Mumbai, March 23: A North Carolina man has admitted to orchestrating one of the first major AI-driven fraud schemes in the music industry, exploiting streaming platforms and artists out of millions in royalties. Michael Smith, a resident of Cornelius, pleaded guilty to conspiracy to commit wire fraud as part of a deal with federal prosecutors in New York’s Southern District.

According to authorities, Smith used artificial intelligence to generate hundreds of thousands of songs and deployed automated bot accounts to stream them billions of times. The scheme, which ran from 2017 to 2024, allowed him to siphon more than USD 8 million in royalty payments that should have gone to legitimate musicians, songwriters, and rights holders. AI-Generated Scam: Scammer Earns Thousands of Dollars Selling Fake AI-Made Frank Ocean Songs.

Prosecutors revealed that Smith created thousands of fake accounts across major streaming platforms such as Spotify, Apple Music, Amazon Music, and YouTube Music. These bot accounts repeatedly streamed his AI-generated tracks, artificially inflating play counts while avoiding detection by spreading streams across a vast catalog of songs.

US Attorney Jay Clayton said the case highlights a growing threat to the music industry. He noted that while the songs and listeners were fake, the financial damage was very real, with millions diverted away from genuine creators. The case marks a significant step in tackling AI-related fraud, as streaming platforms face increasing pressure from fake content and manipulated engagement. What Is YouTube AI Music Hosts? Know All About New Experimental Feature Launched via YouTube Labs for Limited Users in US on YT Music App.

The rise of generative AI tools has made it easier than ever to produce large volumes of music, raising concerns about authenticity and fair compensation. Industry experts warn that such schemes could undermine the streaming economy, where artists are paid based on a share of total plays.

Under the plea agreement, Smith faces up to five years in prison and has agreed to forfeit over USD 8 million. He is scheduled to be sentenced in July 2026.

The case underscores the urgent need for stricter safeguards as artificial intelligence continues to reshape the global music landscape.

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(The above story first appeared on LatestLY on Mar 23, 2026 02:41 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).