AI Music Fraud Shakes Streaming Industry as North Carolina Man Sentenced Over $8 Million Scheme

A North Carolina man has been sentenced to 18 months in federal prison for using thousands of automated bot accounts to stream artificial intelligence-generated songs billions of times, fraudulently collecting more than $8 million in royalties in a case prosecutors describe as the US Justice Department’s first criminal prosecution of AI-assisted music streaming fraud.

Michael Smith, 54, of Cornelius, North Carolina, pleaded guilty to conspiracy to commit wire fraud after operating the scheme between 2017 and 2024. Alongside his prison sentence, he was ordered to serve two years of supervised release and forfeit $8,091,843.64 in illicit proceeds.

According to federal prosecutors, Smith created hundreds of thousands of songs using AI technology and established thousands of fraudulent accounts on major streaming platforms, including Spotify, Apple Music, Amazon Music and YouTube Music. He then used automated software to play the tracks repeatedly, generating artificial streaming activity that appeared to come from genuine listeners.

At times, Smith operated as many as 10,000 bot accounts simultaneously. He distributed the streams across thousands of songs to avoid triggering the platforms’ fraud-detection systems, while using fake email accounts and fraudulently obtained debit cards to create the accounts.

The scale of the operation became particularly striking in April 2023. Prosecutors said Smith’s bot accounts generated 80.9 million streams of his AI-generated music through YouTube Music family plans that month. By comparison, Taylor Swift’s entire catalogue received 9.3 million streams through the same type of plan during the same period.

The figures illustrate how automated activity can distort streaming statistics and divert royalty payments away from artists whose music is played by real audiences. Streaming platforms distribute royalties through systems that allocate payments according to listening activity, creating opportunities for fraudsters to exploit the model.

Federal prosecutors said Smith’s scheme generated more than $8 million in fraudulent royalties. The case highlights growing concerns about the potential misuse of AI tools, which can produce enormous quantities of music at relatively low cost and allow bad actors to manufacture artificial demand.

The sentence marks a significant development in efforts to tackle fraud involving AI-generated content. As the technology becomes more accessible, music platforms face mounting pressure to strengthen verification systems, detect suspicious listening patterns and protect legitimate artists.

The case also raises broader questions about accountability in an industry increasingly shaped by automation. While AI is opening new creative possibilities, prosecutors’ action sends a clear warning that technology does not place fraudulent conduct beyond the reach of the law.