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Is Streaming Broken? The Big AI Fraud Indictment Raises Serious Questions
The federal government's $10 million AI streaming fraud case should be setting off alarms around the industry about the dominant consumption model.
In an indictment unsealed in early September, federal prosecutors charged musician Michael Smith with fraud and conspiracy in a scheme in which he used AI-generated songs streamed by bots to rake in $10 million in royalties. From the perspective of major labels and most indies, the problems with streaming are all about making sure consumers can filter “professional music” from tracks uploaded by amateur creators — bar bands and hobbyists. These ideas may not be popular — streaming services don’t want the burden or expense of curating what they offer, and most of the labels so eager to fight fraud also fear the loss of the pro-rata system that disproportionately benefits their biggest artists.
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