A North Carolina man has been sentenced to 18 months in prison after using artificial intelligence and automated streaming bots to fraudulently collect more than $8 million in music royalties.

Michael Smith, 54, has been sentenced in a New York federal court after pleading guilty to conspiracy to commit wire fraud in a scheme involving artificially generated music and fraudulent streaming activity. Authorities said Smith manipulated streaming platforms, including Spotify and Apple Music, to generate millions of dollars in royalty payments from music that was not being played by genuine listeners. The case marks the first criminal conviction of its kind involving music streaming fraud in the United States.

Investigators found that Smith initially used automated programs to increase the number of plays received by his own music before expanding the operation with AI-generated tracks. By uploading large quantities of artificial music and directing bots to repeatedly stream the recordings, he was able to accumulate billions of fraudulent plays. Although individual streams typically generate only a fraction of a cent in royalties, the enormous volume of fabricated listening activity allowed the scheme to produce substantial revenue.

During sentencing proceedings, Smith’s defence lawyers argued that imprisonment was unnecessary because the financial impact on individual musicians was minimal. Federal prosecutors disagreed and maintained that the operation diverted royalty payments from legitimate artists, songwriters, and other music industry participants. Prosecutors requested a prison term of at least three years, arguing that a substantial sentence was necessary to discourage similar schemes. The court ultimately imposed an 18-month sentence with Smith agreeing to forfeit the $8 million obtained through the operation.

The conviction comes amid growing concerns about the use of artificial intelligence to manipulate digital music services. Streaming fraud has existed for years, but generative AI has made it easier to produce large volumes of recordings that can be uploaded and played automatically. Music streaming service Deezer has reported receiving approximately 90,000 AI-generated tracks daily, illustrating the scale of the challenge facing platforms attempting to distinguish legitimate listening activity from artificial engagement.

The Recording Industry Association of America welcomed Smith’s conviction, emphasizing the financial damage that fraudulent streaming can cause to legitimate creators. Industry estimates have suggested that manipulated streaming activity could cost the music business as much as $2.2 billion annually, increasing pressure on platforms to strengthen fraud detection and royalty protections.

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Originally published on Canadian Fraud News.