Michael Smith, a 54-year-old North Carolina man whom federal prosecutors accused of defrauding music-streaming services with AI-generated songs, pleaded guilty to one count of conspiracy to commit wire fraud on Thursday before U.S. District Judge John G. Koeltl. The charge carries a maximum sentence of five years in prison. Smith agreed to pay $8,091,843.64 in forfeiture. Judge Koeltl will sentence Smith in full this summer.
In the plea, Smith admitted to creating hundreds of thousands of songs using AI and, in turn, using thousands of bots to stream the songs billions of times, the way average consumers would, to make an income. By spreading the streams across thousands of accounts, he was able to evade detection by streaming services such as Amazon Music, Apple Music, Spotify, and YouTube Music. Ultimately, Smith acquired more than $8 million in royalties.
“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” Jay Clayton, a U.S. attorney for the Southern District of New York, said in a statement. “Although the songs and listeners were fake, the millions of dollars Smith stole was real. Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud.” (An attorney for Smith, Noell Tin, declined to comment.)
A letter from the Department of Justice indicated that in addition to forfeiting his earnings and the maximum prison sentence, he could also be sentenced to three years’ supervised release and a maximum fine of $250,000. Sentencing is scheduled for July 29. The DOJ said it would not prosecute Smith further, but that it would consider tax violations between 2017 and 2024 should it discover them.
A Rolling Stone investigation into Smith revealed he was using 1,040 accounts, which would each stream around 636 of his AI-generated songs a day. That added up to 661,440 streams a day, potentially earning him $3,307.20 a day, $99,216 a month, and more than $1.2 million a year. “Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed,” U.S. Attorney Damian Williams commented when Smith was indicted.
