Michael Smith has been sentenced to 18 months in prison for a streaming fraud scheme that prosecutors say brought him more than USD $8 million in royalties.
US District Judge John G. Koeltl handed down the sentence in Manhattan federal court on Tuesday (October 6), the US Attorney’s Office for the Southern District of New York announced.
Smith, 54, of Cornelius, North Carolina, pleaded guilty in March to one count of conspiracy to commit wire fraud.
Global recorded music trade body IFPI said in a statement today (October 7): “This result sends a clear message that streaming fraud is a crime and has serious consequences. But enforcement is only one part of tackling streaming fraud – we also need to prevent, detect and disrupt fraudulent activity.
“The global music industry is collectively doing just that through the Streaming Integrity Initiative which protects artists, rightsholders and fans and strengthens trust in streaming.”
According to prosecutors, between 2017 and 2024 Smith used thousands of fake accounts on services including Spotify, Apple Music, Amazon Music, and YouTube Music to stream hundreds of thousands of AI-generated songs billions of times.
In one example cited by prosecutors, Taylor Swift‘s entire catalog received 9.3 million family-plan streams on YouTube Music in April 2023, while Smith‘s bot accounts used family plans to stream his AI-generated music 80.9 million times in the same month.
Judge Koeltl also ordered Smith to forfeit USD $8,091,843.64, the loss figure agreed by both sides.
He will spend two years under court supervision after his release.
The 18-month term is less than half what prosecutors sought, and shorter than the US Probation Office‘s recommendation.
Prosecutors had asked for at least 46 months, the low end of the 46-to-57-month range set by federal sentencing guidelines, as MBW reported.
The US Probation Office had recommended 24 months. Smith‘s lawyers had asked for probation, with no prison time.
Prosecutors and the defense have both described the case as the first criminal prosecution of its kind in the US.
In a letter to the court cited by prosecutors, the Music Fights Fraud Alliance (MFFA) argued that “the sentence the Court imposes will serve as the first real signal to the public regarding the actual legal consequences of streaming fraud.”
“If the public is watching this case, as the defendant claims, a lenient sentence will send precisely the wrong message: streaming fraud will not result in meaningful punishment,” the US Attorney’s Office wrote in its own sentencing letter.
“Michael Smith exploited super intelligence technology to generate a fraud,” US Attorney Jamie McDonald said on Tuesday. “By flooding music streaming platforms with automated bots in the place of consumers, and fake songs in the place of creativity, Smith robbed millions in royalty payments from genuine artists and their fans.
“By flooding music streaming platforms with automated bots in the place of consumers, and fake songs in the place of creativity, Smith robbed millions in royalty payments from genuine artists and their fans.”
Jamie McDonald, US Attorney
“This Office is committed to ensuring the integrity of all markets, and protecting the public from those who use super intelligence for fraud.”
When Smith pleaded guilty in March, the same office’s announcement, issued under then-US Attorney Jay Clayton, referred to “artificial intelligence” throughout.
The sentence came four days after Smith‘s lawyers made a last written case for probation, in a letter to Judge Koeltl dated October 2.
The three-page letter, signed by Justine A. Harris of Harris Trzaskoma LLP and Noell P. Tin of Tin Fulton Walker & Owen, can be read in full here.
Smith has argued that a music industry lawyer he consulted told him that, at worst, his conduct would lead to civil penalties.
Prosecutors cast doubt on that claim, saying they believe the same lawyer emailed The Mechanical Licensing Collective (The MLC) in March 2023 insisting none of Smith‘s works were computer-generated.
Either Smith hid the facts from the lawyer, prosecutors argued, or the lawyer “affirmatively lied to the MLC.”
According to the defense letter, disclosures prosecutors made to Smith‘s lawyers in August 2025 show that at least one witness confirmed the lawyer “100% knew that Smith was manipulating streams” and even had computers in his office “with bots running.”
The letter also argues that “it is not inherently unlawful to use AI to create songs and place those songs on streaming platforms,” citing a September 2025 Spotify statement that for royalty purposes “all music is treated equally, regardless of the tools used to make it.”
According to the government’s sentencing letter, Smith received more than USD $14 million in total from royalty-paying entities.
The agreed loss was calculated by deducting estimates of royalties from legitimate streams of Smith‘s music, and of money he paid back into royalty pools by buying the streaming accounts his bots used.
The US Attorney’s Office had argued: “Every penny of loss was diverted to the defendant.”
The defense letter, which does not dispute the USD $8 million-plus loss figure itself, counters that it “far exceeds any amount Mr. Smith actually ‘pocketed.'”
Smith‘s lawyers also claim the government does not dispute that “(1) streaming manipulation has been, and remains, rampant across industry, (2) this is a first-of-its kind prosecution, and (3) no recording artist or songwriter suffered any appreciable loss as a result of the offense.”
The letter also takes aim at the industry organizations, including the Nashville Songwriters Association International (NSAI), whose letters to Judge Koeltl were attached to the prosecutors’ submission.
“Sentencing is not a forum for policy advocacy by trade associations,” it states. “The MLC, MFFA, RIAA, and NSAI are not victims and do not claim to be.”
Smith‘s lawyers also accuse the government of failing “to acknowledge the glaring unfairness of attempting to use a novel prosecution – and the liberty of an individual – as a vehicle to attempt to solve the ills of an industry.”
The letter argues that a prison term “will only diminish Mr. Smith‘s ability to repay his debt to the community, including by working to pay off the massive forfeiture judgment against him.”
According to the letter, which does not name the label, Smith has been offered “a position doing audio production, mixing, mastering, and recording for a record label, at a salary of $5,000 per month.”
The dispute over how much harm Smith caused turns on how streaming royalties are paid, as MBW set out in an analysis published ahead of the sentencing.
Services such as Spotify do not pay a fixed rate per play. Instead, rights holders are paid from a pool tied to each service’s revenue, divided according to each track’s share of all streams in that period.
Smith‘s fake streams therefore reduced the payout to every rights holder paid from the same pools.
The MFFA made that point in its letter to the court, stating that “[e]very fraudulent stream perpetrated by Mr. Smith diluted the value of every legitimate stream occurring during the same accounting period.”
In an October 2018 email quoted by prosecutors, Smith wrote: “in order to not raise any issues with the powers that be we need a TON of content with small amounts of Streams.”
Early in the scheme, he emailed himself a model of 1,040 bot accounts producing around 661,440 streams a day.
Assuming a catalog of 300,000 songs, in line with the “hundreds of thousands” prosecutors have cited, MBW calculated that this comes to roughly two plays per song per day.
Since April 2024, Spotify has paid recording royalties only on tracks with at least 1,000 streams on the service in the previous 12 months.
On Smith‘s early model, each track would have averaged roughly 805 streams a year across all platforms combined – below that threshold.
Prosecutors say that at certain points he had as many as 10,000 bot accounts active. On the same arithmetic, that would put the average track above the threshold.
Spotify also requires a minimum number of unique listeners per track, and says neither requirement currently applies to publishing royalties – the side of the business where The MLC halted Smith‘s payments in 2023.
Spotify told MBW in 2024 that its preventative measures had limited Smith‘s earnings from the platform to about USD $60,000 of the USD $10 million alleged at the time.
An indictment unsealed in September 2024 originally charged Smith with wire fraud, wire fraud conspiracy, and money laundering conspiracy, each carrying up to 20 years in prison.
“We appreciate the Court recognizing the significance of this harmful conduct and the ill-gotten gains that come from the pockets of real artists, songwriters and their label partners.”
RIAA
“Streaming fraud harms creators and deceives fans,” a spokesperson for the RIAA said in a statement following the sentencing. “We appreciate the Court recognizing the significance of this harmful conduct and the ill-gotten gains that come from the pockets of real artists, songwriters and their label partners.”
“Michael Smith undermined trust in the music industry and stole $8 million from artists and songwriters,” said Michael Lewan, Executive Director of the MFFA, in a separate statement. “He was prosecuted, convicted, and now sentenced.
“We thank the U.S. Attorney’s Office for the Southern District of New York and the FBI for their work on this case.
“But the industry’s fight against fraud is about more than one case,” Lewan added. “To truly protect creators, industry stakeholders, law enforcement, and policymakers must keep working together to deliver continued, meaningful deterrence.”
“the industry’s fight against fraud is about more than one case. To truly protect creators, industry stakeholders, law enforcement, and policymakers must keep working together to deliver continued, meaningful deterrence.”
Michael Lewan, MFFA
In Denmark, a man convicted of using bots to inflate streams on 689 tracks was sentenced in March 2024 to 18 months in prison, of which three months were to be served.
The Western High Court of Denmark increased that sentence to 24 months in February 2025, again with three months to be served.Music Business Worldwide
