US Copyright Office Opens Music Streaming Fraud Inquiry
The review will examine royalty losses and anti-fraud safeguards after Michael Smith was sentenced to 18 months over an AI-assisted streaming scheme.
The US Copyright Office has opened an inquiry into music streaming fraud, seeking evidence on its impact on royalties and whether stronger safeguards are needed, according to its Notice of Inquiry published on 7 October.
The inquiry follows a congressional request to examine the prevalence of fraudulent streaming across digital platforms and its effect on the music industry.
The Office says artificial plays reduce the share of royalties available for music streamed by genuine listeners. It identifies bot farms, click farms, playlist stuffing and account hijacking among the methods used to manipulate streams.
The notice asks how industry practices may inadvertently contribute to fraud and how effectively platforms, distributors and others detect and prevent it.
It also seeks evidence on checks on customers and content, recovering royalties paid on fraudulent streams, removing content and sharing information. Potential responses include voluntary action and changes to laws or regulations.
The inquiry comes a day after Michael Smith was sentenced to 18 months in prison over an AI-assisted scheme that generated more than US$8 million in fraudulent royalties.
According to the US Department of Justice, the North Carolina man was sentenced on 6 October to two years of supervised release in addition to the prison term. He was ordered to pay US$8,091,843.64 in forfeiture.
Reporting from inside the Australian music business since '94.
Smith pleaded guilty to conspiracy to commit wire fraud on 19 March, a development previously reported by TMN.
Prosecutors said his scheme ran from 2017 to 2024, using thousands of automated accounts to stream hundreds of thousands of AI-generated songs billions of times.
At times, Smith operated as many as 10,000 accounts simultaneously. He spread the plays across thousands of songs to avoid triggering fraud detection through unusually high activity on individual recordings, prosecutors said.
The fraud involved manufactured listening activity used to collect royalties. Using AI to make music is not, by itself, streaming fraud. The inquiry asks how AI-generated music relates to fraudulent streaming.
The notice also cites a recent industry commitment to tackle fraud at the distribution stage.
On 14 September, global recorded music industry body IFPI announced its Streaming Integrity Initiative, supported by major music groups and independent distributors.
Participating distributors commit to verifying customer identities and rights ownership, checking content and acting on suspected fraud. They also commit to sharing information where legally permitted and measuring and improving their anti-fraud systems.
The announcement sets out commitments but does not establish their effectiveness or quantify losses to Australian rights holders.
The Copyright Office is accepting initial written comments until 23 November 2026, with replies due on 21 December. Both deadlines fall at 11.59pm US Eastern Time.
