North Carolina music producer Michael Smith was indicted for allegedly orchestrating a scheme that defrauded streaming platforms out of over USD 10 million in royalties by using AI-generated music and automated bot accounts. 

Smith, 52, is accused of creating hundreds of thousands of AI-generated songs and employing up to 10,000 bot accounts to stream these tracks billions of times on platforms such as Spotify, Apple Music, and Amazon Music. 

Prosecutors claim he was able to generate as many as 661,440 streams per day, significantly inflating his streaming numbers to collect royalties that should have gone to legitimate artists.

The indictment reveals that Smith began this fraudulent activity around 2018, collaborating with an undisclosed AI music company to rapidly produce music. To evade detection, he used fake email accounts, VPN services, and randomised song and artist names, creating a façade of legitimacy for his vast catalog of music.

Smith faces multiple charges, including wire fraud, conspiracy to commit wire fraud, and money laundering. Each charge could result in up to 20 years in prison. 

The US Attorney's Office highlighted the seriousness of the allegations, stating that Smith's actions undermined the integrity of the music industry and deprived rightful musicians of their earnings.

The case sparked broader concerns about the implications of AI in the music industry, particularly regarding streaming fraud. As AI-generated content becomes more prevalent, there are growing worries about fair compensation for artists. 

The Mechanical Licensing Collective, which distributes streaming royalties, had previously flagged irregularities in Smith's streaming data and withheld payments as a result.

This incident underscores the challenges streaming platforms face in detecting and combating fraudulent activities, especially as technology evolves.