The fraudster who stole $12 million in royalties used 1,000 bots that streamed hundreds of thousands AI tracks billions times

They say that crime doesn't pay. Michael Smith, a North Carolina musician, allegedly conned music streaming services of $12 million. He allegedly did this by setting up 1,000 bots to stream AI generated tunes that he had uploaded. He did this until the Feds caught him and charged Smith for multiple crimes.

Smith and his co-conspirators are said to have run their shady scheme from 2017 to 2024. Smith, aware that uploading just a few tracks and using bots for streaming would raise red flags among streaming services, devised a plan to use hundreds or thousands of AI-generated music.

The tracks would only be streamed a small number of time and therefore less likely to get attention. According to court documents (via Bleeping Computer), Smith outlined his plans via emails.

Smith said that "in order to avoid any issues with the powers-that-be, we need a ton of content with small quantities of Streams." He added that "we need to quickly get a ton of songs to make this work to circumvent the antifraud policies all these guys use now." Smith's ruse was so elaborate that he created thousands of fake artist names and hundreds, thousands of fake track title.

As for the "music", it was provided by a co-conspirator, CEO of an AI-generated music company. Smith received hundreds of thousands AI-generated tracks. This means that a thousand bots have listened to hundreds of thousands AI tracks billions upon billions of time.

The streaming mechanics were based on over 1,000 bots, which were housed in 52 cloud services and connected via VPN services. The net result was that over half a billion tracks could be streamed daily. Smith calculated that he could earn $100,000 per month with earnings of a half-cent per stream.

In emails dated February 2024, he boasted of "over 4 billion streams" and "12 million in royalties from 2019".

The charges include conspiracy to commit wire fraud, which is punishable by a maximum of 20-years in prison; wire fraud, for which the maximum penalty is 20-years in prison; and conspiracy to commit money laundering, which is punishable by a maximum of 20-years in prison.

The FBI's Complex Frauds and Cybercrime Unit is prosecuting the case. Smith was arrested this week and is scheduled to appear before a U.S. magistrate judge in North Carolina. It's unclear when any trial proceedings could begin.

It seems like a lot of work, even with the millions in stolen revenue. There are bots, cloud services, VPNs and spooling the track and artist name. All that effort would make more sense if it was put into something legitimate, right? It doesn't look like easy money. Especially when it looks like the outcome is going to include hard time.