The US Government is wondering about the legality of this Spotify feature
The American recorded music industry has had a payola problem for decades. To be clear, it is illegal for someone to pay for access (and to accept such payment) for things like radio airplay. You cannot jump the queue to reach the public by paying a bribe. Yet despite many, many attempts to stomp out this practice, payola keeps coming back.
Spotify may have an issue with its Discover Mode feature. The platform allows artists and labels to promote specific tracks in the recommendation algorithms in exchange for a lower royalty rate. In other words, artists and labels don’t pay for access to the public. They just agree to take less money for it.
Is this a form of payola? Some people think so.
A couple of US congressmen have some questions for Spotify about the program, which was announced in November 2020. They’re worried that Discovery Mode might result in a race to the bottom where the producers of music will feel compelled to take less money as a way to break through the competition.
Spotify has until June 16 to answer these five questions:
- Does Spotify intend to make this pilot program a permanent one, and if so, when does it anticipate that it will begin?
- What types of safeguards will be in place to ensure that a large volume of boosts under the Discovery Mode program do not end up cancelling each other out or otherwise resulting in a race to the bottom where the only practical way to get recommended is to accept a reduced royalty?
- In general, how will Spotify calculate the reduced, “promotional” royalty rate that an artist or record label will need to accept to use the Discovery Mode program? Is this calculation the same for all artists and labels?
- 4. How will artists and record labels be able to measure the impact of the program on their streams, including which streams are served directly from participating in the Discovery Mode program?
- 5. What, if any, means of redress will be offered to artists to recover lost royalties in the event that they determine participation in the program has not yielded increased streams?
We’ll see, won’t we?