North Carolina musician pleads guilty to $10M streaming fraud scheme powered by AI-generated songs

Musician admits to $10M streaming royalty fraud using AI bots

North Carolina musician Michael Smith has pleaded guilty to collecting over $10 million in royalty payments through a massive streaming royalty fraud scheme on Spotify, Apple Music, Amazon Music, and YouTube Music. 54-year-old Smith bought hundreds of thousands of songs generated using artificial intelligence (AI) from an accomplice, uploaded them to these streaming platforms, and used automated AI bots to stream the AI-generated tracks billions of times. According to court documents unsealed when he was charged in September 2024, Smith fraudulently inflated listening stats on his songs on these digital platforms between 2017 and 2024 with the help of an unnamed music promoter and the Chief Executive Officer of an AI music company. To avoid detection by anti-fraud systems, Smith also had the bots access the streaming platforms using virtual private networks (VPNs). On October 4, 2018, he emailed his coconspirators to say, "to not raise any issues with the powers that be we need a TON of content with small amounts of Streams," and added that, "We need to get a TON of songs fast to make this work around the anti fraud policies these guys are all using now." At the peak of the operation, Smith was using over 1,000 bot accounts to artificially boost streams. On October 20, 2017, he also emailed himself a financial breakdown outlining how he operated 52 cloud service accounts, each with 20 bot accounts. He estimated that each bot could stream around 636 songs per day, for a total of approximately 661,440 streams per day. With an average royalty rate of half a cent per stream, the daily earnings would reach $3,307.20, the monthly earnings would reach $99,216, and the annual earnings would exceed $1.2 million, according to Smith. "Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times. Although the songs and listeners were fake, the millions of dollars Smith stole was real," said U.S. Attorney Jay Clayton on Wednesday. "Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith's brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud." Prosecutors said that Smith fraudulently collected over $10 million in royalty payments after having his bots stream hundreds of thousands of AI-generated songs billions of times. In a February 2024 email, confirmed these claims bosting that the songs generated "over 4 billion streams and $12 million in royalties since 2019." Smith has agreed to pay $8,091,843.64 in forfeiture and faces a maximum sentence of 5 years in prison after pleading guilty to one count of conspiracy to commit wire fraud.

Man Pleads Guilty to Defrauding Streaming Services of $8 Million With AI-Generated Songs

Cody Johnson, Lainey Wilson, and Riley Green Slated for ACM Awards Performances Michael Smith, a 54-year-old North Carolina man whom federal prosecutors accused of defrauding music streaming services with AI-generated songs, pleaded guilty to one count of conspiracy to commit wire fraud on Thursday before U.S. District Judge John G. Koeltl. The charge carries a maximum sentence of five years in prison. Smith agreed to pay $8,091,843.64 in forfeiture. Judge Koeltl will sentence Smith in full this summer. In the plea, Smith admitted to creating hundreds of thousands of songs using AI and, in turn, using thousands of bots to stream the songs billions of times, the way average consumers would, to make an income. By spreading the streams across thousands of accounts, he was able to evade detection by streaming services such as Amazon Music, Apple Music, Spotify, and YouTube Music. Ultimately, Smith acquired more than $8 million in royalties. "Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times," Jay Clayton, United States Attorney for the Southern District of New York, said in a statement. "Although the songs and listeners were fake, the millions of dollars Smith stole was real. Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith's brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud." (An attorney for Smith, Noell Tin, declined to comment.) A letter from the Department of Justice indicated that in addition to forfeiting his earnings and the maximum prison sentence, he could also be sentenced to three years' supervised release and a maximum fine of $250,000. Sentencing is scheduled for July 29. The DOJ said it would not prosecute Smith further but that it would consider tax violations between 2017 and 2024 should it discover them. A Rolling Stone investigation into Smith revealed he was using 1,040 accounts, which would each stream around 636 of his AI-generated songs a day. That added up to 661,440 streams a day, potentially earning him $3,307.20 a day, $99,216 a month, and over $1.2 million a year. "Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed," U.S. Attorney Damian Williams commented when Smith was indicted.

North Carolina Man to Pay $8 Million After Pleading Guilty In First-Ever Streaming Fraud Case

Jay-Z Plots Pair of Yankee Stadium Shows for 'Reasonable Doubt' and 'The Blueprint' Anniversaries A North Carolina man has agreed to pay over $8 million after pleading guilty in the first-ever criminal music streaming fraud case brought by law enforcement. The feds had first indicted Mike Smith in 2024, alleging that he had used artificial intelligence music generators to help him create mass amounts of songs to be streamed millions of times by bots tied to thousands of accounts Smith had set up. Smith earned millions of dollars from his fraudulent streams, siphoning off royalties from the legitimate artists in the royalty pool. Smith pled guilty to one count of conspiracy to commit wire fraud, the U.S. Attorney's Office for the Southern District of New York said, which carries a maximum sentence of five years in prison. Smith will also return the nearly $8.1 million he'd made. "Smith's brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud," U.S. Attorney Jay Clayton said in a statement Thursday. Streaming fraud has been a rampant issue in the music industry for years, a problem only exacerbated by AI now that fraudsters can quickly generate thousands of songs to flood the zone on streaming services like Spotify and Apple Music. The French music streaming service Deezer previously reported that it's seeing 60,000 AI songs uploaded to its platform every day, further noting that as much as 85 percent of streams on those tracks are fraudulent. As The Hollywood Reporter exclusively reported in February, Apple Music doubled its penalties for those caught engaging in streaming fraud, with the company saying AI's impact on fraud was a factor in the decision.