. However, since people would play each song a few times, it would be more challenging to identify a billion phony streams spread across tens of thousands of songs.
Smith used artificial intelligence to obtain the music he needed to make his plan work. With the help of the Chief Executive Officer of an AI music company and a music promoter, they created hundreds of thousands of songs using artificial intelligence. Smith then created randomly generated song and artist names for audio files so that they would appear as if real artists rather than artificial intelligence had created them.
The AI music scheme worked, until it didn’t
Unfortunately for Smith, authorities eventually uncovered the scheme, and in Nov. 2024, prosecutors charged him with wire fraud conspiracy, wire fraud, and money laundering conspiracy.
On Thursday, the United States Attorney for the Southern District of New York announced that Michael Smith had pleaded guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison. Smith also agreed to pay $8,091,843.64 in forfeiture.
“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” said U.S. Attorney Jay Clayton. “Although the songs and listeners were fake, the millions of dollars Smith stole was real. Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud.”