Have musicians long criticized streaming services for their terrible revenue sharing programs. In 2021, for example, no less 97 percent of Spotify’s more than 6 million listed artists earned less than $1,000. Last year the company announced a new system that offers fractions of a cent per song, all of which is now based on even stricter rules. But there was apparently a way to make some real profit from those numbers — provided you have access to thousands of bots, hundreds of thousands of AI-generated numbers, and are willing to risk a federal grand jury indictment for fraud and money laundering. .
That’s what a man named Michael Smith in North Carolina is currently dealing with, according to one DOJ announcement on September 4. Unsealed files US prosecutors accuse Smith of defrauding digital streaming platforms, including Spotify, Apple Music, Amazon Music and YouTube Music, of more than $10 million in royalty payouts between 2017 and 2024. To achieve this, however, Smith purchased “hundreds of thousands of songs created by artificial intelligence” from an unnamed co-conspirator, uploaded them to the music services and eventually instructed more than 10,000 bot accounts to simultaneously increase streaming numbers for each song around the clock. Both streaming platforms and music distribution companies explicitly prohibit streaming fraud through artificially increasing plays and follows, content promotion, or the use of automated bots and programs.
While the exact amounts vary by platform and subscription, the DOJ notes that it is often “less than one cent per stream.” This would have required Smith’s bot army to play the trove of AI numbers “billions of times” over nearly eight years to collect the payout.
[Related: Spotify considered axing white noise podcasts to save $38 million.]
Although the bots’ streaming protocols were largely automated, it is reportedly a “labor-intensive” project to get up and running. The DOJ accuses Smith of seeking help both domestically and abroad in manually signing up bots for streaming services, usually grouped under family plans because of the reduction in subscription fees and the use of large numbers of debit cards through a service typically reserved for the issuing company cards. Once revenue started rolling in, Smith is estimated to have used $1.3 million to continue funding the debit cards, creating a cyclical system.
Back in 2017, Smith is even said to have emailed himself a financial statement illustrating how the entire plan worked on a given day. For example, 1,040 bots spread across 52 VPN-protected cloud service accounts streaming approximately 636 songs per day, generated an estimated 661,440 streams per 24 hours. Smith estimated that the average royalty was half a cent per stream and would have totaled the entire business to $3,307.20 per day, $99,216 per month, and ultimately $1,207,128 per year.
Here’s where things got even smarter: any random song that racked up a billion streams would likely flag a streaming platform’s monitoring systems. But if you spread those streams across tens of thousands of songs, each of which has only been played a few times, you could probably fly under the radar. Hence the perceived need for a mountain of AI-generated songs with titles like ‘Zygophyceae’, ‘Zygophyllaceae’, ‘Zygophyllum’ and ‘Zygopteraceae’ from non-existent artists like Calliope Bloom, Calliope Erratum and Camel Edible. And while AI-generated songs from 2017 apparently weren’t of the best quality, the landscape looked very different in just a few years.
“Song quality is now 10x-20x better, and we also have vocal generation capabilities,” a third party reportedly wrote to Smith in 2020. “… Listen to the attached one [song] for an idea of what I’m talking about.”
“Keep in mind what we’re doing here musically… this isn’t ‘music’, it’s ‘instant music,'” another participant reportedly messaged Smith during a separate conversation, along with a winking emoticon.
However, the conspiracy was not completely watertight. Streaming platforms apparently contacted Smith as early as 2018 about songs that their systems believed were artificial and/or received a play boost. “This is absolutely wrong and insane!…There is absolutely no fraud!” Smith is said to have responded via email at one point, adding, “How can I appeal this?”
Despite these occasional problems, prosecutors say the scheme continued until at least February 2024. By then, Smith reportedly told an affiliate that they had managed to generate over 4 billion streams since 2019 alone, bringing in $12 million.
“Defendant’s alleged scheme preyed on the integrity of the music industry through a concerted effort to circumvent the streaming platforms’ policies,” said FBI Acting Assistant Director Christie M. Curtis in Wednesday statement.
If convicted, Smith faces a maximum sentence of 20 years in prison on each count of wire fraud conspiracy, wire fraud and money laundering conspiracy. As for the millions of dollars in payouts, the plaintiffs allege that “those funds should ultimately have been paid to the songwriters and artists whose works were legitimately streamed by actual consumers.”