NC man used AI to defraud music streaming sites billions of times. Now he owes $8M
A Charlotte-area man pleaded guilty to using AI to manipulate music streaming platforms billions of times to siphon royalties worth over $8 million, federal authorities said Thursday. They said it’s the first case of its kind in the U.S.
Michael Smith, 54, of Cornelius, in pleading guilty to one count of conspiracy to commit wire fraud faces a maximum sentence of five years, the U.S. Attorney for the Southern District of New York announced. Smith also agreed to forfeiture of over $8 million.
“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,” U.S. Attorney Jay Clayton said in a statement.
Smith’s scheme used automated programs, or “bots,” from 2017 through 2024 to stream songs created with artificial intelligence, according to the September 2024 indictment. He then used the bot accounts to stream those songs billions of times across multiple streaming platforms to boost his royalties.
Smith is scheduled to be sentenced by July 29.
How the AI music streaming fraud worked
Each time a song is streamed on Amazon Music, Apple Music, Spotify and YouTube Music platforms, the songwriter, musician and other rights holders receive royalty payments. Royalty payments are made proportionately to musicians and songwriters from a pool of funds, according to the federal prosecutor’s office.
Streaming fraud diverts funds from musicians and songwriters whose songs were legitimately streamed by real listeners to those who use automation to falsely create the appearance of legitimate streaming.
To avoid detection by streaming platforms, Smith spread his automated, manipulated streams across thousands of different songs, knowing that concentrating streams on a single track would be flagged, according to the federal prosecutor’s office.
Smith turned to artificial intelligence to create hundreds of thousands of AI-generated songs, which he then used to manipulate streaming counts.
On Oct. 20, 2017, Smith emailed himself a financial breakdown showing he had 52 cloud service accounts, each with 20 bot accounts on streaming platforms, for a total of 1,040 bot accounts, according to the indictment.
At its peak, Smith generated about 661,440 streams per day, resulting in annual royalties to himself exceeding $1.2 million.
