Create music tracks and even listeners with AI and earn 8 million: there is the world's first case of fraud in streaming with Artificial Intelligence

A musician from North Carolina has admitted to stealing $8 million in royalties by orchestrating fake streams of songs generated with artificial intelligence. This is the first criminal case for streaming fraud initiated by U.S. prosecutors, a precedent that shakes the entire music industry.

On Thursday, March 19, in a federal court in New York, 54-year-old Michael Smith pleaded guilty to one count of conspiracy to commit wire fraud. He accepted the forfeiture of the $8 million in illicit profits and faces up to five years in prison. He is currently out on $500,000 bail awaiting sentencing set for July; his attorney declined to comment.

The scheme, which began in 2017 and culminated in the arrest in 2024, involved the use of thousands of bots to continuously stream the man's songs on platforms like Spotify, Amazon Music, Apple Music, and YouTube Music. Initially, Smith focused on a limited catalog of music composed by humans, before heavily resorting to AI systems to multiply monetizable content.

“Smith generated thousands of fake songs using AI and then streamed those same songs billions of times,” publicly stated the top federal prosecutor in Manhattan, U.S. Attorney Jay Clayton. “Although the songs and listeners were fake, the millions of dollars that Smith stole were real. Millions of dollars in royalties that Smith took from deserving artists and rightful rights holders.”

By the end of 2018, Smith began a collaboration with the CEO of an AI-based music company to increase the production of the fabricated songs, promising to split the proceeds and guaranteeing the counterpart the greater of $2,000 a month or 15% of monthly revenue. Although not named in the filings, in 2024 Billboard reported that hundreds of Smith's songs listed Alex Mitchell, CEO and founder of the AI music platform Boomy, as a co-writer. At the time, Mitchell said he was “shocked,” claiming that Smith had always presented himself as “a legitimate person.” To date, Mitchell has not been charged with any crime.

The indictment, however, identifies Smith's IA partner as "CC-3", an abbreviation for "co-conspirator" often used in legal contexts to designate someone who collaborates with prosecutors in exchange for immunity. A representative of Boomy did not immediately respond to a request for comment.

The scheme collapsed in 2023, when the artificial flows were intercepted by the fraud detection systems of the platforms and by the Mechanical Licensing Collective (MLC), the body officially designated by the U.S. Copyright Office for the collection and distribution of digital royalties. In a statement, the MLC stated that Smith's guilt "highlights the serious threat that streaming fraud poses to the music industry and the important role that the MLC plays in addressing it."