Michael Smith, a 54-year-old American musician living in North Carolina, has been sentenced to 18 months in prison for a music streaming fraud scheme. Between 2017 and 2024, he used automated accounts to stream his own tracks on Spotify, Apple Music, Amazon Music, and YouTube Music, using a catalog powered by artificial intelligence, spread across hundreds of thousands of titles.
Thousands of accounts to fabricate an audience
The scheme relied on a circular mechanism: supply the tracks, fabricate their listeners, then collect the associated royalties. According to reported investigation details, Smith created thousands of accounts with fake email addresses and fraudulently obtained bank card details. Software then played his tracks continuously, while VPN connections, i.e., virtual private networks, helped conceal this activity.
At certain times, up to 10,000 automated accounts were operating simultaneously. However, concentrating streams on a few songs would have produced easily detectable anomalies. Smith therefore sought to disperse the plays across a multitude of compositions, each displaying less spectacular activity. He partnered with a music promoter and the head of a company specializing in AI-generated music, whose names were not specified by the U.S. justice system. He purchased hundreds of thousands of tracks from this accomplice, which were then uploaded to the platforms.
An email dated October 4, 2018, sheds light on the intent: Smith demanded a considerable quantity of songs from his contacts, quickly, in order to circumvent anti-fraud policies. A comparison with Taylor Swift illustrates the scale of the system, provided its scope is respected. In April 2023, on YouTube Music and for streams from family subscriptions, her catalog totaled 9.3 million plays, compared to 80.9 million for the AI-generated tracks distributed via Smith’s automated accounts. The source clarifies this is not a comparison of their global audiences across all services.
Amounts claimed at sentencing
Smith himself assessed the yield of his setup. In a financial document sent to his own address in October 2017, he envisioned 52 cloud accounts each running 20 bots, totaling 1,040 bots, for an estimated total of 661,440 daily streams. Assuming a payout of $0.005 per stream, approximately €0.00445, he calculated around €2,946 per day, over €88,000 per month, and more than €1 million per year.
In February 2024, in another email, he claimed to his accomplices to have surpassed four billion streams and obtained $12 million in royalties since 2019. These royalties, paid to rights holders based on recorded streams, are distributed from a common pool: fake streams therefore divert a portion of the funds to the fraudster, to the detriment of musicians and rights holders whose works are genuinely listened to.
The U.S. Department of Justice press release mentions over $8 million obtained fraudulently, approximately €7.13 million. The ordered forfeiture amounts to $8,091,843.64, about €7.21 million. The defense sought a probation sentence, arguing that Smith had not personally retained all the funds and expressing deep remorse. His lawyers mentioned a job offer in audio production, mixing, mastering, and recording, paying $5,000 monthly, and argued that incarceration would delay owed payments. The prosecution emphasized the duration of the fraud, the concealment efforts, and lies told to investigators. Smith had pleaded guilty to conspiracy to commit wire fraud. His sentence also includes two years of supervised release.
