Musician sentenced to 18 months for $8M AI-generated streaming fraud
A North Carolina man used bots and hundreds of thousands of AI-made songs to fake billions of streams, in the first U.S. criminal case of its kind.
What happened: A federal judge in Manhattan sentenced North Carolina musician Michael Smith, 54, to 18 months in prison on October 6 for running a streaming royalty fraud scheme from 2017 to 2024. Smith pleaded guilty in March to one count of conspiracy to commit wire fraud. He must also forfeit $8,091,843.64, the amount prosecutors say he collected in fraudulent royalties, and serve two years of supervised release afterward. It's described as the first U.S. criminal case built around AI-assisted music streaming fraud.
Why it matters: Streaming royalties are paid out of shared pools based on each track's share of legitimate plays. When Smith's bots inflated his own catalog's play counts, that money came directly out of what was otherwise due to real artists and songwriters. Prosecutors said in April 2023 alone, Smith's bot accounts generated 80.9 million fake family-plan streams on YouTube Music, more than eight times the 9.3 million streams Taylor Swift's entire real catalog got that same month on the same plan type.
How it works, plainly: Smith started with fake accounts and stolen debit cards streaming his own songs through automated software. As platforms got better at flagging unusual activity on single tracks, he turned to AI to mass-produce songs, reportedly working with an AI music company executive and a promoter, so fraudulent plays could be spread thin across hundreds of thousands of tracks instead of piling up on a few. At its peak the operation ran over 1,000 to 10,000 bot accounts, routed through VPNs to dodge detection, generating what Smith himself claimed was over 4 billion streams and $12 million in royalties by 2024.
The rollout: Sentencing guidelines called for 46 to 57 months, and prosecutors wanted at least 46; Smith's lawyers pushed for probation, arguing the harm to any single artist was tiny when spread across millions of rights holders. The judge landed well below the guideline range at 18 months. Separately, the Justice Department's own press materials on the case used the Trump administration's new mandated term 'super intelligence' instead of 'artificial intelligence,' a rebranding effort ordered by executive order in late September.