A North Carolina man has pleaded guilty in the first U.S. criminal case involving AI-assisted music streaming fraud, the Department of Justice announced last week.

The Scheme

Michael Smith used AI tools to generate approximately 660,000 songs between 2017 and 2024. He uploaded the tracks to major streaming platforms — including Spotify, Apple Music, and YouTube Music — and deployed thousands of bots to stream them over one billion times, accumulating more than $8 million in fraudulent royalties.

The exact forfeiture amount agreed to in the plea was $8,091,843.64.

How It Worked

The scam exploited how streaming royalties are distributed: platforms pay rights holders a small fee per stream, typically fractions of a cent. By generating vast volumes of disposable AI tracks and automating playback at scale, Smith siphoned a meaningful share of the total royalty pool that would otherwise go to legitimate artists.

Platforms like Spotify distribute hundreds of millions of dollars monthly to rights holders. When bots inflate stream counts artificially, real artists receive proportionally less.

Charges and Sentencing

Smith faces up to five years in federal prison. Sentencing is scheduled for later this summer. The DOJ's decision to charge him criminally — rather than pursue civil remedies — signals a tougher enforcement posture as AI music generation becomes increasingly accessible.

The case sets a legal precedent for prosecuting AI-enabled royalty fraud, which the music industry has flagged as a growing problem since generative audio tools became widely available in 2023.