U.S Man Arrested for $10M Music Streaming Scam

A 52-year-old North Carolina man, Michael Smith, has been arrested by the Federal Bureau of Investigations (FBI) for allegedly earning over $10 million in music-streaming royalties through a sophisticated scheme involving hundreds of thousands of AI-generated tracks and fake listeners.

According to an unsealed indictment, Smith devised a “brazen” plan to publish thousands of tracks per week on music-streaming services, playing them billions of times using fake bot accounts he programmed. The scheme, which spanned seven years, involved collaborating with the CEO of an AI music company and a music promoter to supply him with a vast volume of fake songs.

“Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed,” said US Attorney for the Southern District of New York, Damian Williams.

Smith was arrested last week on charges including wire fraud, wire fraud conspiracy, and money laundering conspiracy. Prosecutors described the case as the first of its kind and said that Smith is set to “face the music.”

The fake tracks, which arrived with names such as “n_7a2b2d74-1621-4385-895d-ble4af78d860.mp3,” were assigned song and creator names like “Zygopteris” and “Zygosporic.” Smith’s fake band names included “Callous Post” and “Calvinistic Dust,” with tracks named “Zygotic Washstands” and “Zymotechnical.”

In a 2019 email, the AI executive described the scheme as “instant music,” saying, “This is not ‘music,’ it’s ‘instant music’ ;).” Smith created up to 10,000 streaming accounts using purchased email addresses and outsourced the process to paid assistants. He also developed software to stream his songs to different computers, making it appear that listeners were tuning in from various locations.

Smith faces three counts of wire fraud, wire fraud conspiracy, and money laundering conspiracy, each carrying a maximum sentence of 20 years imprisonment.