AI tools, fake songs, and $10M fraud: US musician indicted for royalty scam

Smith and his accomplices allegedly set up around 10,000 fake profiles to stream these songs, carefully distributing streams to avoid detection by avoiding abnormal listening spikes. His actions syphoned royalties that should have gone to legitimate artists. A US attorney condemned the scam, stressing the damage it caused to genuine musicians and songwriters.

“Smith stole millions in royalties owed to musicians, songwriters, and other rights holders,” the US attorney stated. Smith now faces charges of wire fraud and money laundering conspiracy, which could lead to a 20-year prison sentence. He was arrested on Wednesday.

Smith was first flagged by a distribution company in 2018, but denied any wrongdoing, claiming, “This is absolutely wrong and crazy! … There is no fraud happening!”

Artists dependent on ‘digital listening’

As digital listening increasingly determines commercial success, many artists rely on live performances for income due to the low payouts from streaming platforms. Popular music, now largely digital, is created with computer-generated sounds, and fans receive it through intangible digital files.

According to a 2017 financial projection, Smith estimated he could stream his songs 661,440 times per day, potentially earning $3,307.20 daily and up to $1.2 million annually. To avoid suspicion, prosecutors say Smith spread the streams across many fake songs, never inflating play counts for a single track too much.

Initially, Smith uploaded his own music but found his catalogue too small to generate significant revenue. He then expanded by using a publicist’s catalogue and later offered his services to other musicians, hoping they would pay him or share royalties. Both efforts failed.

In 2018, Smith reportedly teamed up with an AI music company’s CEO and a music promoter, building an extensive catalogue of fake songs, uploading thousands each week.

First Published: Sep 06 2024 | 11:27 AM IST