A North Carolina man pleaded guilty Thursday to the first criminal prosecution for AI-assisted streaming fraud in the United States, admitting he siphoned more than $8 million in royalties by deploying bot accounts to play hundreds of thousands of AI-generated songs billions of times across Spotify, Amazon Music, Apple Music, and YouTube Music.
Michael Smith, 54, of Cornelius, N.C., entered his guilty plea before U.S. District Judge John G. Koeltl in the Southern District of New York.
He faces up to five years in prison and agreed to forfeit $8,091,843.64. Sentencing is scheduled for July 29.
The scheme ran from 2017 to 2024. Smith began with his own catalog but later partnered with the CEO of an unnamed AI music company and a music promoter to generate hundreds of thousands of AI-produced tracks, which he uploaded to streaming platforms under multiple accounts.
How It Worked
At peak operation, Smith's 1,040 bot accounts streamed approximately 636 songs each per day - generating an estimated 661,440 streams daily and roughly $1.2 million per year, according to Rolling Stone's prior investigation that first detailed the scheme.
To avoid platform detection, Smith routed streams through virtual private networks and spread them across a large catalog of tracks rather than concentrating activity on a small number of songs.
He also made false statements to streaming services, rights organizations, and music distributors, according to court filings.
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How It Was Caught
The Mechanical Licensing Collective, the U.S. Copyright Office-designated body that collects and distributes mechanical royalties, identified the fraud, challenged Smith and his representatives, and alerted the Department of Justice.
Smith and his representatives had denied the works were AI-generated. The MLC said Thursday its early detection "prevented the diversion of mechanical royalties away from rightful songwriters."
Streaming royalties are distributed from a fixed pool, meaning fraudulent streams directly reduce payments to legitimate artists. Platforms including Deezer reported receiving more than 60,000 fully AI-generated tracks daily earlier this year, and have begun expanding detection tools.
"Although the songs and listeners were fake, the millions of dollars Smith stole was real," U.S. Attorney Jay Clayton said in a statement.
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