Minnesota Indie Musicians Reflect on Michael Smith’s $10 Million AI Music and Streaming Scam

Twin Cities indie musician reflects on the news of a man who allegedly used AI-generated songs and streaming bots to earn over $10 million. 🌐 #News #MinneapolisMN #Minnesota #Arts

MINNEAPOLIS, MN – Prior to starting our Minnesota-based news blog JackAndKitty.com, my wife Kitty and worked as full-time singer-songwriters for over twenty years. Like many independent musicians in the Twin Cities, we know first hand that the digital music era hasn’t delivered the financial rewards many expected.

But one crooked con-man in North Carolina seems to have found a way to make millions streaming his “music”. This is the story of Michael Smith, the alleged masterminding an AI-driven music scam that generated more than $10 million in royalties.

Struggles of Independent Musicians in the Age of Streaming

With countless albums released, Kitty and I have seen firsthand how streaming platforms fall short when it comes to supporting independent artists. Despite having song placements in Oscar-nominated films like Sean Baker’s The Florida Project, and a daily kids TV series that aired for several years on PBS member stations nationwide, our income from streaming music is pretty insignificant.

Like most indie artists, live shows, merchandise sales, and licensing deals are where we earned our living. This story isn’t unique to us, as many musicians find it increasingly difficult to rely on digital streams for meaningful revenue.

That’s why the recent case of a North Carolina man accused of scamming streaming services out of millions shocked many in the music community. It highlights one aspect of the streaming problem in a way that may be shocking to many.

The AI Music Fraud Scheme That Earned $10 Million in Fake Streams

Michael Smith, 52, is facing serious charges for allegedly masterminding an AI-driven music scam that generated more than $10 million in royalties.

Smith has been indicted in New York on counts of wire fraud conspiracy, wire fraud, and money laundering conspiracy. Each charge carries a potential sentence of up to 20 years in federal prison.

Smith is accused of using artificial intelligence to create hundreds of thousands of songs, which were then streamed billions of times using bots. According to prosecutors, the massive volume of fraudulent streams led to substantial payments in royalties, money that should have gone to legitimate artists and rights holders.

“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,” said U.S. Attorney Damian Williams.

“Today, thanks to the work of the FBI and the career prosecutors of this Office, it’s time for Smith to face the music.”

A Tech-Driven Fraud

The indictment reveals that Smith’s operation began in 2018, when he allegedly sought to bypass anti-fraud measures put in place by major streaming services such as Spotify, Amazon Music, Apple Music, and YouTube Music.

Smith reportedly told his co-conspirators, “We need to get a TON of songs fast to make this work around the anti-fraud policies these guys are all using now.”

Smith’s solution involved creating thousands of bot accounts across multiple streaming platforms. Instead of concentrating on a few songs, which might attract attention, his plan was to spread the fraudulent streams over hundreds of thousands of AI-generated songs.

In an email, Smith reportedly estimated the bots could generate around 661,440 streams per day, translating to more than $1.2 million in annual royalties.

Like many independent musicians, my wife and I know how hard it is to make a living from legitimate streaming. It’s heartbreaking to see millions funneled into scams like this while actual working artists struggle to make ends meet.

AI-Generated Songs and Fake Artists

Smith collaborated with a CEO of an AI music company, identified in court documents as CC-3, and a music promoter, CC-4, to create the content needed for his scheme.

The AI-produced music was paired with randomly generated song titles and artist names like “Zygophyceae,” “Callousness,” and “Calm Baseball.”

The sheer volume of songs allowed Smith’s bot network to evade detection and pull in millions in royalties.

“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,” said FBI Acting Assistant Director Christie M. Curtis.

“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.”

Smith’s legal battle is just beginning, and if convicted, he could face significant time behind bars for the alleged offenses. His case also raises questions about how emerging technologies, like AI, can be misused for financial gain.

What’s Next for Jack and Kitty?

As for my wife and I, like many artists, we’ll continue to branch out to more and more revenue streams. Many musicians in the Twin Cities community no longer consider themselves just musicians, today they’re “creators”. They still make music but they have side hustles, YouTube channels, podcasts and DIY merch.

We have our independent, locally-produced news blog JackAndKitty.com (thanks for reading this by the way), we have daily podcasts, a small YouTube channel and a series of books. I guess like so many other musicians these days we’re now “creators” too.

And like so many hard working indie artists, we’ve yet to make $10 million in royalties from streaming. But we’re doing what we love, and that’s what keeps us going.

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