US man pleads guilty to defrauding music streamers out of millions using AI

A North Carolina man has pleaded guilty to defrauding music streaming platforms and his fellow musicians out of millions in royalties by flooding the services with thousands of AI-generated songs – and using automated “bots” to artificially boost the number of listens into the billions.As part of a deal with federal prosecutors in New York’s southern district, 52-year-old Michael Smith pleaded guilty on Friday to conspiracy to commit wire fraud.The case against the Cornelius, North Carolina, resident is one of the first successful prosecutions of AI-related fraud in the music business, which is being hammered by fake music that threatens to swamp streaming services and deprive earnings from legitimately human musicians and copyright holders.“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” US attorney Jay Clayton 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.”Smith was charged in September 2024 with fraudulently obtaining more than $10m in royalty payments by amassing as many as 661,440 streams daily between 2017 and 2024, yielding annual royalties of $1,027,128.Then US attorney Damian Williams said the defendant had stolen “millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed” and it was “time for Smith to face the music”.As one X commentator by the handle of Tuki pointed out after the plea deal was announced, Smith had used “AI make the music AND the audience” and had made $1.2m a year “for music no human ever actually listened to”. Musicians and the music industry, the X user added, now has “to fight songs that don’t exist being listened to by people who don’t exist”.Under the terms of his plea agreement, Smith now faces up to five years in prison and the forfeiture of $8,091,843.64 when he is sentenced in July.The case against Smith highlights a growing problem for the music industry that had largely recovered from the Napster music piracy era of the early 2000s only to be faced with an AI-based threat to revenue from music streaming platforms such as Amazon Music, Apple Music, Spotify and YouTube Music.Under their business model, which musicians have long complained results in subsistence earnings except for a few big stars, they are recompensed from a pool of funds proportionate to their streams. But AI-generated music – and AI-related schemes to boost plays – diverts funds from musicians and songwriters whose songs were legitimately streamed by real consumers.The UK government recently abandoned plans to allow AI companies to use copyrighted works without permission, a proposal strongly opposed by thousands of artists, including Elton John, Dua Lipa and Paul McCartney.The issue of generative AI music has placed a spotlight on Suno, a company with 2 million subscribers that allows users to turn out AI-generated music that is disrupting the act of creation.The French streaming service Deezer suggests that 97% of people cannot differentiate between human-generated music and that made by AI – including the now-60,000 fully AI-generated tracks delivered to the service daily.According to the US trade publication Billboard, Suno generates 7m songs a day, which equates to a streamers’ entire catalog of music every two weeks. Much of the output is passably similar to existing, human-composed music but like most AI production reads as mass-produced without artistic risk or depth.Suno’s chief executive, Paul Sinclair, told Billboard earlier in March that he was conflicted. “Truly, every single day I’m conflicted,” he is quoted as saying. “This s–t is complicated … I want to make sure there’s whole future generations of the beauty of art and music and the ability to build careers around it.”