Musician Sentenced to 18 Months for $10 Million AI-Assisted Streaming Fraud

Musician Sentenced for Streaming Fraud

Michael Smith, a 54-year-old musician from North Carolina, has been sentenced to 18 months in prison for his involvement in a streaming royalty fraud scheme. Smith pleaded guilty in March 2024 after being indicted in September 2024. The scheme, which ran from 2017 to 2024, fraudulently collected over $10 million in royalties from major streaming platforms.

Details of the Fraudulent Operation

Smith's operation involved uploading hundreds of thousands of AI-generated songs, which he acquired from an accomplice, to platforms such as Spotify, Apple Music, Amazon Music, and YouTube Music. He then used automated AI bots to stream these tracks billions of times, artificially inflating listening statistics. To avoid detection by anti-fraud systems, the bots connected to streaming platforms using virtual private networks (VPNs).

At its peak, Smith utilized more than 1,000 bot accounts. An email from October 20, 2017, detailed his operation of 52 cloud service accounts, each with 20 bot accounts. He estimated each bot could stream approximately 636 songs per day, totaling around 661,440 streams daily. The bots were designed to continuously stream songs, with streams dispersed among many tracks to avoid raising red flags by targeting a single song.

Collaboration and Tools Used

Court documents indicate that Smith received assistance from the Chief Executive Officer of an AI music company and an unnamed music promoter. He also used fake email accounts and fraudulently obtained debit cards to create thousands of fraudulent accounts on the streaming services.

Significance of the Conviction

The US Department of Justice announced that Smith's case marks the first criminal conviction in the United States for AI-assisted streaming fraud. This highlights a new vector for financial crime within the digital music industry, where AI and automation are being exploited to manipulate royalty distribution.