A man from North Carolina has admitted to orchestrating a massive fraud scheme that exploited music streaming platforms and fellow artists by uploading thousands of AI-generated tracks and using automated bots to inflate their play counts into the billions.
As part of a plea deal with federal prosecutors in New York’s southern district, 52-year-old Michael Smith pleaded guilty on Friday to conspiracy to commit wire fraud.
The case is among the first major successful prosecutions involving AI-driven fraud in the music industry, which is increasingly grappling with a surge of artificially generated content that threatens to overwhelm platforms and cut into earnings for genuine musicians and rights holders.
“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” US attorney Jay Clayton said in a statement.
“Although the songs and listeners were fake, the millions of dollars Smith stole was real. 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.”
Smith was initially charged in September 2024 with fraudulently securing more than $10 million in royalty payments. Between 2017 and 2024, he allegedly generated up to 661,440 streams per day, earning over $1 million annually in royalties.
Then US attorney Damian Williams said the defendant had stolen “millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed” and it was “time for Smith to face the music”.
Following news of the plea deal, an X user known as Tuki remarked that Smith had used “AI make the music AND the audience” and earned $1.2 million annually “for music no human ever actually listened to”. The user added that the industry now has “to fight songs that don’t exist being listened to by people who don’t exist”.
Under the terms of the agreement, Smith faces up to five years in prison and must forfeit $8,091,843.64 when he is sentenced in July.
The case underscores a growing concern within the music industry, which had only recently recovered from the piracy crisis of the early 2000s, only to now face a new threat from AI-generated music on platforms like Amazon Music, Apple Music, Spotify, and YouTube Music.
Streaming services typically distribute revenue based on the number of plays a track receives, a system long criticized by artists for favoring only top performers. The rise of AI-generated content—and schemes to artificially boost streams—further diverts revenue away from legitimate creators.
In the UK, the government recently dropped plans to allow AI firms to use copyrighted content without permission, following strong opposition from artists including Elton John, Dua Lipa, and Paul McCartney.
The debate over generative AI in music has also drawn attention to companies like Suno, which reportedly has around 2 million users and allows people to create music using AI—raising concerns about its impact on creativity and originality.
French streaming platform Deezer estimates that 97% of listeners cannot distinguish between human-made and AI-generated music, with around 60,000 fully AI-created tracks being uploaded daily.
According to Billboard, Suno is generating approximately 7 million songs per day—enough to match the size of an entire streaming catalog every two weeks. While much of this content resembles human-made music, critics argue it often lacks originality and artistic depth.
Suno CEO Paul Sinclair acknowledged the dilemma in an interview earlier this month: “Truly, every single day I’m conflicted,” he is quoted as saying. “This s–t is complicated … I want to make sure there’s whole future generations of the beauty of art and music and the ability to build careers around it.”
