A North Carolina man has pleaded guilty to orchestrating a massive AI-powered streaming fraud scheme—one that reportedly siphoned millions away from real artists and rights holders.
On 21 March, Michael Smith, 52, admitted to conspiracy to commit wire fraud as part of a deal with federal prosecutors in New York. Authorities say Smith generated thousands of AI-created songs and used automated bots to stream them billions of times across major platforms.
According to prosecutors, the scheme ran from 2017 to 2024, with Smith allegedly pulling in over US$10 million in royalties. At its peak, the operation generated up to 661,440 streams daily—translating to more than US$1 million in annual earnings.
US attorney Jay Clayton said in a statement: “Although the songs and listeners were fake, the millions of dollars Smith stole was real.” He added that the royalties were diverted from “real, deserving artists and rights holders.”
The case marks one of the first major prosecutions tied to AI-driven fraud in the music industry—highlighting growing concerns around how generative tech is reshaping (and potentially exploiting) streaming ecosystems.
Under the current streaming model, payouts are distributed from a shared revenue pool based on play counts. That means artificially inflated streams—especially at scale—can directly eat into earnings meant for legitimate musicians.
And the scale of AI music is only accelerating. Reports suggest tens of thousands of fully AI-generated tracks are uploaded daily, with some platforms struggling to distinguish between human and machine-made music. Tools like Suno, which reportedly generates millions of songs per day, have further blurred the line.
As one commentator online put it: “AI made the music and the audience.”
Beyond fraud, the issue has also sparked wider debate across the industry—from copyright protections to the future of artistry itself. Thousands of artists, including major global names, have already pushed back against proposals that would allow AI companies to train on copyrighted music without consent.
Smith now faces up to five years in prison and the forfeiture of over US$8 million when he is sentenced in July.
For many in the music community, the case is a wake-up call: in an era where streams equal income, the fight for authenticity just got a lot more complicated.
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