A 54-year-old man has pleaded guilty to defrauding online music streaming platforms out of more than US $8 million, after creating hundreds of thousands of songs with AI, and then using bots to play them billions of times.

Michael Smith, of Cornelius, North Carolina, pleaded guilty in the Southern District of New York to one count of conspiracy to commit wire fraud.

To understand how the fraud was committed, it is helpful to understanding how streaming royalties work. Platforms like Spotify and Apple Music do not pay a fixed rate per stream. Instead they divide a pot of money between all of the artists whose songs have been streamed that month. The more streams your song receives, the larger your slice of the pot.

But that also means that the more 'fake' streams your song receives, the smaller everyone else's royalty cheque. In other words, Smith was not just fraudulently earning money - he was taking it directly out of the pockets of legitimate artists.

Smith's scheme operated at an industrial scale. He created thousands of accounts on music-streaming platforms and used as many as 10,000 bots to cause those accounts to continuously stream the songs.

He spread his automated streams across thousands of songs, in an attempt to avoid detection. And because he needed thousands of songs, he used AI to generate them.

Smith is said to have worked on the scheme with two unnamed accomplices - a music promoter and the CEO of an AI music company - who began providing him with thousands of songs on a weekly basis.

Originally the songs had filenames beginning with random strings of letters and numbers, but when uploading them to streaming platforms Smith would rename them with names like "Zygotes" and "Zyme Bedewing," and claimed they were recorded by made-up artists like "Calorie Event," "Calms Scorching," and "Calypso Xored."

The AI-generated songs were streamed by his bots billions of times, fraudulently earning US $8 million in royalties.

Smith has agreed to pay US $8,091,843.64 in forfeiture, and will be sentenced on July 29, 2026. He faces a maximum sentence of five years in prison.

The case acts as a warning shot to music streaming platforms that AI tools have made it trivially easy to generate passable-sounding music at scale - with every fake stream not just generating illicit income, but actively depriving genuine artists.

Spotify and other streaming platforms do take steps to remove AI-generated content that is attempting to commit fraud, but it is clear that the problem is an ongoing fight - with fraudsters and streaming services battling to knock out the other.