AI Music Brazen Fraud: A Multi-Million Dollar Scam

Whereas AI has been turning upside down many sectors in the last few years, at the same time, the speed of such development has also given birth to several unexpected and brazen fraudulent schemes. Consider, for example, a North Carolina man, Michael Smith, arrested on the count of running the massive scheme of fraud by using AI-generated music. Smith allegedly used artificial intelligence to create hundreds of thousands of songs and manipulated streaming services to generate illegal royalties that totaled in excess of $10 million.

What is a Brazen Fraud ?

A brazen fraud refers to a deceptive act or scheme that is carried out with extreme boldness and shamelessness, often in a way that shows a lack of concern for consequences or getting caught. The term “brazen” suggests that the person committing the fraud is acting in a way that is openly and defiantly dishonest, with no attempt to hide their actions or intentions.

In legal and criminal contexts, “brazen fraud” can describe cases where the fraudulent behavior is particularly blatant, audacious, and disrespectful of the law or ethical standards, as seen in the case of Michael Smith (this is not the real name for privacy reasons), who manipulated streaming platforms to earn millions using AI-generated music​

How the AI Music Fraud Scheme Came Undone

Smith’s scheme involved the use of bots: automated programs that streamed AI-generated songs constantly. Initially, he had uploaded his own music catalog on various streaming platforms such as Spotify, Amazon Music, and Apple Music. Soon enough, though, he realized his catalog wasn’t big enough to guarantee significant royalty payoffs. So, he turned to one thing: artificial intelligence. Working with an AI music company and a promoter, Smith started churning out thousands of new tracks a week. None were typical songs, rather AI-generated ditties with randomized song titles and artist names to make it appear like real musicians were behind them.

And the linchpin of his scheme? Streaming manipulation. Smith created several thousand bot accounts programmed to stream his AI-generated songs billions of times. He spread those streams out over a large volume of songs, thus avoiding suspicions from the streaming platforms that would raise unusual activity flags when one single track had too many streams. Such was how this tactic allowed him to remain undetected while pocketing royalties over several years.

The Arrest and Aftermath

Federal authorities finally caught wind of Smith’s scheme, and he was subsequently indicted on various charges of wire fraud, conspiracy, and money laundering. Prosecutors said Smith’s fraud was so particularly harmful because it bilked millions of dollars from legitimate artists, songwriters, and rights holders who need the streaming money to make ends meet. Smith now faces serious legal consequences, with each charge carrying as much as 20 years in prison.

The FBI, in particular, underlined the serious crime it was, underlining how technology, such as AI, can be used to negatively exploit systems intended to help artists. Smith’s case marked one of the first large-scale frauds concerning AI-generated music and the manipulation of streaming. It has shed light on the darker side of artificial intelligence that has grown in the creative world.

The Broader Context around Music Frauds using Artificial Intelligence

AI has become a fantastic new addition to the music world; artists have used it to facilitate their composition and production processes. In such light, one can almost imagine the way this could be harnessed: fraudsters like Smith using AI’s capabilities for mass production, then manipulating algorithms for streaming, will beg the question of protection measures in place for creators. The fact that AI is further developing suggests that the industry could continue to experience other stressors in ensuring royalties are correctly distributed and avoid scams against the streaming platforms.

AI music fraud is one of the cautionary tales that speak to both the tech and music worlds. It’s a harbinger that all that great potential for creativity and efficiency that AI can afford can, in fact, be used to harm artists and degrade the integrity of platforms meant to support them.