US Man Jailed 18 Months Over $8m AI Music Streaming Fraud

AI music streaming technology. Source: WIPO

A 54-year-old North Carolina man, Michael Smith, has been sentenced to 18 months in prison for using artificial intelligence (AI)-generated songs and automated bot accounts to fraudulently collect over $8 million in music royalties.

A US federal judge sentenced Smith on October 6 after he pleaded guilty to conspiracy to commit wire fraud, according to the US Department of Justice.

In addition to the prison term, the judge ordered Smith to serve two years of supervised release and forfeit $8,091,843.64 obtained through the illegal scheme.

Federal prosecutors stated that Smith operated the fraud scheme between 2017 and 2024, creating thousands of fake listener accounts across major streaming platforms, including Spotify, Apple Music, Amazon Music, and YouTube Music.

He used specialised software to have these automated accounts repeatedly stream songs he controlled, most of which were AI-generated.

To evade detection by anti-fraud systems, Smith generated hundreds of thousands of AI tracks and spread the artificial streams across thousands of songs.

At the peak of the operation, Smith operated up to 10,000 automated accounts simultaneously, generating billions of artificial streams and claiming royalty payouts.

Prosecutors highlighted the massive scale of the fraud by noting that in April 2023 alone, Smith’s automated accounts generated 80.9 million streams for his AI music on YouTube Music family plans, compared to 9.3 million streams for Taylor Swift’s entire catalog in the same category.

The US Department of Justice noted that the scheme diverted legitimate royalty payments away from real musicians and songwriters whose works were streamed by genuine listeners.

US Attorney Jamie McDonald stated that Smith exploited AI technology to defraud streaming platforms and rob legitimate artists of earned royalties, noting that the case represents the first criminal prosecution of AI-assisted music streaming fraud in the country.