Michael Smith gets 18 months for AI-assisted music streaming fraud

On Oct. 6, a federal judge sentenced Michael Smith to 18 months in prison after he pleaded guilty to a wire-fraud conspiracy that paired automated streaming accounts with a large catalog of AI-generated music.

U.S. District Judge John G. Koeltl also imposed two years of supervised release and ordered Smith to forfeit $8,091,843.64. Prosecutors said the scheme generated more than $8 million in fraudulent streaming royalties.

Smith admitted operating the scheme from 2017 through 2024. He created thousands of fraudulent accounts and used software and cloud computers to keep them continuously playing music he controlled, according to the government’s sentencing submission. At some points, as many as 10,000 bot accounts were active.

The operation began by streaming Smith’s own catalog and later expanded to hundreds of thousands of AI-generated songs. Spreading billions of automated plays across that volume of tracks kept any one song from accumulating an unusually conspicuous number of streams, helping the operation work around anti-fraud controls.

The scheme exploited the way streaming services and music-rights organizations allocate pooled royalties based partly on reported plays. Automated streams increased the share attributed to Smith’s catalog, diverting money that otherwise would have been allocated according to listening by genuine users.

Government records say Smith’s bots generated 80.9 million YouTube Music family-plan streams in April 2023, compared with 9.3 million family-plan streams for Taylor Swift’s entire catalog.

The conviction did not establish that generating or uploading AI music is itself illegal. Smith’s lawyers argued in a sentencing filing that using AI to make songs and place them on streaming platforms is not inherently unlawful. The admitted crime was the conspiracy to obtain royalty payments through deceptive automated streaming.

The streaming case is distinct from a recent federal AI-server smuggling prosecution involving alleged export-control violations. Smith’s conviction concerned fraudulent royalty payments, not restrictions on computing hardware.

The public filings use several financial measures. The 2024 charging announcement alleged more than $10 million in royalty payments, while the government later said royalty-paying entities sent Smith more than $14 million in total. The government said the parties agreed on an approximate loss of $8,091,843.64 after adjustments for estimated organic streams and subscription payments; the court ordered forfeiture in the same amount.

Smith pleaded guilty on March 19 to one count of conspiracy to commit wire fraud. The Justice Department described the prosecution as its first criminal case involving artificially inflated music streaming and its first criminally charged AI-assisted music-streaming fraud case.