A U.S. grand jury has formally charged 52-year-old Michael Smith with conspiracy to commit wire fraud, wire fraud, and money laundering after allegedly buying AI-generated music, posting them on streaming platforms, and then using thousands of bots to stream his posts. This act allowed him to earn millions of dollars in royalties from 2017 through 2024. According to the unsealed indictment from the Justice Department, Mr. Smith claimed in February 2024 that his “existing music has generated at this point over 4 billion streams and $12 million in royalties since 2019.”
This meant he made approximately $2.4 million annually by buying AI-generated tracks, uploading them on various streaming platforms like Spotify, Apple Music, and YouTube Music, and creating bots that allowed his tracks to gain millions of fake streams. With royalty payments often falling at less than one cent per stream, Mr. Smith likely garnered over 240 million streams yearly, most of them through bots.
The music industry, in general, prohibits artificially boosting streams as it will negatively impact artists and musicians, where the money that the streaming company should pay them is funneled into accounts that use bots to increase the listening count of their tracks artificially.
The act is similar to the payola scandal in the 1950s, where DJs and radio stations received money from publishers to give their songs more airtime, artificially inflating their popularity to drive record and album sales. The only difference today is that radio stations have since been replaced by streaming platforms, DJs by user accounts, and artists by AI.