A North Carolina man has been sentenced to 18 months in prison for orchestrating a scheme that used thousands of bot accounts to stream his AI-generated music billions of times, generating over $8 million in illicit royalties. Michael Smith, 54, of Cornelius, North Carolina, received the sentence on Tuesday, 6 October, from Judge John G. Koeltl. In addition to imprisonment, Smith was ordered to serve two years of supervised release and forfeit $8,091,843.64. Prosecutors described this as the first criminal case involving AI-music streaming fraud.
Scheme Details and Execution
According to prosecutors, the fraudulent operation ran from 2017 to 2024, employing as many as 10,000 bot accounts to stream AI-generated music owned by Smith on platforms including Amazon Music, Apple Music, Spotify, and YouTube Music. Smith reportedly used hundreds of thousands of AI-made songs, along with fake email addresses and fraudulently obtained debit cards, to establish and maintain these accounts. The platforms pay royalties per stream, and the fake plays translated directly into monetary gains.
To avoid detection, the bots distributed their plays thinly across a vast catalogue of tracks rather than concentrating them on a few songs. This strategy helped the scheme evade the platforms' fraud detection systems. In an email cited during the proceedings, Smith wrote that he needed "a TON of songs fast," underscoring his intent to scale the operation quickly.
Legal Proceedings and Sentencing
Smith pleaded guilty on 16 March to one count of conspiracy to commit wire fraud. He faced a maximum sentence of up to five years in prison. Prosecutors had recommended a sentence of at least 46 months, while Smith's defense requested probation, arguing that the losses were spread so widely that no individual artist suffered meaningful financial harm. The US Probation Office had recommended a 24-month sentence.
Judge Koeltl's sentence of 18 months fell below both the prosecution's recommendation and the probation office's guidance. The court also mandated the forfeiture of $8,091,843.64, representing the total royalties Smith collected through the fraudulent scheme.
Impact and Legal Implications
Prosecutors argued that the fake streams diluted the value of every legitimate stream counted during the same period, harming the broader music streaming ecosystem. The case did not treat the creation or release of AI-generated music as a crime; rather, it centered on the use of bots to fake listeners, which constitutes wire fraud. The reports did not specify when Smith must begin serving his sentence.
This landmark case marks a significant legal precedent, as it is the first criminal prosecution involving AI-music streaming fraud. The outcome signals that authorities are prepared to pursue individuals who exploit streaming platforms through artificial means, even when the underlying music is AI-generated. The forfeiture order ensures that Smith will not retain the illicit proceeds from his scheme.
