A North Carolina man has agreed to pay more than $8 million after pleading guilty in the first criminal music streaming fraud case brought by law enforcement.
The FBI first indicted Mike Smith in 2024, accusing him of using an artificial intelligence music generator to help him create scores of songs that were played millions of times through bots linked to thousands of accounts Smith had established. Smith made millions from his fraudulent live streams, stealing royalties from legitimate artists in the royalty pool.
More from The Hollywood Reporter
Smith pleaded guilty to one count of conspiracy to commit wire fraud, which carries a maximum penalty of five years in prison, the U.S. Attorney’s Office for the Southern District of New York said. Smith will also give back nearly $8.1 million he earned.
“Smith’s brazen scheme has come to an end when he was convicted of federal crimes for AI-assisted fraud,” U.S. Attorney Jay Clayton said in a statement Thursday.
Streaming fraud has been a rampant problem in the music industry for years, and artificial intelligence has only exacerbated the problem as fraudsters can quickly generate thousands of songs to flood streaming services like Spotify and Apple Music. French music streaming service Deezer previously reported that 60,000 AI-powered songs are uploaded to its platform every day, further stating that up to 85% of these tracks streamed are fraudulent.
as hollywood reporter It was exclusively reported in February that Apple Music was doubling penalties for those caught engaging in streaming fraud, with the company citing the impact of artificial intelligence on fraud as a factor in the decision.
Hollywood Reporter Picks
Sign up for the THR newsletter. For the latest news, follow us on Facebook, Twitter and Instagram.