Streaming Fraud Goes To Court: What It Means For Independent Artists

In April 2023, a catalogue of songs almost nobody had knowingly heard drew 80.9 million family-plan streams on YouTube Music in one month. On the same measure, Taylor Swift's entire catalogue managed 9.3 million, according to figures from court filings reported by Music Business Worldwide. The songs were made with AI and the listeners were bots. The man behind them, Michael Smith from North Carolina, is due to be sentenced in a federal court in New York today, 6 October 2026.

It is the first criminal prosecution for streaming fraud in the United States, and prosecutors want at least 46 months in prison. For independent electronic artists the case matters less as a story about one man than as a clear look at how streaming royalties are shared, and why every fake play comes out of someone else's pocket.

The Case in Numbers

Smith pleaded guilty on 19 March 2026 to one count of conspiracy to commit wire fraud, which carries a maximum of five years. According to Music Business Worldwide, the scheme began in 2017 and ran for more than six years. Smith put hundreds of thousands of AI-generated songs on streaming platforms and ran up to 10,000 bot accounts at once to play them.

The money involved is large. Prosecutors say Smith kept $8,091,843.64 in royalties and received more than $14 million in total from royalty-paying entities. Federal sentencing guidelines suggest 46 to 57 months. The US Probation Office has recommended 24 months, and his lawyers have asked for probation with no prison time.

In their filing, prosecutors called Smith "the architect of, and led, a sophisticated and multi-faceted fraud scheme" that took royalties from "legitimate and hard-working songwriters". Judge John G. Koeltl will decide how far he accepts that view.

Why It Was Everyone's Money

The case rests on how most streaming services pay out. Subscription and advertising revenue goes into a shared pool, and each rights holder gets a share based on their portion of total streams. Fake streams do not create new money. They make the total bigger, so every real stream is worth slightly less.

That was the argument the Music Fights Fraud Alliance (MFFA) made in a letter to the court. Founded in 2023, the nonprofit has more than 40 member organisations, according to Digital Music News, including Spotify, Amazon Music, DistroKid, EMPIRE, Downtown, Merlin, Meta and the Mechanical Licensing Collective (MLC).

Streaming fraud is not a victimless crime. Every fraudulent stream perpetrated by Mr. Smith diluted the value of every legitimate stream. - Music Fights Fraud Alliance, letter to the court

The MLC also told the court that, once royalty payments were stopped, Smith and his representatives made false statements denying that any manipulation had taken place. The Department of Justice cited the MFFA letter in its own sentencing filing and asked for forfeiture of the stolen funds on top of prison time.

The AI Flood Behind the Bots

Smith's method, cheap AI tracks plus automated listening, is now happening at industrial scale. In July 2026 Deezer reported that fully AI-generated tracks had passed 50% of its daily uploads for the first time, reaching 90,000 a day at the June peak. The service says it detected and tagged 13.4 million AI tracks in 2025 alone.

The listening figures show what those uploads are for. According to Deezer, up to 85% of streams on fully AI-generated tracks in 2025 were fraudulent, and 8% of all streams across its whole catalogue involved fraud that year. Yet AI music accounts for only 1 to 3% of total streams on the platform. In plain terms, the uploads are huge, real audience demand is small, and a large share of the plays they do get comes from fake listeners.

Deezer's response is to remove fraudulent streams from the royalty pool and to keep AI-tagged tracks out of algorithmic recommendations and editorial playlists. Chief executive Alexis Lanternier said: "Now that half of all daily uploads are AI-generated tracks, we are taking additional steps to safeguard the rights of artists and songwriters." The company says its detection tool wrongly flags fewer than one in every 10,000 human-made tracks, which matters to producers who use synths, samples and processing that could, in theory, confuse a classifier.

How Platforms Push Back, and Who Gets Caught

Spotify announced a package of royalty changes in November 2023, which took effect on 1 April 2024. Tracks now need at least 1,000 streams a year to earn royalties, functional noise recordings need to be at least two minutes long, and Spotify charges labels and distributors per track when "flagrant artificial streaming" is detected on their content. The company linked the deterrent to better detection and to the creation of the MFFA.

This is where independent artists can get caught up even if they have never run a bot. According to Spotify's own guidance, when artificial streaming is found the platform can withhold royalties, correct public stream counts, remove tracks from playlists and, in "repeated or egregious" cases, take content down completely. Distributors and labels get monthly reports and may warn or suspend accounts, and some pass the per-track charges on to the artist.

Spotify is also clear that "3rd-party promotional services that advertise streams in return for payment violate our terms & conditions", and that the same goes for anyone selling guaranteed playlist placement. A producer who pays a promoter for a playlist push can end up with bot plays, withheld royalties and a strike on their distributor account, without ever knowing how the streams were made.

What It Means for Producers and DJs

For people releasing club tracks, ambient records or DJ tools, the lesson from the Smith case is practical. The industry is paying close attention to strange streaming patterns, and that attention falls on catalogues of every size.

• Treat guarantees as a warning sign. Any service promising a set number of streams or a place on a playlist in exchange for money breaks Spotify's terms, whatever its pitch says.
• Watch your own data. A sudden spike from one unknown playlist or one country with no connection to your audience is worth raising with your distributor or label before it shows up in a fraud report.
• Use the reporting tools. Spotify tells artists who believe their streams are genuine to contact their distributor or label, and offers a playlist reporter for flagging suspicious playlists.
• Ask your distributor about its fraud policy. Find out how it handles platform reports, whether it passes on charges, and how disputes are resolved.

The anti-fraud effort is also growing beyond recordings. In April 2026 the MFFA added 12 members, including ASCAP, GEMA, SOCAN, SoundExchange and Ditto, and widened its remit to cover publishing fraud, according to SoundExchange. SoundExchange chief executive Michael Huppe said its mission of accurate, transparent royalties "is directly threatened by streaming fraud".

Whatever sentence Smith receives, the case sets a reference point. Streaming fraud is now being prosecuted as theft, and the people it is being taken from are the artists whose real streams make up the rest of the pool. For independent electronic musicians working with small royalty margins, a cleaner pool is worth more than any bought playlist spot.

Cover photo by Filip on Unsplash