Court jails Michael Smith over $8M AI music streaming scam

A federal court has sentenced 54-year-old Michael Smith of North Carolina to 18 months in prison for running a massive, AI-driven music streaming scheme. Smith, who must also forfeit $8,091,843.64, represents the first person criminally prosecuted in the United States for AI-assisted streaming fraud. Over a seven-year period starting in 2017, Smith utilized thousands of automated bot accounts to continuously stream hundreds of thousands of AI-generated tracks that he claimed to own, successfully siphoning millions of dollars in royalties before his arrest in 2024.

To execute the scam, Smith set up fake email addresses and used fraudulently obtained debit cards to establish bot accounts on major platforms, including Amazon Music, Apple Music, Spotify, and YouTube Music. He then deployed specialized software to distribute billions of automated streams across his vast catalog of AI-generated songs. This distribution prevented streaming platforms from detecting the fraud, as no single track raised immediate red flags. At its peak in April 2023, Smith's automated network generated 80.9 million streams in a single month, vastly outperforming Taylor Swift's entire catalog, which received 9.3 million streams during the same period.

Smith's legal team argued against prison time, requesting probation so he could accept a $5,000-per-month audio production job to help pay back the forfeiture. His lawyers claimed the Department of Justice was making an example of him to address the "ills of an industry" and noted he did not pocket the entire $8 million. However, prosecutors successfully argued that Smith deserved prison time because he escalated his deceptive tactics, lied to law enforcement when confronted, and needed to face a sentence that would deter others from similar schemes.

For digital music practitioners, AI developers, and streaming platforms, this landmark case signals a major shift in how streaming manipulation is policed. Platforms are likely to implement stricter verification protocols for creators and automated detection systems to safeguard royalty pools, which are shared among all artists. Because Smith's artificial streams directly reduced the payouts available to genuine musicians, the prosecution establishes a legal precedent that treats digital stream manipulation as a serious criminal offense rather than a mere terms-of-service violation.