The buried lede is that he was botting fake listeners on his songs to fraudulently boost his payouts, which was the illegal part. Just spamming Spotify with AI dreck and hoping that real people listened to it would have been (legally) fine, but not as lucrative.
Stealing money is illegal, the way you do it is often secondary to that fact. In many countries, hacking or breaking systems, whether digital or analog, is punishable by law. I'm not sure there's much of a surprise here.
money was involved. it didn't help that he incriminated himself with such statements as " We need to get a TON of songs fast to make this work around the anti-fraud policies these guys are all using now.”
Most stream fraud schemes like this use stolen accounts or accounts made with stolen credit cards.
As for what makes the botting illegal, in this case its theft through misrepresentation. He was charged with wire fraud conspiracy, wire fraud, and money laundering conspiracy.
> Smith's scheme, which prosecutors say ran for seven years, involved creating thousands of fake streaming accounts using purchased email addresses.
Despite the title, there is little AI in here. The automatically generated music barely existed seven years ago. It really does not matter what noise you upload to these services, as it is not really validated. It’s just bots streaming your songs, like you can have bots viewing your website for ad impressions.
Looking at the figures, this means that a band would need to have more than 120,000 plays daily to earn the equivalent of $15 an hour for a 40-hour week. (If my back-of-the-napkin math is correct based on the article saying that 661,400 plays daily earned a potential $3,307.20.)
I've little sympathy for Spotify and the rest _but_ this scheme -- if I understand how Spotify pays out -- reduces payouts to other folks. I don't know if society is well-served by sending him to prison, but he should definitely be penalized somehow until that money, plus damages, is redirected to actual artists.
>he should definitely be penalized somehow until that money, plus damages, is redirected to actual artists.
You know it won't go to the artists. Spotify takes it and at best some publishers (or what name they choose in music) get a little cut on the top to keep in good graces.
This is definitely wrong but this is exactly why I don't really have any sympathy here.
On top of the fact that Spotify probably also did and does the exact same scheme, but that was in a period of "market capture mode" and the adverts didn't care enough to not be frauded. Instead playing the long game. (Blitzar in another response explained this better than I did).
Publishers don't just get a little cut... they get a LOT of cut.
I've long maintained that the "Spotify fucks over musicians" angle is cleverly positioned to hide the "record labels fuck over musicians the same as they always have for 50+ years" angle. Because the big record labels are still doing great in the streaming era!
120,000 extra plays a day would have increased the revenue of the streaming platform via played advertisements.
The increased revenue pool in theory means that other artists were unaffected, Spotify made extra money, the fraudulent artist made extra money and the advertisers lost money. This is probably why they waited 7 years and till they had IPO'd to pull the plug.
What is the split between ad revenue vs. subscriber revenue? When I used Spotify I was a subscriber so they got one flat fee from me per month that didn't increase no matter how many times I played a song.
> if I understand how Spotify pays out -- reduces payouts to other folks
do musicians get remunerated per play (in which case, it doesn't matter how many plays other artists get), or is there a fixed pie and it's divided by percentage of share of plays?
If the latter, that's truly a horrible deal for artists.
It's not. The total revenue available for royalties is distributed to rightsholders by the volume they occupy of total plays in a given timeframe[1]. It's been a hot topic for a long time, as your subscription is not going to the artists you listen too only. Huge pop hits that are responsible for X percent of plays across all Spotify streams, will receive X percent of your paid subscription, even though you as a subscriber have never listened to them.
It's a simplification, since 100% of an individual's subscription doesn't go to directly to royalties, it's after expenses.
Smaller artists are frustrated with this model as it favours the big artists.
As I understand it, Spotify pools together everyone's payments and distributes it by number of listens across all users. You or I would expect we'd be supporting our favorite artists by listening to them, but most of our subscription fees actually go to whoever's at the top of the charts. That restaurant playing "Top 40" on repeat effectively outweighs us both.
No, spotify (and most other services) build a pool of money for payouts. That money is then divided among all artists based on their % share of all plays for the month
Reminds me of when I was 11 and pasted stolen nintendo 64 content on geocities until I was earning $10 a month checks, then I got greedy and learned javascript to click my own banners every second 24/7 but somehow they caught on and my business empire all came crumbling down
It was probably good to get "caught" once with no real consequences, so I wouldn't grow up to try it at the $10M level.
I abandoned that N64 website soon after, but a decade or two later I got an email from a stranger, thanking me for hosting the forums that were a huge part of her growing up, where she made lifelong friends, etc. The thing was, I forgot I even made a forum. Few used it at the time I abandoned it. It was only accessible via my N64 website, but the back end was hosted by a third party forum service, so they must have moderated it all those years. It felt like that episode of the Simpsons where Lisa discovers a civilization in her petri dish.
Spotify isn't a parasite... it is an amazing service that connects listeners with musicians, and has excellent methods to help people discover new music they will likely enjoy. It pays artists little because it charges users little- so anyone can afford to listen to music, but unlike the radio or pirating, their listen actually sends money to the artist. I've discovered, and become a concert ticket buying fan of a huge number of small time artists that would have been nearly impossible to find or listen to without spotify. No artist is forced to list songs on spotify, if a non-spotify method worked better for them to get fans and income, they don't need to put songs on there- yet I find most artists do have their music on there.
I listen to a lot of EDM on Spotify while working, and nobody has ever accused me of tasteful discernment when it comes to music. I suspect it's only a matter of time before I 'like' an AI-composed song that no one else has ever heard before, after a bot uploads it automatically as part of some kind of scam and Spotify recommends it based on my previous likes.
Borges more-or-less said this would happen, so when it does, I won't be able to say I wasn't warned.
> used AI to create hundreds of thousands of fake songs by nonexistent bands, then streamed them using bots to collect royalties from platforms
Not a lawyer but I don't see how this is "fraud" or a "scam". He created actual music, which people listened to, and by listening to them, generated royalties. The fact that he could use AI to create hundreds of thousands of different songs is a problem for the music industry, but that's an AI problem in general (art, writing, etc.)
Ah, OK, I see the problem further down in the article. This was the illegal part:
> involved creating thousands of fake streaming accounts using purchased email addresses. He developed software to play his AI-generated music on repeat from various computers, mimicking individual listeners from different locations
He shudda done those youtube fake elon/space-x livestream things on youtube. Those people make easily hundreds of thousands of dollars per video of BTC, and years later afik no arrests or action by feds. Apparently there is some legal loophole in which this crime is ignored or under the radar. As it's said, never steal from the rich.
For that to work Spotify should pay the artist more than it gets from the listeners (bots) who play author’s music. I doubt that’s the case though. Did bots raise track popularity and money was coming from legit listeners? Or did the money come from the advertisers?
Readit News
pdf here - https://www.justice.gov/usao-sdny/pr/north-carolina-musician...
Deleted Comment
As for what makes the botting illegal, in this case its theft through misrepresentation. He was charged with wire fraud conspiracy, wire fraud, and money laundering conspiracy.
https://www.justice.gov/usao-sdny/pr/north-carolina-musician...
Despite the title, there is little AI in here. The automatically generated music barely existed seven years ago. It really does not matter what noise you upload to these services, as it is not really validated. It’s just bots streaming your songs, like you can have bots viewing your website for ad impressions.
I've little sympathy for Spotify and the rest _but_ this scheme -- if I understand how Spotify pays out -- reduces payouts to other folks. I don't know if society is well-served by sending him to prison, but he should definitely be penalized somehow until that money, plus damages, is redirected to actual artists.
You know it won't go to the artists. Spotify takes it and at best some publishers (or what name they choose in music) get a little cut on the top to keep in good graces.
This is definitely wrong but this is exactly why I don't really have any sympathy here.
On top of the fact that Spotify probably also did and does the exact same scheme, but that was in a period of "market capture mode" and the adverts didn't care enough to not be frauded. Instead playing the long game. (Blitzar in another response explained this better than I did).
I've long maintained that the "Spotify fucks over musicians" angle is cleverly positioned to hide the "record labels fuck over musicians the same as they always have for 50+ years" angle. Because the big record labels are still doing great in the streaming era!
The increased revenue pool in theory means that other artists were unaffected, Spotify made extra money, the fraudulent artist made extra money and the advertisers lost money. This is probably why they waited 7 years and till they had IPO'd to pull the plug.
do musicians get remunerated per play (in which case, it doesn't matter how many plays other artists get), or is there a fixed pie and it's divided by percentage of share of plays?
If the latter, that's truly a horrible deal for artists.
https://news.ycombinator.com/item?id=41457870
It's a simplification, since 100% of an individual's subscription doesn't go to directly to royalties, it's after expenses.
Smaller artists are frustrated with this model as it favours the big artists.
[1] https://support.spotify.com/us/artists/article/royalties/
Edit: added the link.
I abandoned that N64 website soon after, but a decade or two later I got an email from a stranger, thanking me for hosting the forums that were a huge part of her growing up, where she made lifelong friends, etc. The thing was, I forgot I even made a forum. Few used it at the time I abandoned it. It was only accessible via my N64 website, but the back end was hosted by a third party forum service, so they must have moderated it all those years. It felt like that episode of the Simpsons where Lisa discovers a civilization in her petri dish.
Deleted Comment
We tolerate, even celebrate, radiation poisoning when it is killing cancer cells and allowing a person to live.
I listen to a lot of EDM on Spotify while working, and nobody has ever accused me of tasteful discernment when it comes to music. I suspect it's only a matter of time before I 'like' an AI-composed song that no one else has ever heard before, after a bot uploads it automatically as part of some kind of scam and Spotify recommends it based on my previous likes.
Borges more-or-less said this would happen, so when it does, I won't be able to say I wasn't warned.
Deleted Comment
Not a lawyer but I don't see how this is "fraud" or a "scam". He created actual music, which people listened to, and by listening to them, generated royalties. The fact that he could use AI to create hundreds of thousands of different songs is a problem for the music industry, but that's an AI problem in general (art, writing, etc.)
Ah, OK, I see the problem further down in the article. This was the illegal part:
> involved creating thousands of fake streaming accounts using purchased email addresses. He developed software to play his AI-generated music on repeat from various computers, mimicking individual listeners from different locations