US man pleads guilty to defrauding music streamers out of millions using AI | US crime
A North Carolina man has pleaded guilty to defrauding music streaming platforms and fellow musicians out of millions in royalties by flooding the services with thousands of AI-generated songs and using automated “bots” to artificially boost streams into billions.
As part of a deal with federal prosecutors in the Southern District of New York, Michael Smith, 52, pleaded guilty Friday to conspiracy to commit wire fraud.
The lawsuit against the Cornelius, North Carolina resident is one of the first successful cases of AI-related fraud in the music industry; is being hammered by fake music that threatens to swamp music streaming services and deprive legally human musicians and copyright holders of their earnings.
“Michael Smith used artificial intelligence to create thousands of fake songs and then published these fake songs billions of times over the internet,” US attorney Jay Clayton said. in question in a statement.
“While the songs and listeners were fake, the millions of dollars Smith stole were real. The millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme was over because he was convicted of a federal crime for his AI-powered fraud.”
In September 2024, Smith was accused of fraudulently obtaining more than $10 million in royalty payments by collecting 661,440 streams per day between 2017 and 2024, resulting in annual royalties of $1,027,128.
Then-US attorney Damian Williams said the defendant stole “millions in royalties that should have been paid to musicians, songwriters and other rights holders whose songs were legally published” and that “it was time for Smith to face the music.”
As Tuki pointed out by an Musicians and the music industry User X addednow he has to “fight against non-existent songs being listened to by non-existent people.”
Under the terms of the plea agreement, Smith now faces up to five years in prison and forfeitures of $8,091,843.64 when he is sentenced in July.
The lawsuit against Smith underscores a growing problem for the music industry, which has largely recovered from the Napster music piracy era of the early 2000s and faces an AI-based threat to revenues from music streaming platforms such as Amazon Music, Apple Music, Spotify and YouTube Music.
Their business model, which musicians have long complained about, is that they earn fees from a pool of funds commensurate with their music streams, according to which all but a few big stars earn a living. But AI-related plans to increase AI-generated music and games divert funds away from musicians and songwriters whose songs are legally listened to by real consumers.
The UK government has recently abandoned Plans to allow AI companies to use copyrighted works without permission; This proposal is strongly opposed by thousands of artists, including Elton John, Dua Lipa and Paul McCartney.
The topic of generative AI music has highlighted Suno, a company with 2 million subscribers that allows users to churn out AI-generated music that disrupts the act of creation.
French streaming service Deezer claims that 97 percent of people cannot distinguish between human-produced music and AI-produced music; This includes 60,000 parts created entirely by artificial intelligence, delivered daily.
According to US trade publication Billboard, Suno produces 7 million songs a day; That’s the equivalent of a publisher’s entire music catalog offered every two weeks. Much of the output is quite similar to existing, human-composed music, but like most AI productions, it reads as mass-produced without artistic risk or depth.
Paul Sinclair, CEO of Suno he told Billboard He said in early March that he was conflicted. “I am literally conflicted every day,” he is quoted as saying. “This situation is complicated… I want to ensure that future generations can experience the beauty of art and music and build their careers around it.”
