Michael Smith, a North Carolina-based musician, received an 18-month federal prison sentence for orchestrating a large-scale royalty fraud operation across Spotify, Apple Music, Amazon Music, and YouTube Music. Smith, 54, entered a guilty plea in March following his indictment in September 2024. The scheme, which ran from 2017 through 2024, involved artificially inflating streaming numbers for his music through fraudulent means.
Court filings reveal that Smith collaborated with the chief executive of an AI music company and an unnamed music promoter to execute the fraud. The operation centered on uploading hundreds of thousands of AI-generated songs—purchased from an accomplice—to streaming services. Smith then deployed automated AI bots to generate billions of artificial streams of these tracks. To evade the platforms' fraud detection mechanisms, the bots connected through virtual private networks (VPNs).
At its height, the scheme employed more than 1,000 bot accounts. A detailed breakdown from October 20, 2017, showed Smith operating 52 cloud service accounts, each containing 20 bot accounts. His calculations indicated each bot could generate approximately 636 streams daily across songs, totaling roughly 661,440 streams per day. With an average royalty rate of half a cent per stream, daily earnings reached $3,307.20, translating to approximately $99,216 monthly and exceeding $1.2 million annually.
As streaming platforms strengthened their anti-fraud defenses, Smith adapted his approach. In an October 4, 2018 email to accomplices, he wrote: "we need to get a TON of songs fast to make this work around the anti fraud policies these guys are all using now." He continued, explaining they needed "a TON of content with small amounts of Streams" to avoid triggering alerts "with the powers that be."
The scope of the fraud became apparent through comparative analysis. In April 2023, Taylor Swift's entire music catalogue received 9.3 million streams on YouTube Music through family plan accounts. During that same month, Smith's bot accounts fraudulently generated 80.9 million streams of his AI-created music using family plans. By February 2024, Smith boasted to associates that his songs had accumulated "over 4 billion streams and $12 million in royalties since 2019."
U.S. Attorney Jamie McDonald characterized the operation in stark terms: "By flooding music streaming platforms with automated bots in the place of consumers, and fake songs in the place of creativity, Smith robbed millions in royalty payments from genuine artists and their fans."
Beyond the prison sentence, Smith was ordered to forfeit $8,091,843.64 and faces an additional two years of supervised release following his incarceration.