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What This Case Really Exposed

• Michael Smith received 18 months in federal prison after admitting his bot network generated billions of fraudulent music streams and more than $8 million in royalties.
• At one point, Smith operated as many as 10,000 fake streaming accounts while spreading the activity across hundreds of thousands of AI-generated songs to avoid detection.
• The case draws an important legal line — creating music with AI was not the crime; manufacturing fake listeners to obtain real royalty money was.

Michael Smith found a way to manufacture something the music business normally has to earn — an audience.

The North Carolina musician was sentenced Tuesday to 18 months in federal prison after admitting that he used thousands of automated accounts to repeatedly stream music he controlled, ultimately collecting more than $8 million in royalty payments. U.S. District Judge John G. Koeltl also imposed two years of supervised release and ordered Smith to forfeit $8,091,843.64.

The scheme ran from 2017 through 2024.

Smith created thousands of fake streaming accounts, sometimes operating as many as 10,000 simultaneously. Software controlled those accounts and continuously played songs Smith owned. Fake email addresses and fraudulently obtained debit cards helped create and maintain the accounts.

But running thousands of bots created another problem: Smith needed enough music to spread the fake plays around.

A single unknown song suddenly receiving hundreds of millions of streams would attract attention. Thousands of songs receiving smaller numbers were harder to spot.

That is where AI became useful.

Smith obtained hundreds of thousands of AI-generated tracks and distributed the automated streams across them. An email cited in the original indictment captured the strategy plainly — Smith said he needed a “TON of songs fast” to work around streaming platforms' anti-fraud systems.

The scale eventually became extraordinary.

Federal prosecutors said that during April 2023, Smith's catalog generated 80.9 million YouTube Music streams from family-plan accounts. Taylor Swift's entire catalog generated 9.3 million streams within that same category that month.

That comparison matters because streaming royalties are not simply money created every time someone presses play. Platforms distribute pools of royalty money based, in part, on listening activity. Fraudulent streams can therefore increase one participant's share while reducing what remains available for legitimate artists, songwriters and other rights holders.

And that is what makes this case bigger than another AI controversy.

AI music itself was not what sent Smith to prison.

During Tuesday's sentencing, Koeltl specifically questioned the defense about that distinction. When Smith's lawyers discussed uncertainty surrounding AI-generated music, the judge focused instead on fake views created by bots, later observing that the prosecution was not targeting Smith's use of AI itself.

That distinction could become increasingly important as AI-created songs multiply across streaming services. A person can use AI as a production tool without committing fraud. Creating thousands of fictitious customers, disguising automated activity as genuine listening and collecting payments generated by those false representations is a very different matter.

Smith pleaded guilty in March to conspiracy to commit wire fraud. Prosecutors sought at least 46 months, the bottom of a reported 46-to-57-month guideline range. Federal probation recommended 24 months, while Smith's lawyers sought probation without incarceration. Koeltl ultimately imposed 18 months, reportedly finding the guideline calculation somewhat inflated while still concluding imprisonment was warranted.

Smith's operation exposed a weakness that will outlive his case.

AI can generate practically unlimited content. Bots can generate practically unlimited consumption. Put the two together inside a payment system that assumes a stream represents a human listener, and fraud can be scaled in ways the music industry's old safeguards were never designed to handle.

About the Author

Samuel López is a reporter and news correspondent for USA Herald who has reported for the publication since 2022. He is also a seasoned legal analyst with more than two decades of experience examining state and federal litigation, complex fraud matters, regulatory disputes and emerging technology issues. His reporting frequently focuses on where new technology collides with established law, enforcement and financial systems.

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