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.
I think what OP is asking is, the "system" says we will pay you money for every download of your song from our system. He automated the song download process at scale.
Guess it depends on the wording (hence the lawsuit). It's an open secret that so many "views" on such platforms are in fact inorganic. That's why the internet been ruined by trackers to try and reassure the poor ad companies can prove humans are looking at ads (i imagine as AI rises this sentiment becomes less relevant).
This is definitely the highest profile case I've seen of this, though.
Maybe if he had formed a shell corporation around his fake listeners, that would have been OK because according to the US Supreme Court, corps are peeps!
Yeah in the sense that the airline says that it’ll fly you in the air and the 9/11 hijackers just decided they’d do that themselves for a bit so why prosecute Bin Laden?
It turns out that the other bits of the deal also matter.
Citizens United ruling basically said that corporations have more rights than actual people. Sure it gives them "the same" speech rights as meat-people, but when you're a corporation you have way more resources at your disposal to get your speech to more places than meat-people can muster.
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.
This seems no worse than what Deutsche Ban and Wells Fargo have been caught doing. I think maybe his mistake was not doing this through corporate obfuscation at a large enough scale. Although Bankman-Fried and Madoff got punished with prison time, they threatened the wealthy with their fraud so steering clear of that has to be taken into account.
> 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!
I agree. I suppose I haven't seen exactly how much Spotify keeps on top for a while, but I wouldn't be surprised if Spotify itself is beholden to the publishers. Definitely a tug of war.
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
Not all artists. Only those with songs that each have had over 1,000 streams in the previous 12 months. That doesn’t sound like much but they effectively demonetized more than half of the music on their platform at the beginning of 2024.
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.
> 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.
They don't really have a choice to avoid Spotify though, unless you consider giving up 30% of the streaming market (which itself is 80% of the overall music market) to be reasonable. Even Taylor Swift couldn't justify being off Spotify.
I don't find that surprising. I did a free trial of Tidal and only found about 1/10th of the artists I like on there, so for the same subscription fee I either listened to music a lot less, or listened to the same artists and songs a lot more. Either way, that is a much bigger fraction of my subscription fees for each individual artist.
I loved the software and high audio quality, but it just wasn't usable because it didn't have the music I wanted to listen to.
From what I've heard, about 70% of a Spotify subscription pays directly for content to the rights holders, and it is mostly distributed in proportion to 'listens.' This does mean that most of the money goes to a tiny number of extremely popular artists, but that seems more like a social dynamic that always existed with pop music, and not Spotify's fault.
>This does mean that most of the money goes to a tiny number of extremely popular artists, but that seems more like a social dynamic that always existed with pop music, and not Spotify's fault.
And society. Oh well, billionaires are just a social dynamic. Can't all be rich, best to just accept being poor as rent rises.
Neither music or life are inherently zero sum. People do sometimes get rich doing awful things, but they also can get rich doing things that add a lot of value to others lives- like making access to music easy and affordable.
Do you truly believe that life is a zero sum game, or is it seeing someone else be rich that in itself bothers you, even if it means you are also living better? Would you prefer to be much poorer, less healthy, etc. in order to make sure everyone else is also? That is the awful life-denying bargain your worldview is offering.
I agree. But the way we monetize life and business becomes zero sum. You don't become a billionaire by giving everyone a living wage. Music is accessible because the top 1% are satisfied and the bottom 50% is fighting for scraps.
If you're a Taylor Swift fan that's not an issue for you, but you can see why this starts to feel zero sum to me, no?
>is it seeing someone else be rich that in itself bothers you, even if it means you are also living better?
It's seeing the rich bask in what's only a evolve above slave labor, as it gets harder and hared for the supposed "middle class"
if you solve world hunger, you can be a trillionaire for all I care. But the sheer inequality and efforts to make it worse is why I'm inherently scrutiny of these companies. Not to even mention all the dark arts tech employs to more or less psychologically exploit people in general. These are not good people trying to do good things for the world.
>Would you prefer to be much poorer, less healthy, etc. in order to make sure everyone else is also? That is the awful life-denying bargain your worldview is offering.
I'd prefer to not psycho-introspect into my own life based on one comment as opposed to just asking me, thank you very much. I hope the explanation above suffices. Happy to clarify, but I won't be replying to any more swipes like this.
>pays artists little because it charges users little
That rationalizes exactly how we came to this age of enshittification. If you don't value your time Spotify is cheap. But Adverts very much do and at this stage half of Spotify is just regurgitating ads to you unless you pay $10/month (or probably more at this point. They can charge $50/month and not much would happen because the free users will listen to ads anyway).
That's the true tragedy of 21st century capitalism. The invisible hand has failed becsuse people are too lazy to make a choice when they're being exploited.
Interesting, I've used Spotify for years and didn't even know you can even use it for free with ads- I would never do that, but it is pretty awesome that you can!
I pay about $8.50/month (my half of a 2-person account) for unlimited access to any music I want with zero ads... seems like a great deal to me. I don't see any sign of "enshittification," "tragedy," or "exploitation" - just lots of good music for a low price- which was impossible before Spotify existed.
I mean, if people value their time so little, they probably simply couldn't afford even that tiny fee, so at least they get to listen to music they like, instead of listening to ads on the radio with music they can't choose.
I don't get why people think not offering something valuable and expensive to provide for free is evil or a tragedy.
Before Spotify that sort of budget would have paid for maybe ~6 new legal albums per year which I couldn't listen to before I bought, so many would end up not being listened to.
Now the same budget allows me to listen to anything I want anytime- and the money goes to the artists I like in proportion to how much I actually like them instead of how much I expected to like them before I actually got to listen. That seems like the opposite of a tragedy.
> I would never do that, but it is pretty awesome that you can!
we haven't been in the same tech industry the last decade, have we?
>I don't see any sign of "enshittification," "tragedy," or "exploitation" - just lots of good music for a low price- which was impossible before Spotify existed.
I guess you aren't in the US. We just got a price bump
Which is the 2nd price bump this year. But this goes to the workers right?
>Spotify recently increased subscription prices for international subscribers, cut costs and underwent several rounds of layoffs including drastic reductions to its podcast business.
This is what happens with market capture. They run at unsustainable rates for years, and then the squeeze happens when people are too lazy to step out of the pot. And then they squeeze the workers as well by making them do more with less staff.
I wish people wouldn't so easily excuse monopolization. It doesn't end well for anyone but the C-Suite. But as they say:
>Nobody gives a care about the fate of labor as long as they can get their instant gratification. - Squidward Tentacles, 2001
No, they mostly stole from Spotify, then fron the top 100 distributors. Then the artists maybe lost pennies on this scheme.
Worst part is that Spotify gained a lot more than 10m from letting this go on for 7 years. I doubt they weren't aware of this, but allowed it becsuse those bots let them attract a lot more than $10m worth of viewers. That's why I have no sympathy.
Can you provide any reasoning or evidence for this beyond “No, you’re wrong?”
Here’s mine:
“ Unlike physical sales or downloads, which pay artists a fixed price per song or album sold, Spotify pays royalties based on the artist's "market share"—the number of streams for their songs as a proportion of total songs streamed on the service. Spotify distributes approximately 70% of its total revenue to rights holders, who then pay artists based on their individual agreements. ”
Reasoning: this happened for 7 years. And I'd be shocked if no one was actually privy of this happening years prior. Like every other 2010's tech operation, bots can be used to attract real users, at which point the bots can be sunsetted a bit and then attract real investors. market capture was more important then profitability in the 2010's, so even if they lost money from this overall, they gained something much more important for a company: a brand. That brand is where you start to become "too big to fail".
This is basically a 3rd party helping with the first step. If you want to look at raw revenue over 7 years, maybe Spotify made less. But they definitely profitted by time by allowing it to go on until it was not longer useful (especially now. As Spotify is using music to train their own AI models. Ai generated music will just mess up the model).
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Do I have any hard evidence Spotify specifically does this? Not on hand, but I wouldn't be surprised if I can actually dig up Spotify dirt. This is documented for several other large scale tech companies. I'd honestly be surprised if Spotify was a special case.
I hope that explanation suffices, or is at least more satifactory than what you interpreted as "no, you're wrong".
While I expected you to try to explain how the scammers "mostly stole from Spotify," (which was the claim I disagreed with) you instead put forth a theory to how their scam instead benefited Spotify (which I never made any claims about, nor disputed your claims). Can you explain how they stole from Spotify if the revenue pool they stole from (70% royalty pool) would never have gone to Spotify in the first place?
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?
AI tends to master these creations. If a song is mastered it’s likely documented who mastered it. This could birth a music industry fueled authentication service in the future.
Is it possible to listen to music for free on spotify, for 7 years ?
That's the only way I can see this scheme working. But it seems odd to me that spotify would not put substantial walls up to validate new users, to prevent what is effectively musical adclick fraud.
He was doing the streaming equivalent of click fraud, streaming his own songs to run up the numbers. The songs being AI generated is an incidental detail.
> Smith used artist names like "Callous Post" and "Calorie Screams," while their songs included titles such as "Zygotic Washstands" and "Zymotechnical."
I mean, those sound like pretty rad names for punk bands and punk songs. Hadn't heard such original names since Seth Putnam left us.
He didn’t generate the music himself, and likely worked with others on setting up the bots (the article mentions co-conspirators). On the song generation:
> This led Smith to pivot to AI-generated music in 2018 when he partnered with an as-yet-unnamed AI music company CEO and a music promoter to create a large library of computer-generated songs. The district attorney announcement did not specify precisely what method Smith used to generate the songs.
I wonder what company he used and whether they can be liable too.
