A North Carolina musician, Michael Smith (52), has pleaded not guilty to charges related to an alleged $10 million streaming fraud scheme. The case began with Smith facing three felony counts and receiving a $500,000 bail order from US District Judge John Koeltl in Manhattan.

The US government's indictment alleges Smith created hundreds of thousands of AI-generated songs and used bots to artificially stream them billions of times. His methods reportedly included:

• Creating fake email accounts
• Setting up fraudulent cloud service accounts
• Purchasing family plans on streaming platforms
• Using bots to generate 661,440 daily streams
• Targeting annual royalties of $1,207,128

Spotify has confirmed it was minimally impacted, with Smith generating only about $60,000 in royalties from their platform—less than 1% of the total scheme. The company credits its robust artificial streaming detection systems for limiting the fraud's impact.

One streaming service (later identified as Spotify) detected and stopped royalty payments to Smith in 2019. The Mechanical Licensing Collective also identified suspicious streaming patterns and withheld related royalties.

According to Beatdapp, a music streaming fraud detection platform, such schemes contribute to approximately $2 billion in lost artist royalties annually. The platform recently partnered with both the Mechanical Licensing Collective and Universal Music Group to combat streaming fraud.

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