Musician Charged in $10M AI Streaming Scam Pleads Not Guilty, Faces $500,000 Bail
A 52-year-old North Carolina musician, Michael Smith, has pleaded not guilty to charges related to an alleged $10 million streaming fraud scheme. The case, now underway in Manhattan, has resulted in a $500,000 bail set by US District Judge John Koeltl.
Man in suit at press conference
The US government's indictment alleges Smith created hundreds of thousands of AI-generated songs and used bots to generate billions of artificial streams. His alleged methods included:
- Creating fake email accounts
- Setting up fraudulent cloud service accounts
- Purchasing family plans on streaming platforms
- Using bots to generate 661,440 daily streams
- Targeting annual royalties of approximately $1.2 million
Spotify has confirmed that their platform represented less than 1% ($60,000) of the total fraudulent earnings, crediting their robust fraud detection systems. The streaming giant emphasized its investment in both automated and manual review processes to combat artificial streaming.
An unnamed streaming service (later identified as Spotify) detected and stopped royalty payments to Smith as early as 2019. The Mechanical Licensing Collective also identified irregularities and withheld associated royalty payments.
AI fraud legal verdict illustration
According to Beatdapp, a music streaming fraud detection platform that partners with Universal Music Group, streaming fraud costs artists approximately $2 billion in lost royalties annually. The platform recently began collaborating with the Mechanical Licensing Collective to enhance fraud detection capabilities.
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