Michael Smith, convicted in the first US criminal case over streaming fraud, is set to be sentenced Tuesday. Prosecutors say Smith used bots to rack up billions of fake streams across platforms including Spotify and Apple Music, generating roughly $8 million in royalties through a scheme that leaned on the pro-rata payout model used by most streaming services.
Music Business Worldwide lays out the arithmetic behind the fraud, showing how a relatively modest stream count per track, spread across tens of thousands of AI-generated songs, could still produce an outsized payout under pro-rata accounting. The outlet also points to a user-centric royalty model, long debated as an alternative to pro-rata, as a structural change that would have significantly blunted the scheme’s profitability.
The case has become a reference point in the industry’s ongoing fight against streaming manipulation, with rights holders and platforms watching the sentencing for signals on how aggressively similar fraud will be prosecuted going forward.
Read the full story at Music Business Worldwide.