Recommendations of the Editorial team
Michael Smith, a 54-year-old North Carolina man who federal prosecutors accused of defrauding music streaming services with AI-generated songs, pleaded guilty Thursday before U.S. Federal Judge John G. Koeltl to one count of conspiracy to commit wire fraud. The maximum penalty for this charge is five years in prison. Smith agreed to forfeit $8,091,843.64. Judge Koeltl will announce the final sentence this summer.
In his guilty plea, Smith admitted to using AI to create hundreds of thousands of songs and then using thousands of bots to stream those songs billions of times, just like regular users would, to generate income. By distributing the streams across thousands of accounts, he was able to avoid detection by streaming services such as Amazon Music, Apple Music, Spotify and YouTube Music. The bottom line is that Smith collected more than $8 million in royalties.
“Michael Smith produced thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” said Jay Clayton, U.S. Attorney for the Southern District of New York, in a statement. “The songs and listeners may have been fake – but the millions of dollars Smith stole were not. Millions of dollars in royalties Smith stole from real, bona fide artists and rights holders. Smith’s brazen scheme is history; he now stands as a convicted federal felon who committed AI-powered fraud.” (Smith’s attorney, Noell Tin, declined to comment.)
Threatening punishment and tax violations
A letter from the Justice Department indicates that in addition to forfeiture of his earnings and the maximum sentence, Smith could also be sentenced to three years of probation and a maximum fine of $250,000. The sentencing is scheduled for July 29th. The Justice Department said it would not prosecute Smith, but reserved the right to prosecute any tax violations between 2017 and 2024 if they came to light.
Research by ROLLING STONE revealed that Smith used 1,040 accounts, each of which streamed around 636 of his AI-generated songs every day. That added up to 661,440 streams per day – potentially earning him $3,307.20 daily, $99,216 monthly, and over $1.2 million a year. “Smith stole millions in royalties that would have been due to musicians, songwriters and other rights holders whose songs were legally streamed,” U.S. Attorney Damian Williams said when Smith was charged.
