North Carolina musician gets 18 months for AI streaming fraud

Mike Smith, a 54-year-old musician and business owner from Cornelius, North Carolina, was sentenced to 18 months in prison for music streaming fraud. Judge John G. Koeltl imposed the sentence at federal court in Manhattan on 6 October. The prison term will be followed by two years of supervised release, the period of monitoring after release from custody.

Smith had pleaded guilty in March to one count of conspiracy to commit wire fraud. That charge carries a maximum sentence of five years in prison. Federal prosecutors had sought 46 months, more than double the sentence imposed, according to Rolling Stone.

He was the first person to face federal charges tied to music streaming fraud. Prosecutors alleged that between 2017 and 2024 he used automated software, known as bots, to play songs millions of times when no real listener had chosen them.

The case centred on an organised system of fake listening. Smith created thousands of accounts on streaming services, prosecutors said. Those accounts were then used to stream tracks on repeat, driving up play counts.

Many of the tracks were songs made with artificial intelligence. Smith bought AI-generated songs, uploaded them to streaming platforms as if they were normal releases, and then directed his bots at them. Each play generated royalties, the small per-stream payments that platforms pay out for music use.

Prosecutors said the method earned Smith $8 million in unearned royalties. The money would otherwise have gone into the shared royalty pool paid to artists and rights holders. As part of his plea deal, Smith agreed to forfeit $8 million.

The U.S. Attorney's Office for the Southern District of New York said the scheme defrauded both streaming platforms and working musicians of royalty payments. Former U.S. Attorney Damian Williams said Smith had fraudulently streamed songs created with artificial intelligence, according to the U.S. Attorney's Office.

What makes this stand out is the direct link between fake streams and real pay. Streaming services divide a fixed pot of subscription and advertising money. False plays take cash away from genuine listening.

Smith, who was 54 at the time of his guilty plea, is from Cornelius, a town north of Charlotte. He will serve his custodial sentence before beginning supervised release.