U.S. Copyright Office Launches Major Inquiry Into Music Streaming Fraud Amid Rising Concerns Over Bot Farms and AI Manipulation

By Steve Brachmann
Published by IPWatchdog

Main Facts

The United States Copyright Office has officially published a Notice of Inquiry (NOI) in the Federal Register, initiating a comprehensive public comment period on the growing threat of music streaming fraud and digital piracy. This federal action addresses systemic vulnerabilities within digital music platforms that threaten billions of dollars in domestic and international revenues.

The inquiry was directly prompted by a congressional request from U.S. Representative Scott Fitzgerald (R-WI), who formally urged Register of Copyrights Shira Perlmutter to investigate the prevalence of fraudulent streaming schemes across digital distribution services. These illicit operations—frequently driven by automated bot farms, click farms, and deceptive "ghost tracking" practices—falsely inflate play counts to siphon millions of dollars in royalties away from legitimate artists, songwriters, and rightsholders.

Concurrently, the launch of the NOI aligns with a major federal sentencing in United States v. Michael Smith, where a North Carolina man was sentenced to 18 months in prison for engineering a massive, AI-assisted streaming fraud conspiracy. Music industry groups, including the Recording Industry Association of America (RIAA) and the International Federation of the Phonographic Industry (IFPI), have lauded the legal crackdown, emphasizing that streaming fraud directly undermines the livelihoods of creative professionals and deceives millions of everyday music consumers.

Chronology of Events

The escalation of regulatory scrutiny surrounding music streaming fraud is the culmination of years of technological exploitation, rising digital revenues, and recent legislative pressure.

• May 2026: Prompted by landmark legal cases involving automated platform manipulation, U.S. Representative Scott Fitzgerald sent a formal letter to Register of Copyrights Shira Perlmutter. The letter highlighted the severe economic threat posed by streaming fraud and generative artificial intelligence, calling on the Copyright Office to examine the stability and security of digital music distribution platforms.
• October 6, 2026: Federal prosecutors in the Southern District of New York secured an 18-month prison sentence for Michael Smith, a North Carolina resident who pleaded guilty to wire fraud conspiracy. Smith had utilized an automated bot network running on super-intelligence-assisted systems to artificially generate billions of streams, fraudulently pocketing roughly $10 million in royalties.
• October 7, 2026: Responding to Rep. Fitzgerald’s congressional inquiry and ongoing federal investigations, the U.S. Copyright Office published its official Notice of Inquiry in the Federal Register. The notice opened the floor for public comments, data submissions, and stakeholder insights regarding digital piracy and royalty diversion.
• November 23, 2026: The strict deadline for interested stakeholders, industry groups, legal experts, and the public to submit written comments to regulations.gov regarding the NOI.

Supporting Data: The Scale of the Digital Music Economy and Fraud

To fully understand the devastating impact of streaming fraud, industry analysts must examine the massive financial ecosystem underpinning modern recorded music and publishing. Digital streaming currently accounts for approximately 70% of global music sales, according to the Digital Media Association (DIMA) Annual Report.

According to financial figures released by the Recording Industry Association of America (RIAA) and the International Federation of the Phonographic Industry (IFPI):

• Global Sound Recording Copyright Owners: Earned a staggering $22 billion in global revenues.
• Global Musical Work Copyright Owners: Generated $10 billion globally.
• U.S. Domestic Market: Domestic record labels brought in $9.5 billion, while U.S. music publishers secured $7.3 billion in revenues over the past year.

When bad actors manipulate this multi-billion-dollar market, the financial repercussions ripple outward. Collective Management Organizations (CMOs) and Performance Rights Organizations (PROs) collect billions in performance and mechanical royalties, which are then distributed to rightsholders based on play-count data. When algorithms are tricked by bot farms, the proportional payout structure collapses. Legitimate artists see their rightful earnings diluted, while fraudsters abscond with millions of dollars in unearned royalties.

Furthermore, the integration of generative artificial intelligence has supercharged these illicit operations. Streaming platforms like Deezer have previously reported that up to 44% of daily music uploads consist of AI-generated content. When combined with automated bot scripts—as seen in the Smith case—bad actors can generate millions of synthetic tracks, stream them continuously via server-farm bots, and rapidly drain royalty pools before platform detection algorithms can intervene.

Official Responses and Industry Reactions

The federal government’s renewed focus on digital music piracy has drawn strong applause from major trade organizations and legislative figures who have long championed creators’ rights.

Following the sentencing in United States v. Michael Smith, the RIAA issued a pointed and resolute statement:

“Streaming fraud harms creators and deceives fans. We appreciate the Court recognizing the significance of this harmful conduct and the ill-gotten gains that come from the pockets of real artists, songwriters and their label partners.”

The sentiment was echoed by the International Federation of the Phonographic Industry (IFPI) and various music publishing associations, which have consistently called for tighter cybersecurity protocols, enhanced fraud-detection algorithms across streaming digital service providers (DSPs), and heavier criminal penalties for perpetrators.

Lawmakers like Rep. Fitzgerald have similarly emphasized that while digital streaming has democratized music distribution and expanded global access, it has also created sophisticated new vectors for white-collar crime. By pushing the U.S. Copyright Office to issue its NOI, Congress aims to gather empirical data that can eventually form the basis of targeted statutory reforms, closing legal loopholes that cybercriminals currently exploit.

Implications for the Music Industry, Live Touring, and the Future of AI

The U.S. Copyright Office’s Notice of Inquiry poses critical questions to the public, setting the stage for regulatory changes that will impact every corner of the entertainment industry. The inquiry explicitly seeks data on several complex fronts:

1. Mechanics of Fraud and Technological Vectors

The Copyright Office is demanding hard data on how streaming fraud is executed, asking for detailed breakdowns of bot farms, click farms, playlist manipulation networks, and fraudulent marketing companies that guarantee artificial placement.

2. The Intersection of Generative AI and Royalties

While Rep. Fitzgerald’s initial congressional letter heavily emphasized the disruptive nature of generative AI—both as legitimate creative competition and as a tool for automated fraud—the Copyright Office’s NOI touches on how AI-generated music intersects with licensing, reproduction, and distribution royalties. The Office is actively investigating how synthetic tracks distort royalty calculations and dilute the earnings of human creators.

3. Ripple Effects on Live Touring and Secondary Commerce

Streaming data is no longer confined to digital devices; it serves as a primary metric used by booking agents, venue managers, and promoters to make high-stakes, data-driven decisions regarding live touring performances. Artificially inflated streaming numbers can deceive promoters into booking artists in venues they cannot actually fill, leading to catastrophic financial losses in ticket sales, secondary merchandise purchases, food and beverage revenues, and parking receipts.

4. Regulatory, Statutory, and Criminal Solutions

Ultimately, the NOI aims to compile actionable recommendations. The Copyright Office is asking stakeholders to propose voluntary industry standards, statutory copyright updates, and regulatory frameworks. Furthermore, it seeks guidance on how federal law enforcement agencies can more aggressively prosecute streaming fraud under existing criminal statutes, such as wire fraud and copyright infringement conspiracies.

Conclusion and Next Steps

As the music industry navigates the turbulent waters of the digital age, the convergence of generative artificial intelligence and organized cybercrime presents an existential threat to fair compensation. The U.S. Copyright Office’s Notice of Inquiry represents a vital first step toward establishing comprehensive federal oversight.

Interested members of the public, legal scholars, technology firms, and music industry stakeholders have until 11:59 p.m. Eastern Time on November 23, 2026, to submit their written comments via regulations.gov. The insights gathered during this comment period will likely shape the future of American copyright law, digital platform accountability, and the economic survival of human creators for decades to come.

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