Prosecutors Allege $10M Royalty Scam Using AI-Generated Songs

The N.Y. Times (Maia Coleman) reports:

A North Carolina man used artificial intelligence to create hundreds of thousands of fake songs by fake bands, then put them on streaming services where they were enjoyed by an audience of fake listeners, prosecutors said.

From the Indictment:

From approximately 2017, up to and including 2024, MICHAEL SMITH, the defendant, orchestrated a scheme to steal millions of dollars of musical royalties by fraudulently inflating music streams on digital streaming platforms (the "Streaming Platforms"), such as Amazon Music, Apple Music, Spotify, and YouTube Music. SMITH purchased from a coconspirator hundreds of thousands of songs that were created through artificial intelligence ("AI") and then uploaded to the Streaming Platforms.

SMITH then used "bots"—automated programs—to stream the AI-generated songs billions of times. At the height of his fraudulent scheme. SMITH used over a thousand bot accounts simultaneously to artificially boost streams of his music across the Streaming Platforms. By manipulating the streaming data in this manner, SMITH fraudulently obtained more than $10 million in royalty payments to which he was not entitled….

As alleged herein, MICHAEL SMITH, the defendant, made false and misleading statements to the Streaming Platforms, Rights Organizations, and certain companies that facilitate the distribution of artists' music to the Streaming Platforms. As described below, those lies were repeated and varying but all were intended to promote and conceal his massive streaming manipulation fraud. As a result of his false and misleading statements, SMITH fraudulently obtained millions of dollars in royalty payments from the Streaming Platforms, Rights Organizations, and music distribution companies. Those funds ultimately should have been paid to the Songwriters and Artists whose works were streamed legitimately by real consumers….

At certain points. SMITH had as many as 10,000 active Bot Accounts on the Streaming Platforms. Signing up such a voluminous number of Bot Accounts on the Streaming Platforms was labor-intensive, and SMITH paid individuals located abroad as well as coconspirators located in the United States to do the data entry work of signing up for the Bot Accounts. For example, in a May 11, 2017 email to a coconspirator ("CC-1"), SMITH asked CC-1 to create Bot Accounts on a particular Streaming Platform: "Make up names and addresses[.] [J]ust make sure they all are the same for family member and also make sure everyone is over 18." …

Early in the scheme, SMITH used the catalog of a music publicist ("CC-2") to fraudulently generate royalty payments. Later, SMIIB attempted to sell his fraudulent streaming scheme as a service, in which other musicians would pay him for streams he would fraudulently generate or share royalties with him in exchange for fraudulent streams of their music. But neither strategy allowed SMITH to gain access to the massive volume of songs the scheme needed in order to evade detection and succeed on a large scale….

[Smith] eventually turned to artificial intelligence to expand his fraudulent scheme, and in tum, his illicit proceeds. In or about 2018, SMITH began working with the Chief Executive Officer of an Al music company ("CC-3") and a music promoter ("CG-4") to create hundreds of thousands of songs using artificial intelligence that SMITH could then fraudulently stream….

CC-3 ultimately provided MICHAEL SMITH, the defendant, with hundreds of
thousands of Al songs for which he could manipulate the streams. CC-J's songs were typically given file names that were a randomized list of letters and numbers, such as "n_7a2b2d74-1621-4385-895d-bl e4af'78d860.mp3." SMITH then created randomly generated song and artist names for audio files so that they would appear to have been created by real artists rather than artificial
intelligence. For example:

a. An alphabetically consecutive selection of25 of the names of the AI songs SMITH used is as follows: "Zygophyceae," "Zygophyllaceae," "Zygophyllum." "Zygopteraceae," "Zygopteris," "Zygopteron," "Zygopterous," "Zygosporic," "Zygotenes," "Zygotes," "Zygotic," "Zygotic Lanie," "Zygotic Washstands," "Zyme Bedewing," "Zymes," "Zymite," "Zymo Phyte," "Zymogenes," "Zymogenic," "Zymologies," "Zymoplastic," "Zymopure," "Zymotechnical,"
"Zymotechny," and "Zyzomys."

b. An alphabetically consecutive selection of 25 of the names of the "artists" of the AI songs SMITH used is as follows: "Calliope Bloom," "Calliope Erratum," "Callous," "Callous Humane," "Callous Post," "Callousness," '·Calm Baseball," "Calm Connected," "Calm Force," "Calm Identity," "Calm Innovation," "Calm Knuckles," "Calm Market," "Calm The Super," "'Calm Weary," "Calms Scorching," "Calorie Event," "Calorie Screams," "Calvin Mann," "Calvinistic Dust," "Calypso Xored," "Camalus Disen," "Camaxtli Minerva," "Cambists Cagelings," and "Camel Edible." …

The Al technology that CC-3 used to generate AI songs for MICHAEL SMITH, the defendant, improved over time, making it less likely that the Streaming Platforms would detect the scheme….

MICHAEL SMITH, the defendant, made numerous misrepresentations to the Streaming Platforms in furtherance of the fraud scheme. For example, SMITH repeatedly lied to the Streaming Platforms when he used false information to create the Bot Accounts and when he agreed to abide by terms and conditions that prohibited streaming manipulation. SMITH also deceived the Streaming Platforms by making it appear as if legitimate users were in control of the Bot Accounts and streaming music when, in fact, the Bot Accounts were hard-coded to stream SMITH's music billions of times. SMITH also caused the Streaming Platforms to falsely report billions of streams of his music, even though SMITH knew that those streams were in fact caused by the Bot Accounts rather than real human listeners….

I could totally imagine those as band names.