North Carolina Musician Sentenced to 18 Months for $10 Million Spotify Streaming Fraud Scheme
A North Carolina musician has been sentenced to 18 months in federal prison for collecting more than $10 million in royalties from Spotify, Apple Music, Amazon Music, and YouTube Music through a massive streaming copyright fraud scheme.
Musician used AI-generated songs and streaming bots
Michael Smith, 54, was indicted in September 2024 for fraudulently inflating listening statistics for his songs between 2017 and 2024. He pleaded guilty in March.
According to court documents, Smith worked with an AI music company CEO and an anonymous music promoter. He uploaded hundreds of thousands of AI-generated songs purchased from his accomplices to streaming platforms, then used automated AI bots to stream the tracks billions of times.
To avoid detection by anti-fraud systems, Smith used a virtual private network (VPN) to connect the bots to streaming platforms.
At the peak of the scheme, Smith controlled more than 1,000 bot accounts designed to artificially boost his streams. On October 20, 2017, he emailed himself a financial breakdown showing that he operated 52 cloud service accounts, each containing 20 bot accounts.
How the streaming royalty fraud worked
Based on his estimates at the time, each bot could stream about 636 songs per day. Together, the bots generated approximately 661,440 song streams daily.
At an average royalty rate of 0.5 cents per stream, Smith estimated that the operation could generate $3,307.20 in daily revenue, $99,216 in monthly revenue, and more than $1.2 million annually.
A year later, on October 4, 2018, Smith emailed his accomplices saying he needed to obtain a large number of songs quickly to circumvent the anti-fraud policies in place at the time. He wrote that “a lot of content and a little stream” was needed to keep “the powers that be” out of trouble.
Smith’s bots generated billions of fake streams
In a February 2024 email, Smith acknowledged that the songs had generated “over 4 billion streams and $12 million in royalties since 2019.”
The Justice Department also compared Smith’s activity with the streaming numbers for Taylor Swift’s music. In April 2023, Swift’s entire catalog received 9.3 million streams on YouTube Music from Family Plan streams. During the same month, one of Smith’s bot accounts used the Family Plan to illegally stream his AI-generated music 80.9 million times.
“By flooding music streaming platforms with automated bots on behalf of consumers and distributing fake songs in place of creativity, Smith extorted millions of dollars in royalties from real artists and their fans,” U.S. Attorney Jamie MacDonald said.
Federal prison sentence and forfeiture
In addition to serving 18 months in federal prison, Smith was ordered to pay $8,091,843.64 in forfeiture and sentenced to two years of supervised release.
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Source: www.bleepingcomputer.com