Musicians Criticize Spotify for Revenue Sharing
Streaming services have long been under fire from musicians for their unfair revenue sharing practices. In 2021, a staggering 97 percent of Spotify’s listed artists earned less than $1,000. To address this, the company introduced a new system offering minuscule payouts per track, leading to even more stringent rules. However, one individual found a way to exploit the system by utilizing thousands of bots, hundreds of thousands of AI-generated songs, and facing potential legal consequences for wire fraud and money laundering.
Man Faces Charges for Music Streaming Fraud
Michael Smith from North Carolina is currently facing allegations of scamming digital streaming platforms such as Spotify, Apple Music, Amazon Music, and YouTube Music out of over $10 million in royalty payouts between 2017 and 2024. Smith allegedly purchased AI-generated songs, uploaded them to the platforms, and used a network of over 10,000 bots to artificially boost the streaming numbers for each track.
The Elaborate Scheme
Despite the platforms offering minimal payouts (often less than a cent per stream), Smith’s operation involved playing the AI songs billions of times over nearly 8 years to accumulate the payout. The scheme required manual assistance to sign up bots for streaming services, utilizing family plans and multiple debit cards to evade detection.
Crafty Tactics and Consequences
Smith’s operation involved spreading out the streams across thousands of songs to avoid detection by the platforms’ monitoring systems. The use of AI-generated tracks with obscure titles and fictitious artists helped in flying under the radar. Despite occasional warnings from the platforms, Smith allegedly continued the scheme until at least February 2024, generating over 4 billion streams and $12 million in revenue.
Legal Ramifications
If convicted, Smith could face up to 20 years in prison for wire fraud conspiracy, wire fraud, and money laundering conspiracy. Prosecutors emphasize that the funds obtained through the scheme should have rightfully gone to the songwriters and artists whose work was legitimately streamed by real consumers.
