First AI Music Streaming Fraud Draws 18-Month Prison Sentence
A New York judge sentenced Michael Smith to 18 months for using 10,000 bots and AI music to collect $8 million in royalties. Key takeaways for labels in Mexico.
Michael Smith, 54, a resident of Cornelius, North Carolina, was sentenced on October 6, 2026 in a federal court in Manhattan to 18 months in prison and the forfeiture of $8,091,843.64 for a royalties fraud involving songs generated by artificial intelligence, the first criminal case of its kind in the United States.
Between 2017 and 2024, Smith used thousands of automated accounts and fake emails to stream his own tracks on Spotify, Apple Music, Amazon Music and YouTube Music, according to Music Business Worldwide. According to Forbes México, the federal prosecutor's office for the Southern District of New York described the scheme as a plot to defraud the platforms and musicians in the payment of royalties. Smith pleaded guilty in March to conspiracy to commit wire fraud. The case matters to Mexico because independent labels and local distributors place their catalogs on those same platforms, where the royalty pool is distributed by streaming volume. IFPI, which represents the recorded music industry, noted that the outcome confirms that streaming fraud is a crime with serious consequences.
The figures in the case file set the scale. In April 2023, Smith's accounts registered 80.9 million streams of his AI-generated music on YouTube Music family plans, compared with 9.3 million for Taylor Swift's entire catalog on that same tier. Prosecutors maintained that Smith took in more than $14 million from royalty-paying entities, although the agreed loss amount was $8.09 million; Spotify stated that its controls limited the defendant's earnings on its platform to about $60,000. Since 2018 he had worked with the director of an AI music company to mass-produce tracks, with deliveries of thousands per week. Judge John G. Koeltl also imposed two years of supervised release. Prosecutors sought 46 months; the defense sought probation without prison.
For distributors and independent labels in Mexico that upload catalog to those platforms, the precedent moves artificial volume from the contractual terrain to the criminal one. The operational question is what traceability of origin the platforms require from those who upload third-party music, and what audit clause is advisable to have signed before the first withdrawal.
This article was written with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.