Man Pleads Guilty to Using AI to Generate $8 Million in Fraudulent Streaming Music Royalties

A North Carolina man pleaded guilty Thursday to a federal charge tied to a scheme that used artificial intelligence and automated accounts to collect more than $8 million in music streaming royalties, according to the U.S. Department of Justice.

Michael Smith pleaded guilty to conspiracy to commit wire fraud in the Southern District of New York following a yearslong investigation. He agreed to forfeit the royalty payments and faces up to five years in prison.

“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” U.S. Attorney Jay Clayton said in a statement.

Sentencing is scheduled for July 29.

The case comes as AI-generated music tools have become widely available, allowing users to create songs with vocals, lyrics, and instrumentation from simple prompts. Platforms like Suno, Udio, and Google’s Lyria have accelerated production, making it possible to generate large catalogs of tracks at scale. At the same time, the technology has raised questions about copyright, ownership, and how streaming platforms handle AI-generated content.

In January, Rolling Stone reported that Smith had spent years pursuing a music career, including charting songs and working with industry collaborators, before investigators tied him to the scheme to manipulate streaming services.

Streaming services, including Spotify, Apple Music, Amazon Music, and YouTube Music, distribute royalty payments based on play counts, creating an incentive to inflate streams.

When he was first charged in September 2024, federal prosecutors said Smith had created thousands of accounts on streaming platforms to artificially play songs he owned, using software to generate roughly 661,440 streams per day and around $1.2 million in annual royalties. He was released on a $500,000 bond the following month.

“To obtain the necessary number of songs for his scheme to succeed, Smith turned to artificial intelligence, which he used to create hundreds of thousands of AI-generated songs for which he could manipulate the streams,” prosecutors said.

Rather than concentrate on a small number of tracks, Smith spread streams across a large catalog. Prosecutors said the approach was intended to avoid detection systems that flag irregular activity. The catalog included both his own recordings and hundreds of thousands of AI-generated tracks, allowing the operation to scale.

“Although the songs and listeners were fake, the millions of dollars Smith stole was real,” Clayton said. “Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud.”

Attorneys for Smith did not immediately respond to requests for comment by Decrypt.