Mike Smith, the first person to face federal charges tied to music streaming fraud, was sentenced to 18 months in prison after pleading guilty earlier this year.
Smith, a musician and business owner from North Carolina, appeared at federal court in Manhattan Tuesday afternoon, Oct. 6. He nodded heavily as John G. Koeltl handed down the year-and-a-half prison sentence, which will be followed by two years of supervised release. Smith also previously agreed to forfeit $8 million as part of his plea deal.
When asked if he would like to say anything following his sentence, Smith told the judge, “Thank you for your consideration on everything, Your Honor.”
The sentence was notably less than the 46 months in prison prosecutors had sought, though Smith’s lawyers had hoped to secure their client just probation.
Smith was also given the chance to address the court before receiving his sentence. Choking up at times, the father of six, said that all he’d wanted in life was to be a good husband, father, upstanding member of society, and to succeed in music. By “committing this crime,” he said, “I have failed miserably.”
“I betrayed the music community I care so much about,” Smith added, admitting that he turned his love of music into a “perverse business model.” At the end of his statement, he said, “I have made a mess of what wa an honorable life.”
Smith pleaded guilty to one count of conspiracy to commit wire fraud back in March, a charge that carries a maximum sentence of five years in prison. In their original complaint, the feds claimed that, between 2017 and 2024, Smith used an army of bots to improperly stream his music millions of times. While Smith, an aspiring musician, had a catalogue of his own music, he also allegedly generated additional royalties through bot-streams of AI-generated songs he purchased and uploaded.
In their sentencing submission, the prosecution highlighted the novelty of the streaming fraud case, as well as the $8 million in unearned royalties Smith earned. They argued a significant stint in prison was necessary “to provide justice punishment” and deter other potential fraudsters.
“If the public is watching this case, as the defendant claims, a lenient sentence will send precisely the wrong message: streaming fraud will not result in meaningful punishment,” Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin B. Mead wrote.
Meanwhile, Smith’s lawyers in their own filing, said their client was “profoundly sorry” for his conduct, but claimed he “did not set out to commit a federal crime” and “believed his initial efforts to be lawful.”
They said he spoke with a “well-known music attorney” and came to believe “his conduct began at a time when the legal parameters [around artificially inflated streams] were unsettled.” Nevertheless, they acknowledged, Smith “ended up rationalizing conduct that he knew was wrong,” like when he gave “false statements to distributors” who contacted him about possible streaming manipulation.
While addressing the court on Tuesday, one of Smith’s lawyers, Justine Harris, attempted to walk a tightrope between acknowledging that Smith had admitted to committing a serious crime while arguing there were various factors that ought to mitigate the sentence. For instance, she highlighted the fact that, when Smith began his scheme, many streaming platforms did not specifically prohibit using bots to artificially inflate streams in their terms of service.
She also pointed to how rampant streaming fraud is, and argued that while Smith’s scheme did remove millions from the streaming royalty pool, from which all artists are paid, the actual damages to others were difficult to calculate, and likely minuscule. A message about the seriousness of the case and combatting streaming had already been sent by indicting and arresting Smith, Harris argued. And the only way to actually deter streaming fraud wasn’t individual prison sentences, but structural reforms to the music streaming ecosystem.
In turn, Chiuchiolo countered that, even if most artists received small royalty payouts, those checks were meaningful and sometimes the “only recognition” they got for their work. The prosecutor also stressed that, even if there weren’t specific rules against using bots to stream songs in a platform’s terms of service, Smith knew from the beginning that what he was doing was wrong and that he lied to obtain money.
Smith’s sentencing submission further featured a plethora of statements from friends and family, many of whom argued that Smith should be spared a prison sentence so that he would not be separated from his children, especially an adolescent son. Some of Smith’s music industry peers even submitted letters on his behalf, including the Wu-Tang Clan’s RZA.
As Rolling Stone previously reported, Smith developed deep contacts in the music industry during the 2010s, with RZA one of the more well-known figures he interacted with. They released some music together; RZA served as a guest judge on One Shot, the rap reality competition Smith bankrolled and starred in; and in 2024, Smith and RZA both served as executive producers on a horror movie called Nyctophobia.
“Mike has always acted honestly with me and with the artists and business partners we have worked with,” RZA wrote. “I have seen him use his connections and resources to help people who might not have had those chances otherwise. I know the matter before the Court is serious, and I do not write this letter to make light of it. I respectfully ask the Court to consider the person I have come to know through my own experience with Mike: someone who can contribute to his community, support others, and keep making responsible choices.”
