Michael Smith, convicted of using bot-driven streams on AI-generated tracks to divert royalties from artists and songwriters, faces sentencing on October 6 in New York. The Music Fights Fraud Alliance (MFFA) has asked Judge John G. Koeltl to impose a substantial prison term in what is the first U.S. criminal prosecution for streaming fraud.
In a letter to the court, the MFFA said the sentence should “signal to the public the actual legal consequences of streaming fraud.” The group stated that streaming fraud is not a victimless crime, and that the more than $8 million in stolen royalties “came at the expense of the creators whose rightful royalties were siphoned away.”
MFFA letter argues for deterrence
“It is the MFFA’s belief that the sentence imposed should reflect the unprecedented scope and systemic harm of Mr. Smith’s fraud that targeted artists, songwriters, and the greater digital music ecosystem,” the letter states. “In addition to our mission to fight fraud, we are committed to ensuring that every dollar of streaming revenue reaches the creators who earned it.”
The letter continues: “Since the start of Mr. Smith’s scheme, streaming fraud has considerably grown as a clear threat to the music industry. Stakeholders across the music supply chain, including MFFA member companies, are investing significantly in trust and safety resources, talent, and technologies.” It adds that fraud persists “due to its relative ease and inherent incentive structure, coupled with a perceived lack of a legal risk.”
“As a precedent-setting case, the sentence that this Court imposes will serve as the first real signal to the public regarding the actual legal consequences of streaming fraud,” the MFFA wrote. “A clear precedent grounded in general deterrence is essential to deterring copycats and safeguarding the global creative community, while influencing how law enforcement, the courts, the music industry, and the broader public respond to streaming fraud in the years to come.”
“The prosecution of Mr. Smith has definitively shown that streaming fraud is a crime. It is our respectful hope that the court’s sentence will reinforce that reality, providing the general deterrence necessary to protect artists, songwriters, and the integrity of the digital music economy,” the letter concludes, signed by Michael Lewan, Executive Director of Music Fights Fraud Alliance.
Alliance membership spans streaming, distribution and rights
The MFFA is a nonprofit industry alliance founded in 2023 to coordinate fraud detection, prevention and mitigation. Its members include digital streaming platforms, distributors, publishers, labels, performing rights organizations and royalty collection societies. The alliance, which represents a significant market share of the digital streaming economy, lists more than 40 stakeholders, including:
- Amazon Music, Spotify, SoundCloud, Qobuz, Meta
- DistroKid, TuneCore, CD Baby, UnitedMasters, TooLost, Symphonic, LANDR, Ditto, Identity Music, RandomSounds, Revelator, SonoSuite, AudioSalad, Limbo, NueMeta, OneRPM, FaroLatino, EMPIRE, Roc Nation Distribution, Downtown, Believe, FUGA, GYROGroup, ICE Services, Merlin, Sentric, Vydia
- The MLC (Mechanical Licensing Collective), ASCAP (American Society of Composers, Authors and Publishers), SOCAN (Society of Composers, Authors and Music Publishers of Canada), SoundExchange, Songtrust, MusicBiz
Prosecutors seek at least 46 months
The MFFA letter also states that Smith and his representatives repeatedly lied to The MLC in an attempt to obtain royalty payments. It cites an email from one representative who wrote, “Mike categorically denies any play manipulation.” An attorney for Smith separately denied that any of his works were “computer-generated creations.”
Smith was convicted of wire fraud. The government has requested “a substantial term of imprisonment of at least 46 months’ imprisonment,” along with forfeiture of the more than $8 million obtained in the scheme.
