A North Carolina musician has been charged with using artificial intelligence (AI) and thousands of bots to fraudulently generate more than $10 million (£8.2m) in streaming royalties.
Prosecutors describe the case as the first of its kind involving AI-generated music and automated fake streams.
Michael Smith, 52, of Cornelius, has been indicted on three counts: wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. If convicted, he faces up to 20 years in prison on each charge.
US Attorney Damian Williams said Smith’s “brazen fraud scheme” stole royalties that should have gone to legitimate artists and songwriters. The FBI, which helped investigate the case, said it was committed to “plucking out those who manipulate technology for illicit profits.”
How the alleged scheme worked
According to the indictment, Smith began the operation in 2017 after partnering with the head of an unnamed AI music company. The pair allegedly produced hundreds of thousands of synthetic songs, created by AI tools and uploaded to streaming platforms such as Spotify, Apple Music and Amazon Music.
Using up to 10,000 automated accounts, Smith is accused of streaming these tracks billions of times to generate royalties. To avoid detection, he allegedly spread activity across multiple services, used randomised artist names like Calm Identity and Zygotic Washstands, and ensured no single track appeared unusually popular.
In one 2019 email quoted in court documents, the AI company executive described their work as “instant music ;)”, implying the tracks required little to no human input.
By early 2024, Smith reportedly claimed his catalogue had “generated over 4 billion streams and $12 million in royalties since 2019.”
Verified details and ongoing allegations
The US Department of Justice (DOJ) confirmed the charges in September 2024, describing the case as the first criminal prosecution of AI-enabled streaming fraud.
Spotify later clarified that its platform accounted for “less than 1%” of the alleged proceeds, roughly $60,000, suggesting most of the activity took place elsewhere.
Other details, including the identity of Smith’s alleged co-conspirator, remain sealed or unverified while the case proceeds through court.
Industry faces growing threat
Artificial streaming, the use of bots or fake accounts to inflate play counts, has long been a problem in the $20 billion global streaming market. But experts say AI has made it far easier for fraudsters to scale up.
Deezer estimates that up to 18% of new uploads each day are now AI-generated. Analysts warn that fraudulent activity can divert hundreds of millions of dollars each year from legitimate artists, while also skewing recommendation algorithms and audience data.
“Every time fake streams are created, real artists lose visibility and income,” said Morgan Hayduk, co-founder of the anti-fraud firm Beatdapp.
Platforms fight back
Streaming companies have begun tightening their systems to detect and deter fake activity. Spotify introduced new royalty rules in April 2025, penalising distributors found to have artificially inflated streams.
Deezer has implemented a cap limiting how many plays per user count towards royalties, a measure designed to neutralise looping bots.
Industry coalitions such as the Music Fights Fraud Alliance, which includes Spotify, SoundCloud and TuneCore, are now sharing data to identify streaming farms worldwide.
A warning for the AI age
Smith has not yet entered a plea. His case is being closely watched by the music and tech industries, both of which are wrestling with how to balance innovation and integrity in the age of AI.
“The case could set a precedent for how authorities respond to AI-driven financial crimes,” said a spokesperson for the DOJ.
As US Attorney Damian Williams noted:
“Through his fraud scheme, Smith stole millions in royalties that should have gone to genuine artists. He will now face the music.”
