Spotify Facing House Judiciary Committee Probe Over “Discovery Mode” (aka official payola)

A new letter from Congress questions the intended duration of the app’s new feature, how it calculates its reduced “promotional” royalty rate, and more

Last fall, Spotify launched a new tool for artists called “Discovery Mode.” The feature allows artists to opt into a “promotional royalty rate” for specific songs that is less than the standard rate. In exchange, the songs will be boosted and given higher visibility on some of listeners’ algorithmically generated playlists. Now, Congress has sent a letter to Spotify demanding specifications on the tool, as The Hollywood Reporter points out.

The letter, sent by House Judiciary Committee Chairman Rep. Jerry Nadler and Subcommittee on Courts, Intellectual Property, and the Internet Chairman Rep. Hank Johnson Jr., is addressed to Spotify CEO Daniel Ek. It states concerns over Discovery Mode creating a “race to the bottom” in which artists and labels accept lower pay in order to “break through an extremely crowded and competitive music environment,” as Nadler and Johnson put it. You can find the full letter via THR.

The letter points out that Spotify’s royalty payments to artists are already low—less than one cent per stream. “At a time when the global pandemic has devastated incomes for musicians and other performers, without a clear path back to pre-pandemic levels, any plan that could ultimately lead to further cut pay for working artists and ultimately potentially less consumer choice raises significant policy issues,” Nadler and Johnson write.

Nadler and Johnson also list out a series of questions regarding Discovery Mode. They ask about the intended duration of the app’s new feature, how it calculates its reduced “promotional” royalty rate, what kind of safeguards will be in place to ensure the “race to the bottom” effect does not occur, and more. Spotify is expected to respond no later than June 16. Pitchfork has reached out to Spotify representatives for comment.

Discuss!

I hope they remove that feature. It only benefits major label plants and is detrimental to indie artists who will get even less visibility unless they are willing to give up even the tiny amounts of revenue they get from Spotify now. It also creates a false impression that artists using it are actually popular, when in reality they get added to users playlists for money.

Abolish payola.

Quote from Afriyieau1

As always lo and behold. Armys don’t smoke shit without there being fire. Why are our gut feelings always right

We have good instincts. And some of the influence of this Discovery Mode is very transparent.

Quote from Afriyieau1

Definitely. Spotify is a good app. Like the fact that you can post your songs without having your label to go through with it and have an income.

But it’s this fiasco behind the scenes which makes everything unfair in the end, with unknown acts having playlisting over very known acts with tons of followers

Funny how Butter never made an appearance on my Release Radar, while pushed westnern acts who I have never listened to and kpop acts I have blocked are all there The kpop acts are the same ones known for excessive YT ads

Same for Discover Weekly

I had an illegal upload of BTS Soundcloud song there once and yet no actual BTS releases

Quote from Ves

IMO, I don't think anyone should be surprised. With the advent of streaming, music consumption changed from a pay for music model where people bought albums to a new paradigm that made music more freely available, both in terms of reach and cost, the latter to the detriment of the industry. Companies like Spotify that offer these streaming platforms have been trying to "monetize" streaming in any way they can for years and they've used a two pronged approach.

Their approach? It includes getting people to pay for the privilege of having their stream count more on the charts while making music industry inroads where they become a staple that can't be ignored. Moves like that are as valuable for the paying customers they gain as it is for the foothold on industry influence it has left them with. Streaming has gradually been weighted more heavily on the charts.

And here they're really using that influence. Here they've devised a model to keep even more money in their pockets while letting the industry decide how they want to influence what people "discover" and listen to. Win-win? Yea, for everyone, but the little guys, or those the industry would rather be overlooked. The industry has always operated using underhanded means. I'm glad that at least someone seems to want to try to keep a check on it.

Its no surprise that the only industry players speaking up against it so far seem to be indie labels. Its a deal between Spotify and major labels where everyone else ends up collateral damage.

It will truly make Spotify the new radio. Hopefully there will be some legislation against it like radio payola, but we know it will not work anyway. Even if straightforward payola like in this case is banned, then the more underhanded deals will remain.

Spotify should at least treat these streams as YT does ad views, where they are not reported to charts and do not influence Spotify charts rankings.

Quote from Minkah

Wow.

I feel bad for ever having wondered, if people aren't just being paranoid...

There was an article in Rolling Stone few months ago about this, by indie labels calling this out. Its not paranoia, its reality. Anyones faves will have to pay Spotify out of the already tiny streaming revenue to get any visibility. And if you dont pay, you get less ULs and more filtering.

Quote from Tic_tac_toe

Someone linked a site on here to see the amount of playlisting an artist gets can someone link it again

Algorithmic playlisting like the one talked about here is not included in playlist audience numbers.

Quote from Ves

Welp, I just read this and suffice to say it's alarming:

3 things to know about Spotify’s controversial new ‘pay for influence’ tool, Discovery Mode

Selected quotes:

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Autoplay. Interesting. Its not even a concious choice by user to listen to specific playlist, its forcing songs on playlists. All these reports of certain artists being added to free users playlists and playing on autoplay...

Quote from Ves

Here's Spotify's own definition (thanks myaza)

This is from Spotify's conference paper from 2020. Its very interesting. They analyzed the impact of programmed streaming on the diversity of music users listen to. Some findings:

• organic streaming tends to incease the diversity of music users listen to while programmed streaming decreases it
• more diverse users ("generalists"), who listen to different music, tend to churn less and are more likely to upgrade to premium compared to less diverse users ("specialists") who mostly listen to similar music.
• the existing recommendation systems work better for "specialists" while not that well for "generalists"
• they recommend trying to find ways to improve recommendation systems (aka Spotify algortihmic playlists, autoplay etc) to make them more diverse

And yet, instead of following these finding by their own data scientists, based on enourmous amount of data of 100 million Spotify users, Spotify decides to:

• penalize these more loyal and more profitable organic ways of streaming and reward programmed streaming on their charts and in their filtering logic by prioritizing ULs from curated playlists and autoplay at the expense of streams from user playlists and manual search
• implement a pay-to-play system to "diversify" recommendations instead properly fixing the recommendation system

I guess the income from pay-to-play and the long term effect on solidifying their position as the top market payer who decides which music gets exposure and which doesnt outweighs the interests of their users and the profit from users.

Quote from SandyBee3

Not surprised seeing this. Welcome to the music industry lol.

Nothing much will change. Payola exist nearly everywhere in the music industry. Removing this feature from Spotify won’t change much.

But on the other hand, removing this would also protect Artists who are falsely accused of payola and foul play for doing well.

We havent really seen anyone be falsely accused though