Op-Ed: Spotify’s New ‘Discovery Mode’ Is Just Payola

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Getting discovered in the music business has never been easy. Before the pandemic, artists could at least rely on the industry’s historic mainstay to break through — playing as many gigs as possible and hoping to build a following. But with that path closed for now, artists and their label partners are increasingly dependent on Spotify, the undisputed king of music streaming, and its black box algorithms.

That’s why Spotify’s cynical decision to use this moment to launch a new pay-for-play scheme pressuring vulnerable artists and smaller labels to accept lower royalties in exchange for a boost on the company’s algorithms is so exploitative and unfair. Artists must unite to condemn this thinly disguised royalty cut, which apparently has just been released in “beta” mode and is soon expected to enter the market in full force. 

The company’s press release announcing the so-called Discovery Mode seems almost designed to confuse busy artists and hide what’s really going on. (“This might sound complicated,” Spotify writes, “and it is!”) Rather than simply describe the trade off in straightforward terms — artists accept a lower royalty rate and the platform recommends their music to more listeners — the press release buries the truth beneath vague platitudes about giving “artists a say in how their music is discovered.”

In practice, of course, once Spotify launches this program, it’s likely to set in motion a race to the bottom in which many active artists feel compelled to pay up rather than risk being left behind in the battle for exposure. The unhappy result of this race? Artists and their labels end up receiving lower royalties without gaining any meaningful additional exposure at all, because if everyone is “boosted,” nobody is. If every artist, made even more vulnerable by the lack of touring income during the pandemic, pays up, there just won’t be any relative gain at all.  

Another potential path for Discovery Mode is that the required royalty cut ends up being so steep that working artists and independent labels cannot even afford to pay it, clearing the field for major record labels and pop megastars to swallow up even more of the streaming pie. This means that working artists, independent labels, and above all music fans looking to expand and diversify their listening end up losing out. Some members of the hip-hop community have been vocal in warning that this could set diversity back despite Spotify’s own recognition of the need for progress in this area. (Some music companies, including BMG and Beggars Group, have also signaled concern about the potential impact of Discovery Mode recently.)

Spotify’s money grab would be unacceptable at any time, but it’s especially hard to swallow in the midst of a global pandemic that has cut off artist income streams while driving massive subscriber and revenue growth for the platform. Adding insult to injury, the launch of Discovery Mode comes alongside other efforts by Spotify and their Washington, D.C. lobbyists to divide the creative community — see the company’s appeal of a copyright royalty board decision that would increase pay for songwriters — and distract us from the fact that, despite the company’s own massive market cap and post-IPO stock balloon, it’s still a failure when it comes to paying adequately for the music that has fueled its success.

Which isn’t to say that Spotify might not succeed. Like Google and Facebook before it, Spotify has charted a typically anticompetitive path — leveraging cut-rate pricing and massive data holdings to drive runaway growth until the company represents so much of the market it becomes indispensable, then cashing in when audiences, artists, and labels have no meaningful way to negotiate or resist. Spotify has managed to lap even Apple Music, with nearly 60 million more paid subscribers worldwide.

Spotify’s long history of below market royalties and anti-artist positioning are well known, of course. Just this August, the company’s billionaire CEO derided artists unhappy with the company’s subpar royalty payouts as backwards-looking malcontents unwilling to put in the work needed for “continuous engagement” with modern fans. Still, rolling out a new set of payola demands in the middle of a global pandemic that has working artists struggling to stay afloat marks a new low.

If Spotify genuinely wants to partner with artists and labels on playlists, priorities, and listener recommendations, it should start by sharing basic information about the algorithms and data powering those processes. Transparency would allow creators to make informed choices and pursue commercial success on the platform in a straightforward way, rather than the current game of digital blind man’s bluff creators are forced to play.

That might not provide the kind of short-term boost to Spotify’s bottom line that Discovery Mode is likely to produce. But it would start the company and creators down a far more sustainable path of partnership, cooperation, and trust.

The Artist Rights Alliance is an artist-run, non-profit organization fighting for songwriters and musicians in the modern music economy. It is led by a Board of Directors including award-winning producer Ivan Barias, Grammy winner Rosanne Cash, music manager Thomas Manzi, John McCrea of CAKE, critically acclaimed Americana singer/songwriter Tift Merritt, world guitar innovator Matthew Montfort, and Indie label executive and musician Maggie Vail.