Spotify Launched ‘Discovery Mode.’ The House Judiciary Committee Has Some Questions

The House of Representatives’ Judiciary Committee sent a letter to Spotify this week requesting additional information on “Discovery Mode,” a controversial program which allows artists and labels to recommend specific songs to more listeners — via the streaming giant’s algorithms — in exchange for a lower royalty rate. 

Spotify announced Discovery Mode last fall, framing it as a boon for artists. “Artists tell us they want more opportunities to connect with new listeners, and we believe our recommendations should also be informed by artists,” the streaming platform wrote in a blog post. “In this new experiment, artists and labels can identify music that’s a priority for them, and our system will add that signal to the algorithm that determines personalized listening sessions.” The program is being tested in formats like Radio and Autoplay. In exchange for this prioritization, “labels or rights holders agree to be paid a promotional recording royalty rate for streams in personalized listening sessions where we provided this service.” 

But not everyone was excited about this opportunity to influence the music Spotify recommends to listeners. BMG and Beggars Group both signaled concern about the potential impact of Discovery Mode. IMPALA, an organization that represents indie labels in Europe, recently issued a 10-point plan to improve the streaming ecosystem; one recommendation called for “no reductions in royalties in exchange for enhanced plays, or privileged treatment in algorithms, or other features that recreate elements of payola.” The American Association of Independent Music raised similar concerns.

And in a recent op-ed published on Rolling Stone, the Artists Rights Alliance slammed Discovery Mode, describing it as “a new pay-for-play scheme.” (Undisclosed pay-for-play is not allowed on the airwaves, but streaming is not regulated in the same way.) “Spotify’s money grab would be unacceptable at any time,” the ARA wrote, “but it’s especially hard to swallow in the midst of a global pandemic that has cut off artist income streams.”

The letter to Spotify from House Judiciary Committee Chairman Rep. Jerry Nadler and Rep. Hank Johnson Jr. expresses concern that “Discovery Mode” “may set in motion a ‘race to the bottom’ in which artists and labels feel compelled to accept lower royalties as a necessary way to break through an extremely crowded and competitive music environment.”

“At a time when the global pandemic has devastated incomes for musicians and other performers,” the letter continues, “… any plan that could ultimately lead to further cut pay for working artists and ultimately potentially less consumer choice raises significant policy issues.”

Representatives Nadler and Johnson asked Spotify to provide them with answers to a series of questions, including whether the streaming service plans to make “Discovery Mode” a permanent program and how the company plans to calculate the reduced royalty rate. 

“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?” the Congressmen ask. In addition, “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?”

Representatives Nadler and Johnson requested answers from Spotify by June 16th.