$10M AI Music Scam Duped Everyone & Inflation Cools...Kinda

0:28The best B2B marketing gets wasted on the wrong people.

0:35Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howe. Today, Campbell is dropping the soup from its name. Sorry, Andy Warhol. It looks like you'll need to redo your paintings. Then the story of the man who allegedly gamed the music streaming market and made off with$10 million. It's Thursday, September 12th. Let's ride.

1:00The most watched TV show in the United States has been revealed. And if you're a parent of young kids, you will not be surprised to hear that it is bluey. The animated Australian show about a dog and her family has been viewed for 35 billion minutes so far this year, according to Nielsen. And it's on track to smash the 43.9 billion minutes watched last year when it was the number two show in the U.S. behind Suits. This seems to be the rare show that kids love, and parents would also maybe watch on their own but wouldn't admit it to you. Even more impressive, though, when you consider the episode length, because Suits episodes are 45 minutes long.

1:39It's this big, sprawling legal drama. Bluey episodes much shorter, usually around 7 to 8 minutes, so it is getting some eyeballs. Also, they released this special episode called The Sign, which drew 10.4 million views globally in its first week on Disney+. Just to put that in perspective, industry, which is this HBO show that a lot of people are talking about, or seemingly a lot of people, it drew a record viewership of 370 ,000 viewers across all platforms. So, Bluey is just truly in a different league. Now, a quick word from our sponsor, MassMutual. Neil, I made a rookie mistake the other day, tried cooking a fancy dinner from scratch, but the smoke detector ended up getting a workout and we got pizza instead.

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3:02Rinse takes your laundry and hand delivers it to your door, expertly cleaned and folded, so you could take the time once spent folding and sorting and waiting to finally pursue a whole new version of you, like tea time you. Mmm. Or this tea time you. Or even this tea time you. So did you hear about Dave? Or even tea time, tea time, tea time you. So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great. I think we found a real world version of the movie Inception, but instead of dreams within dreams, this is a story about scams within scams. The Department of Justice recently announced they arrested a 52-year-old North Carolina a man named Michael Smith, who reportedly set up a scheme where he used AI to create huge amounts of fake bands to produce fake music.

3:53But he wasn't done there. He then allegedly set up bots to listen to those fake songs and earn millions of dollars in ill-gotten gains from streaming companies. Over the course of seven years conducting this fake music scheme, he made upwards of 10 million very real dollars. The details of this operation are wild. Smith worked with an AI music company to crank out literally hundreds of thousands of fake songs, then uploaded them to Spotify, Apple Music, YouTube, etc. But when you're posting songs by the thousands, you also need to name them, and boy did Smith have a flair for it. Titles ranged from Zyme Badooing to Zygotic, while the fake bands went by names like Calorie Even and Calypso Zord.

4:38Neil, this is fraud and streaming platform manipulation on a multi-million dollar scale. It is also the first criminal case involving musical streaming manipulation bought by the Southern District of New York. So this is the first time that they've sort of uncovered a fraud like this. But this is a feature, not a bug, of the music streaming revolution. Ever since Spotify, Amazon Music, YouTube Music came into the fore a few decades ago, there have been all these schemes to just upload a song that just lasts 30 seconds. And it doesn't even have to be a song. It can be absolute gibberish. It just needs to be a little bit of audio in order to get those royalty payments.

5:15Now, like many other musicians, Smith allegedly, when he was concocting this team, first tried to just upload his own music. And he realized that there were such meager payouts by streaming companies, which has been a complaint by many musicians regarding Spotify and these other streaming music services. And then he was like, well, OK, well, I'm not making any money streaming music. I can't go on tour like the biggest artists, which is how they make their money now. So why don't I just concoct allegedly this insane scheme, this crazy flywheel where you have bots listening to bot produce music.

5:49And when you get enough streams of this over time, that can add up. And eventually this guy allegedly pocketed$10 million. One of the big limiting factors to this operation was just the sheer amount of accounts he needed to create to not arise suspicion. because one of the ways that streaming companies can get you is that if you stream the same song over and over and over again, that looks suspicious. So what he did was spread it across 10 ,000 different streaming accounts. So each song would get just a few listens here and there, but none would really stand out. And that became such an issue that he started hiring people to just create those email addresses, and he started buying them from online because he's literally had to create 10 ,000-plus new email accounts.

6:31According to the financial breakdown that he was emailing himself back and forth throughout the years, he was making some money. He calculated if he could stream his songs over 660 ,000 times per day, he could bring in daily royalty payments of about$3 ,300, which comes out to$1.2 million a year. This scheme was making some bank, but you will say that he's stealing it probably from artists who were actually publishing their music and deserve those streams more than him, which is why the district attorney office is going after Smith. Right. There is an outcry from artists right now about AI created music sort of spamming these streaming services while they don't get that much of a payout.

7:13I mean, how much does Spotify actually pay out to musicians? They keep it under wraps, but, you know, there are sort of ways to calculate this. And the average stream, so say someone streams your song, you will get anywhere from 0.3 cents to 0.4 cents. And that amounts to$3 ,000 to$4 ,000 in royalties for one million streams. And for musicians that have sort of absorbed this streaming revolution where you're not selling physical copies of your music anymore and you have to put all your songs on Spotify, that is not a lot of money. And you can't rely on that for your income. Instead, you're seeing all of these artists go on tour, and that is the major source of their revenue now.

7:54And they've sort of called into—they've warned about the rise of AI music and bots and schemes like this taking over streaming services and siphoning royalties away from them. But I got to say, the public response to what this guy did was generally more, hey, I'm impressed. This is crazy that you devised this scheme to manage to evade all these fraud filters. And it was quite ingenious. And they were like, maybe we shouldn't, you know, prosecute this guy. And instead, you know, go full catch me if you can. Get him on our side. Figure out how to stop a lot of these other things that are going on.

8:31Because, I mean, they caught this one guy doing it. but we don't know how many other similar schemes are happening right now. I'm going to open up Spotify and listen to, was it Zygote? Zygote's a banger. Yeah, such a good song. Okay, like the leaves every autumn, inflation keeps on falling. The Consumer Price Index report yesterday showed that consumer prices eased to a three-year low, with inflation dropping for a fifth straight month. Consumer prices in August climbed just 2.5 % from last year, a decrease from 2.9 % inflation in July. Price growth for food slowed, while energy and used vehicles were all cheaper than a month earlier.

9:09It was a report card that your mom would proudly put on the refrigerator, but it wasn't an A+. Core inflation, which removes volatile goods like energy and food, grew at a 3.2 % annual pace, the same as a month before and higher than expectations. The boogeyman, as it has been for the last couple of years, was housing costs. Shelter accounted for more than 70 % of the year-over-year increase in core prices, showing how elevated home prices are continuing to prop up broader inflation numbers. What does this mean for the Federal Reserve? Well, as you know, the Fed is expected to cut interest rates for the first time in four years next week, and this report does nothing to change that.

9:49Inflation is still coming down, and the Fed has pivoted to focusing on the labor market instead of surging prices because they're just not surging anymore. Toby Jerome Powell will never declare victory over inflation, but this is like a football game where you're up big and just taking the knee to run out the clock. I think it also just shows how quickly inflation has kind of faded from being the number one priority. I mean, it's not even our top story on the show today, and it's also we used to sit with bated breath as these inflation reports would drop because we wanted to see that it was coming down.

10:20Now all the attention has kind of shifted over to the labor market and how strong that is, which is a good thing. We shouldn't be hanging on every last inflation report like this. We are still not quite to that 2 % number that Jerome Powell feels comfortable at. But yeah, I guess you could say that the bad news is that that core CPI number is just a little bit more stubborn than expected. But housing costs are always going to remain a little bit of an issue. But those food and energy prices, people are probably feeling that and feeling a little bit better that energy costs slid 0.8%. gasoline prices got lower as we've talked about on this show but it is just interesting to take a step back even to a few months ago when this was just the main thing that we wanted to talk about and now it's a little less so yeah when you go to the grocery store you're not going to be super shocked to see prices you know doubling over the past year as they had been over the past couple of years i mean food price gains continued to slow down food prices climbed 0.1 percent over the month.

11:20So basically not at all. Grocery prices were completely flat after they rose 0.1 percent from the month before veggies and fruits prices fell 0.2 percent. Now there is one little issue at the grocery store, and you may notice this when you go into the egg aisle. There's no such thing as an egg aisle, whatever, wherever, wherever, wherever that egg section is. Remember, egg prices skyrocketed at the beginning of last year due to avian flu. They fell back down But now they are coming back up. Egg prices in August rose 4.8 percent from the month before. And then in July, the month before that, they rose 5.5 percent.

11:59And compared with a year ago, egg prices are up 28.1 percent. So while all grocery prices are either staying flat or falling, it seems like egg prices are on their way back up. Which is tough because we eat a lot of eggs, at least in our household. One thing to look at, too, as well, another piece of government data that dropped this week from the Census Bureau was household incomes. And they actually rose last year for the first time since the pandemic began. Inflation adjusted median household income reached$80 ,000 in 2023. That's up from$77 ,000 in 2022. It remember, though, to put this in perspective, we're only just now getting back to the peak median income of 2019 after this pretty long blip, pretty long interruption from the pandemic.

12:47So we are household income is recovering, but it's only recovering back to those pre pandemic levels. And it is adjusted for inflation. So that's why those those income numbers had been going down for the past four years. Now we're back to 2019 levels as inflation has eased. There's this famous scene from the social network where Justin Timberlake's character tells Mark Zuckerberg to drop the the and just call it Facebook. While another company is also interested in slimming its name down, Campbell's Soup is dropping the Campbell's and is now just soup. Just kidding. It is dropping soup from its name to become the Campbell's Company to signify its shift from just a chunky noodle purveyor to a broader packaged food company.

13:31Campbell's has spread its wings beyond French onion and broccoli cheddar recently. It also owns Goldfish, V8, and jarred sauces, brands like Prego, and more recently, Raos, which it purchased for$2.7 billion last year. Neil, Campbell's is synonymous with soups because it was the first brand to ever sell canned soup more than a century ago. But now almost half of Campbell's revenue comes from its snack sales, not its soup division. So it clearly wants to show that it's more than just a creamy tomato and a nice cream of mushroom. I need to start a company that's just soup, Inc. No, the quotes from the CEO about this name change, it's just so funny.

14:10Just the word soup, I don't know. He goes, we will always love soup and we will never take our eye off this critical business. But today, we're so much more than soup. He went on to say, the new name still celebrates soup. It respects our heritage, but also reflects who we are today and who Campbell's is today is a soup business, yes, but more broadly, a snack business. And that snack business has been growing much faster than the soup business last year. Its snack sales grew 13 percent, while its soups grew 3 percent. And that tracks broader consumer trends. Nearly half of Americans say they eat at least three snacks a day.

14:46and Campbell is just bulking up on the pantry and deciding this is our future. Soup sales will continue to stay, grow at a steady clip. Maybe won't grow so much, but we're banking our future on snacks. They are actually, one bull case for soup is that the population is aging. We've talked about the silver tsunami and on average, older people eat more soup. So that's something to, if you're bullish on soup or you don't want soup to go out of style, that's something that could propel that forward. But yeah, I'm bullish on soup. Yeah, I remember actually revisited an article that I wrote back in 2020 when the pandemic was in their early stages where soup sales just went through the roof.

15:28Soup demand was up 140 % at the beginning of the pandemic as no one really knew what was going on. So everyone started stocking up on that. And then as we actually exited those first few months and entered into the summer, it still was on the rise, 35 % boom. So that was a nice trip down memory lane. But Campbell's is a lot more than soup at this point. I mean, it's got Pepperidge Farms, which makes Milano's and Goldfish. It's got Rao's, which it bought via that deal with Sovos brands. It's got Kettle Brand, which are those kettle chips, Cape Cod as well. So it is just a broader CBG, consumer packaged goods company at this point, trying to snag a bigger piece of that$200 billion snack industry that we've seen a lot of other mergers and acquisitions happen.

16:11And I mean, Mars bought Kelanova for$29 billion last month. So we're seeing a little bit of a snack arms race. And the Campbell's company wants to stake its place. Kelanova makes Pringles and Cheez-Its. But Campbell's has this ace in their pocket, which is Goldfish. What the heck? Goldfish is massive. Goldfish is a billion-dollar business already. Goldfish, people buy a billion dollars worth of Goldfish every single year. And by 2027, Campbell's expects it to be the biggest brand in its entire portfolio. I just thought of a nice little dish of maybe get some Campbell's soup, a tomato soup, crumble some goldfish on top as like your crackers.

16:49I think we're on to something there. Up next, the one, the only, the Neal's Numbers.

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17:41Bundling, just another way to save with a personal price plan. Like a good neighbor, State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer. Availability, amount of discounts and savings, and eligibility vary by state. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will absolutely level up your small talk game today. My first number is from a new study that revealed how the brains of teenagers aged far more than expected during pandemic lockdowns. And most crucially, girls brains age much faster than boys.

18:17According to research from the University of Washington published this week, scans of adolescent brains in 2021 showed that girls brains had accelerated 4.2 years ahead of what was expected. One of the study's authors, Patricia Kohl, explained that a girl who came in at 11 and then returned to the lab at age 14 now has a brain that looks like an 18-year-old's following the pandemic. Boys' brains, on the other hand, accelerated just 1.4 years, which Kohl called a stunning difference with what was observed in girls. Brain aging refers to the thinning of the cerebral cortex, the outer layer of tissue that controls higher-level functions like decision-making and reasoning.

18:56It is normal for the cortex to thin as you get older and mature. This allows the brains to develop specialization. But the researchers warn that the social isolation teens encountered during the pandemic could have contributed to accelerated aging with potentially harmful cognitive impacts down the road. Toby, this wasn't the first study to show that isolation during COVID may have played a role in faster brain aging, but it was the first to show the stark difference between boys and girls. And the study was almost an accident because they were studying these teenagers' brains before the pandemic.

19:29And then the pandemic happened, so they couldn't actually follow up with them until after it became safe to kind of bring them back in for an MRI, which is then they saw and came to these conclusions about how much these brains were aging. And the difference between boys' and girls' brains was interesting as well. They said maybe just something to do with how girls socialize versus how boys socialize, maybe less being able to talk with your friends caused girls to experience more of that stress, which caused their brains to age a little bit faster. But, yeah, the study did have its limitations as well because they said we couldn't really control for things like familial financial security or food safety or exercise or sleep.

20:15So they're saying take it with a little bit of a grain of salt. It's also unknown if the participants having COVID-19 actually impacted the study as well. But very curious and interesting to see how much those few years really can impact a teen's development. Okay, you might want to skip this second number if you're afraid of heights. It's 755 miles above the Earth's surface, which is how high the crew of the Polaris Dawn mission ventured on Tuesday. that's further than any human has traveled into space since an Apollo mission in 1972, and all the more historic because it is a private crew, not a government, pushing the boundaries of the final frontier.

20:54Polaris Dawn is the brainchild of Jared Isaacman, a fintech billionaire and truly adventurous soul who partnered with SpaceX to take himself and three other non-professional astronauts deep, deep, deep, deep into space. This morning, after coming down to an altitude of about 450 miles, They'll attempt the first ever spacewalk by civilians, which experts warn is pretty dang risky. It's actually happening as we speak right now. For two hours, the astronauts will be exposed to the vacuum of space, while Isaacman and another crew member will head outside the vehicle 20 minutes at a time to test out SpaceX's brand new spacesuits.

21:31Here's a bonus stat on that altitude milestone. Sarah Gillis and Anna Manon, the two women on the mission, have now gone further from Earth than any other women ever, because all the moon missions were made up of guys. I don't want to up your number with a number of my own, but a new record has also been set this morning as the most people in Earth orbit at one time. It's at 19, and that is including the nine people on the International Space Station, including the two astronauts stranded by the Boeing Starliner, three people en route to the ISS, three on a Chinese permanent station, and then the four flying on this Polaris Dawn mission.

22:08The funny part, too, is that without the two astronauts stranded by Boeing Starliner, they would not have set this record. So shout out Boeing. You did something well and contributed to space history. For my final number, remember Ray Gunn, the Australian breaker who went viral during the Olympics for her unorthodox moves that earned her last place in the competition? Well, she is now the number one breaker in the world in the World Dance Sport Federation rankings. This is not a joke. It's real. Ray Gunn, a college lecturer in Sydney, whose real name is Rachel Gunn, is the top breaker in the world despite losing her three dance-offs at the Olympics by a combined score of 54 to 0.

22:51How did this happen? Well, according to the World Dance Sport Federation's rulebook, the standings are based on four competitions that occur in the last 12 months. In that period, Ray Gunn did win an event, the Oceania Continental Championships, which featured breakers from Australia and New Zealand. But besides that, there weren't many breaking contests at all because of the Olympics and Olympics qualifiers, which don't count toward the world rankings. As news of Raygun's number one ranking dripped out, pressure built on the World Dance Sport Federation, which already had a credibility problem, to explain themselves.

23:26They issued a statement saying the world rankings as they currently stand should be interpreted in conjunction with results from recent global breaking competitions for a more accurate reflection of the global competitive landscape. TLDR, don't take this seriously. Oh, B-Girl Ray Gunn, it's been a minute. I haven't thought of you, but I wish I had because she is just truly one of the most polarizing and recognizable figures from this Olympic cycle. I was reading some of the comments on the Wall Street Journal article that wrote about her status as the world number one, and these two were back-to-back.

23:59One said, a slap in the face to those with real skill and athleticism in the sport. But then immediately after that, someone said, I love Ray Gunn. She makes me laugh, and laughing makes me feel good. And that, to me, shows the dichotomy of the two parties of how you can interpret Tate. Ray Gunn, you could say, hey, she brought a lot of joy to a lot of people. She maybe elevated the sport, maybe not in the best light. But then the other camp is saying she doesn't deserve any of this attention. She did not put forth the sport of breaking in a good light at the Olympics on the biggest stage. But I don't know.

24:30I fall in the latter cap. She does bring me joy. Every time I see her doing that kangaroo move, I let out a little chuckle. Michael Jordan has achieved a lot in his life. Hall of Famer, billionaire shoe baron, and the second best player to ever play the game. But he hasn't achieved something that you or a neighbor has probably done at least once in your life. Sell a house. Jordan's mansion in the Chicago suburb of Highland Park has been on the market for 12 years now. He first listed it for$29 million all the way back in 2012, but it's slowly been reduced through the years, and you can now get it for the bargain bin price of just under$15 million.

25:11Now, you can blame everything from it being overpriced for the area to its non-waterfront location for its inability to sell, but the real reason it's languished on the market for so long is MJ's house has a little too much MJ in it. Seriously, he's everywhere. The Iron Gate is adorned with his number 23. he plastered his Jumpman logo on flags and walls and the basketball court literally has his name on it. Neil, apparently this is a thing though. Ultra customized celebrity houses are very tough to get off the market. Yeah, I mean, if you look at Derek Jeter, he had a New York Lake home that had turrets and a Statue of Liberty replica.