Spotify Denies “Modern Payola” Claims Over Discovery Mode

Spotify is finding itself in the hot seat, facing a new class-action lawsuit that accuses the streaming giant of operating a “modern form of payola” through its Discovery Mode feature. The lawsuit alleges that this program allows artists and labels to boost their music’s visibility in exchange for accepting lower royalty rates, which plaintiffs describe as a “deceptive pay-for-play” scheme.

Spotify’s Strong Rebuttal

The streaming service has vehemently denied these accusations. In a statement obtained by AllHipHop, Spotify called the allegations “nonsense,” asserting that the complaint misunderstands and misrepresents how Discovery Mode actually functions. The company emphasized that the lawsuit is riddled with inaccuracies.

Spotify clarified that Discovery Mode is a tool for artists to flag priority tracks for algorithmic consideration in specific contexts like Radio, Autoplay, and certain Mixes. They stressed that it does not “buy plays,” nor does it influence editorial playlists. Furthermore, the company stated that the program’s details are clearly disclosed within the app and on their website.

Addressing Factual Inaccuracies

Spotify also pointed out that the lawsuit contains basic factual errors. The company stated that Discovery Mode is not used in all algorithmic playlists, nor is it applied to popular features like Discover Weekly or DJ, as the complaint incorrectly claims. This highlights a potential misunderstanding of the feature’s implementation.

Support for Independent Artists

Contrary to the lawsuit’s suggestion that Discovery Mode primarily benefits major label artists, Spotify highlighted that the feature has been widely adopted by the independent music community. Many independent artists and labels have publicly praised the program for its effectiveness in increasing their music’s reach.

Facing Multiple Legal Challenges

This lawsuit isn’t the only legal hurdle Spotify is currently navigating. Earlier this week, the company was hit with another class-action lawsuit alleging that it has been turning a “blind eye” to “mass-scale fraudulent streaming.” Spotify also denied these allegations, stating that they heavily invest in systems to combat artificial streaming and protect artist payouts through measures like removing fake streams and withholding royalties.