A North Carolina man is accused of using bot accounts to trick streaming platforms into paying him over $10 million in royalties.
Michael Smith, 52, was indicted on three counts in a New York federal court Wednesday in a scam that authorities said involved his using the bot accounts to stream thousands of AI-generated songs en masse.
From at least 2017 through 2024, the Cornelius, North Carolina, resident bought fake emails en masse and created bot accounts to stream music he owned on streaming platforms in order to get paid royalties, the U.S. Attorney’s Office for the Southern District of New York alleged in court documents.
Mr. Smith’s case is the first criminal case to revolve around artificially inflated music streams, prosecutors said in a release.
After buying the fake emails in bulk, Mr. Smith purportedly had unnamed co-conspirators, some of whom live outside the U.S., do the work of signing up for the streaming services.
In his indictment, prosecutors cited a May 11, 2017, email in which Mr. Smith purportedly told a co-conspirator to make up names, a single address for the fake family to share, and to ensure the age of each “person” behind the account was 18 or higher.
Prosecutors alleged that, in order to pay for the subscriptions for these accounts, Mr. Smith told a Manhattan-based financial service that they belonged to employees of a business he owned but which the indictment did not specify. The financial service then gave him debit cards that funded the streaming subscriptions for the bot accounts.
In order to stream in bulk, Mr. Smith used multiple virtual computers and had accounts for each of the streaming platforms, which the indictment did not identify, authorities said. Those accounts would play music in open web browser tabs simultaneously.
Mr. Smith also bought computer code that automatically and continuously kept playing music, per the indictment.
As for the music, prosecutors said, Mr. Smith initially used his own work, but then also tried to use the catalog of a co-conspirator and music publicist.
Later still, he tried to market his scheme to other artists as a service to pump up the streams of their works in exchange for kickbacks of some of their royalties.
Neither method, however, gave Mr. Smith the amount of music he needed to keep avoiding detection by the streaming platforms in question. In 2018, Mr. Smith began working with the unnamed CEO of an AI music company and an unnamed music promoter to make hundreds of thousands of songs to which he would both own the rights and have his computers play en masse, according to the indictment.
Some of the platforms did suspect something was amiss, and the Mechanical Licensing Collective (MLC) that pays out streaming royalties suspended payments to Mr. Smith in spring 2023. At the time, Mr. Smith and his representatives vociferously denied the claims and appealed the decision to suspend payments, according to the indictment.
“As the DOJ recognized, The MLC identified and challenged the alleged misconduct, and withheld payment of the associated mechanical royalties, which further validates the importance of The MLC’s ongoing efforts to combat fraud and protect songwriters,” MLC CEO Kris Ahrend said in a statement to Rolling Stone magazine.
Mr. Smith was charged with wire fraud conspiracy, wire fraud and money laundering conspiracy. Each charge carries a maximum sentence of up to 20 years in prison.
• Brad Matthews can be reached at bmatthews@washingtontimes.com.
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