High-Level Music Fraud: When Artificial Intelligence and Bots Turn Streaming into a Crime

What happened

On September 4, 2024, the U.S. Department of Justice (Southern District of New York) announced the indictment of Michael Smith (pictured above) , a musician from North Carolina, for his involvement in an artificial intelligence (AI)-assisted music streaming fraud scheme .

According to the indictment, Smith created hundreds of thousands of AI-generated songs and used “bots” — automated accounts — to get those songs streamed billions of times on streaming platforms like Spotify , Apple Music , Amazon Music , and YouTube .

The fraud reportedly yielded more than US$10 million in illegally obtained royalties.

How did I come across this news? The explanation lies in the Data Science training process itself. During the course, we are constantly trained to perform statistical analyses on digital metrics, observing variations in audience and engagement indicators.

This work involves everything from identifying outliers to assessing the consistency of time series and correlations between variables.

Instances of intentional data manipulation—such as the artificial creation of large numbers of followers to convey a false perception of relevance—were frequently presented by professors as practical examples. The goal was to develop critical thinking skills to detect suspicious patterns and differentiate genuine metrics from inflated indicators.

How the scheme worked

Some important points to understand the fraud mechanism:

• Smith created several fake accounts (“Bot Accounts”) on streaming platforms, programmed to repeatedly play songs he owned.

• To prevent any particular song from standing out too much (which could draw attention to potential fraud), he spread streams across hundreds of thousands of tracks . This way, each individual song had a "less obvious" number of plays.

• To obtain so many songs, Smith partnered with an AI company (“CC-3”) and a promoter (“CC-4”), who regularly provided thousands of artificially generated songs.

• The AI songs often had strange or random names, such as strings of letters and numbers or fictitious “artist” names, precisely to disguise their automated origin.

The legal accusation

He was indicted on three federal charges:

1. Wire fraud conspiracy – use of electronic means to deceive; maximum sentence of up to 20 years.

2. Wire fraud – actually committing the fraud; also punishable by up to 20 years.

3. Money laundering conspiracy – to disguise or move illegitimate profits; also a sentence of up to 20 years.

Reflections and impacts

The case raises a number of important questions for the music industry, streaming platforms, and regulators:

• Streaming system integrity : Platforms like Spotify and Apple Music rely on usage metrics (number of streams) to determine royalties. If these metrics are manipulated, legitimate artists not only lose revenue but also visibility.

• AI as an ambiguous tool : Artificial intelligence can be used to innovate, generate new sounds, assist in composition, etc. But, as this case shows, it can also be used for fraud. The challenge is to distinguish legitimate use from abuse.

• Detection and prevention : Streaming platforms will likely need to invest more in technology and auditing to detect this type of fraud—bots, atypical streaming patterns, impersonation, massive use of automated accounts, etc.

• International legal aspects : Although this is a US case, streaming services operate globally. There are implications for jurisdiction, copyright laws in different countries, and international cooperation in digital fraud cases.

• Ethics and consequences for real artists : Artists who create "real" music (with human composition, performance, and production) depend on this streaming ecosystem to make a living. Fraud like this diverts resources that should go to them.

Conclusion

Michael Smith's case is remarkable because it appears to be one of the first major criminal cases involving AI-facilitated music streaming fraud. It demonstrates how technology can both expand horizons and open the door to abuse. Platforms, artists, regulators, and the public need to be vigilant: ensuring fair compensation, protecting the integrity of music, and balancing innovation with responsibility will become increasingly essential.

The data is from the website portal of the Southern District of New York, United States Attorney's Office:

North Carolina Musician Charged With Music Streaming Fraud Aided By Artificial Intelligence

What the US case reveals for Brazil and Latin America

A warning from outside

The recent case of American musician Michael Smith , accused of using Artificial Intelligence (AI) and bots to defraud billions of streams on digital platforms and profit from over US$10 million in royalties, has repercussions far beyond the United States. For us in Brazil and Latin America, the situation serves as a red flag : the digital music ecosystem is vulnerable to technological manipulation, and the consequences can directly affect local artists, independent record labels, and even consumers.

Why does this case matter to Brazil?

1. Growing digital market

Brazil is currently the 9th largest music market in the world (IFPI data). Platforms like Spotify, Deezer, and YouTube account for over 80% of the country's music revenue . This means that any fraud in this system directly impacts the pockets of Brazilian artists .

2. Regulatory fragility

While the US has robust investigations by the Department of Justice and the FBI, digital oversight mechanisms in Latin America remain weak . Cases of streaming fraud rarely make headlines or lead to criminal prosecutions. This creates fertile ground for scammers to exploit flaws.

3. Unfair competition

Independent artists in Brazil already face difficulties gaining visibility. If AI schemes artificially inflate numbers, legitimate musicians will be pushed down in the platforms' algorithms , losing reach and, consequently, revenue.

I've read that some Brazilian mainstream artists — those already established and constantly pushed to the top of the charts — have resorted to dubious tricks to artificially inflate the performance of their songs on streaming platforms.

Manipulation wouldn't be new, but what's striking is the scale: artists who already have extensive media exposure and million-dollar investments still seek to inflate numbers to reinforce narratives of success.

A technical perspective helps reveal these distortions. Metrics such as skip rate (rapid jumps in the first few seconds of a track) , unusual peaks in playback at unusual times , and disproportionate concentration of streams in specific geographic regions are strong indicators of artificial behavior.

It's also worth noting an imbalance between the volume of unique listeners and the total number of plays — when few profiles “replay” the same track excessively — in addition to repetition patterns that deviate from normal human consumption.

There are reports that even the platforms themselves are investigating suspicious cases, which reinforces the seriousness of the problem. If proven, such practices constitute fraud not only against the market but also against the public, whose perceptions are manipulated by inflated metrics and misleading campaigns.

Direct impacts for Latin American artists

1. Loss of legitimate revenue : If royalties are paid to fake songs, there is less money left in the pie for real artists.

   
   

2. Reduced visibility : Algorithms favor tracks with more streams. Bots push fraudulent songs into playlists and recommendations, stealing space from human artists.

   
   

3. Devaluation of streaming : The more the public distrusts the authenticity of metrics, the less trust they will have in digital platforms as a fair form of remuneration.

What can be done in Brazil and the region

1. Strengthen oversight

• ECAD and copyright associations could create anti-fraud monitoring centers in partnership with platforms.

  
  

• It is urgent that Ministries of Culture and communications regulatory bodies discuss specific standards for streaming.

  
  

2. Pressure on platforms

Spotify, Deezer, Amazon, and YouTube need transparency protocols in Latin America, such as regular reporting on bot detection and removal of fraudulent content.

3. Support for independent artists

• Create funds and notices for artists who have demonstrably suffered loss of income due to fraud.

• Encourage local music platforms to invest in human curation , reducing blind reliance on algorithms.

  
  

4. Digital education

Artists, independent labels, and producers need to learn to identify suspicious proposals, such as "companies" that offer guaranteed plays in exchange for payment.

Ethical and cultural reflection

Music in Latin America is about identity, culture, and resistance . If we allow AI and bots to transform the market into a field of digital manipulation, we risk weakening authentic voices , especially those of peripheral and independent artists who already face enormous barriers to entry.

This case shows that this is not just about “financial fraud”: it is also a dispute over who will be heard on the global music scene.