Artist Indicted in $10 Million AI Music Streaming Fraud that Spanned Years
A North Carolina musician is facing criminal charges for orchestrating a $10 million streaming fraud scheme using AI-generated tracks across major platforms including Spotify, Amazon Music, Apple Music, and YouTube Music from 2017 to 2024.
The defendant, Michael Smith, allegedly partnered with an AI music company in 2018 to create thousands of tracks. He then developed an extensive network of bot accounts, particularly targeting Family plans, to artificially inflate streaming numbers.
AI fraud indictment legal document
Key details of the alleged scheme:
- Created over 1,040 bot accounts across 52 cloud services
- Generated approximately 661,440 streams per day
- Expected daily royalties of $3,307.20
- Transferred $1.3 million in fraudulent royalties between 2020-2023
- Used fake employee names to obtain corporate debit cards for subscription payments
- Collected both recording and compositional royalties until detection
The scheme was eventually discovered by the Mechanical Licensing Collective, which halted royalty payments in early 2023. While creating AI music itself is legal, Smith faces charges of wire fraud and money laundering conspiracy due to the alleged use of bots and fraudulent streaming practices.
Blurred businessman in dark suit
This marks the first criminal case involving artificially inflated music streaming, highlighting growing concerns about fraud in the digital music industry. The case continues to develop as Smith pleads not guilty and faces $500,000 bail.
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