An alleged scammer has been arrested under suspicion that he used AI to create a wild number of fake bands — and fake music to go with them — and faking untold streams with more bots to earn millions in ill-gotten revenue.
In a press release, the Department of Justice announced that investigators have arrested 52-year-old North Carolina man Michael Smith, who has been charged with a purportedly seven-year scheme that involved using his real-life music skills to make more than $10 million in royalties.
Indicted on three counts involving money laundering and wire fraud, the Charlotte-area man faces a maximum of 20 years per charge.
TBF, this particular loophole doesn’t take any money from the streaming services. Quite the opposite, it massively inflates their stats.
And while it does siphon money from the big labels, it also impacts small indie artists just trying to earn enough from each play to get to eat.
Yeah, this guy is in trouble because he stepped on some big toes, but he curb-stomped a bunch of little guys, too.
impacts small indie artists
How?
I read the article but I don’t understand how bots making and listening to songs to generate royalties for the bot owners affects anyone but the royalty-payers?
The “royalty payers” are the streaming subscribers, and they pay the same amount regardless of how much they listen to.
The different streaming services have different payment models, but Spotify at least works by first taking their cut from subscribtion income each month.
Then, the rest is evenly distributed to the plays that month.
By inflating the playcount with bots, this guy gets a bigger share, at the expense of everyone elses plays becoming worth less.
None of the services have some infinite money glitch where more plays just means more money out of nowhere. How much you get for each play is not a fixed amount, It’s always based on how much money actually came in from subscribers, so anyone using bots to tilt the scales, is stealing from everyone else.
Agreed. As a person that has released music, I hate this guy and would like the book thrown at him and anyone mass releasing shitty AI music… It might not be a big corpo doing it, but it’s still fucking creatives over.
So corporations use ai and bots themselves in order to inflate their stats and steal money from investors and share holders(see Reddit) and its all cool. Someone does that but it costs the corporation some money. Straight to jail.
Seriously, how has the reddit IPO which was offered to users not been a fraudulent scheme due to the website statistics being based on genuine user interaction with no mention of auto reposting or bots that are either operated by or hired by reddit?
It genuinely seems like the next ponzi scheme but that would require so many federal agencies that stopped giving shit and learning how the world works to see any peep into that business.
But what do I know, I’m just some average Joe that gets audited over a $300 mistake on annual taxs which I have to pay a private third party more than that to do.
Using AI to provide services or crawlers to scan the internet for pages to add to search evinces is different from what this guy did with bots. Those use cases are not pretending to be a legit user in order to collect money.
What this guy did — using bots to fake listen to music — is in the same category as using bots to click on ads that you put on your own web page: it’s serving no legitimate purpose and only exists to defraud businesses which paid for the ads (or Spotify which is paying the royalties)…
Spotify didn’t lose a dime. Their cut is fixed.
What each play is worth is determined by how many plays there were in a month, and the income from subscribers that month.
If the “pot” is ten bucks, and people listen to a hundred songs, each artist gets ten cents for each play. If there were a thousand plays, each play is only worth one cent.
This guy didn’t make money by taking it from spotify, he made it by taking it from everyone else. Spotify actually has no reason to care, and playfarming scams have been happening for years.
They only get stopped when they get big enough for the giant music labels to notice.
How does that work though? Presumably he’s not paying subscription fees on all of his bot accounts, so they must be free accounts. I don’t use Spotify, so I don’t even know why they would have free accounts.
Unless he’s hacked other people’s accounts, then that would make sense for the seriousness of these charges.
There are various methods.
Spotify does have a free tier.
But paid accounts can rack up so many plays they can pay for themselves. If you listened to ten tracks, but someone else listened to ten thousand, then your money barely paid for what you listened to, and almost all of it went towards whatever the other user listened to a bunch.
There has also been malware that hijacks legitimate accounts… There’s even been recommendation algorithm fuckery to manipulate the relevant tracks into getting recommended/autoplayed for a bunch of users.
The whole system seems like a sham to me. If one artist has fans that listen 24/7 and another artist has fans that only listen for one hour a day (but that artist is all they listen to), it should be the same. Each person’s account should have its own “pot” out of the subscription fee that only they can allocate to the artists they listen to. Duration of listening shouldn’t matter at all.
I fully agree. Spotify’s payment model has been criticized for years, but they refuse to consider changing it.
AFAIK youtube music works in the way you suggest, where the money from your subscription gets divided up among whoever you listen to.
it also impacts small indie artists just trying to earn enough from each play to get to eat.
I’m sorry but it’s the 21st century, even small indie artists can have their own sites nowadays or, heck, use bandcamp, sellaband… you can’t really use technological complexity as an excuse to depend on fat middlemen.
It’s not “complexity”.
It’s that end users have no interest in paying for individual songs.
You and me might buy our music on bandcamp, but the vast, vast, vast majority of people still just pay for spotify and never give how it works a second thought.
A moderetely successful indie artist is still likely to make way more having their albums on streaming services, than they are selling them on bandcamp.
you can’t really use technological complexity as an excuse to depend on fat middlemen.
Is that what I’m doing? At no point did I say streaming services could be fair and good if only this one issue was fixed. Merely that play farming works by skimming the money from real artists.
Now, I’d also like to ask “wtf”, since you are kinda suggesting that it is the artist’s that are at fault for not getting the money they need to live, by not using their own websites/bandcamp.
