Man Pleads Guilty in $8M AI Music Streaming Fraud Case
A North Carolina musician has pleaded guilty in what federal prosecutors are calling the first criminal streaming fraud case in U.S. history, and it involved millions of dollars and artificial intelligence.
According to federal authorities, Michael Smith, 54, admitted to running an $8 million scheme that used AI-generated music and automated systems to rack up fake streams across major platforms.
Smith pleaded guilty to conspiracy to commit wire fraud in New York federal court, bringing an end to a years-long operation that prosecutors say diverted money away from real artists.
The Scheme and Play
Officials say the strategy was simple.
Smith allegedly created thousands of songs using artificial intelligence, then used bots and automated accounts to stream those tracks billions of times. Because streaming royalties are paid out from a shared pool, those inflated numbers allowed him to collect revenue that would have otherwise gone to legitimate creators.
“Although the songs and listeners were fake, the millions of dollars Smith stole was real,” U.S. Attorney Jay Clayton said in a statement. “These were royalties taken from real, deserving artists and rights holders.”
As part of his plea agreement, Smith has agreed to forfeit more than $8 million connected to the scheme. He now faces a potential prison sentence of 46 to 57 months, though a judge will make the final decision later this year.
Wasn’t an Overnight Operation
Court documents show the operation evolved over time. Prosecutors say Smith initially used his own music catalog before scaling up with AI-generated tracks and automated streaming systems designed to exploit the system at a much larger level.
The scheme eventually unraveled after unusual streaming activity raised red flags with platforms and industry watchdogs, including the Mechanical Licensing Collective, which helps ensure songwriters are properly compensated.
For many in the music industry, the case highlights growing concerns around AI and how it can be used to manipulate systems meant to support artists.
Smith remains free on bond as he awaits sentencing. I wonder how it will shake out. This ruling could shape the future of music in the AI-age.
