We’ve all heard how much artists are struggling as streaming services are replacing fans actually buying physical records.

Many musicians have even explained to their fans that it is merch sales and gig tickets that really keep the music alive.

So it’s surprising to learn that one previously unknown North Carolina man has made millions from streaming – especially when you learn that the music was fake and streamed using AI the whole time.

But that is exactly what has happened in the Charlotte area, as 52-year old Michael Smith was arrested after working with two accomplices over seven years to make over $10 million from fraudulent streaming of fake music.

It is alleged that the musician created thousands of accounts on streaming platforms under the guise that they were actual music fans wanting to listen to the tracks.

Then, using special software, he used the fake accounts to stream the songs all day, every day. This meant that he streamed his fake tracks over 660,000 times per day.

The royalties from the tracks made him over $1.2 million per year.

According to a press release from the Department of Justice, Smith was arrested and faces criminal charges – including up to 60 years of jail time – for three counts of money laundering and wire fraud.

In the statement, U.S. Attorney Damian Williams explained exactly how Smith’s scheme played out:

“As alleged, Michael Smith fraudulently streamed songs created with artificial intelligence billions of times in order to steal royalties.  Through his brazen fraud scheme, Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed.”

Over the years, streaming services have put plenty of checks in place to make sure that exactly this isn’t happening: that the royalties that they pay out are to genuine artists whose fans are legitimately streaming their music.

Smith and his team were wise to this, and worked hard to avoid detection. If there were suddenly billions of simultaneous streams of the same song by an otherwise unknown artist, the suspicions of the streaming platforms would be raised. However, they figured out, by spreading the plays over tens of thousands of songs, the music could be streamed and royalties generated while their money-making scheme went under the radar.

This was revealed by an email – noted by the Department of Justice in their statement – that Smith sent to his accomplices back in 2018:

“We need to get a TON of songs fast to make this work around the anti-fraud policies these guys are all using now.”

But how was all this music made?

Well, rather than using his legitimate skills as a musician, Smith used AI to generate all this music quickly and easily. The AI music company that he worked with sent him thousands of songs per week, so that he could upload them to streaming platforms under the fake accounts of bands and musicians.

Even the names of the artists and the songs were clearly developed using AI – or, maybe, by copying and pasting from a dictionary. For example, the statement provides a selection of the band names, including “Calm Innovation,” “Calm Knuckles,” “Calm Market,” and “Calm The Super,” while one ‘album’s’ track listings included “Zymo Phyte,” “Zymogenes,” “Zymogenic,” and “Zymologies.”

Any earlier attempts creativity had clearly left the musician’s priority list!

Though streaming platforms are multi billion dollar industries that many people might not have much sympathy with, schemes like this have indirect effects on the genuine artists that we all know and love.

In the statement, FBI Acting Assistant Director Christie M. Curtis explained why Smith’s brazen money-making scheme is so damaging:

“Michael Smith allegedly produced hundreds of thousands of songs with artificial intelligence and utilized automatic features to repeatedly stream the music to generate unlawful royalties to the tune of $10 million.  The defendant’s alleged scheme played upon the integrity of the music industry by a concerted attempt to circumvent the streaming platforms’ policies.  The FBI remains dedicated to plucking out those who manipulate advanced technology to receive illicit profits and infringe on the genuine artistic talent of others.”

This guy had once been a musician, but this scheme went against everything that most musicians stand for.

If you enjoyed that story, check out what happened when a guy gave ChatGPT $100 to make as money as possible, and it turned out exactly how you would expect.