Congress Probes Spotify's New Discovery Mode Program

Spotify is facing a Congressional inquiry about its Discovery Mode program, with lawmakers expressing concerns that it may trigger a financial “race to the bottom” for artists and reduced choice for consumers.

The program, announced last November and now in pilot stage in Spotify’s Radio and Autoplay formats, offers artists and labels the option of getting priority treatment in recommendation algorithms for some tracks without paying upfront fees — if they agree to receiving a lower, “promotional recording” royalty rate.

On Wednesday, Rep. Jerry Nadler (D-NY), chairman of the House Judiciary Committee, and Rep. Hank Johnson Jr. (D-GA), chairman of the Subcommittee on Courts, Intellectual Property, and the Internet, sent an open letter to Spotify CEO Daniel Ek expressing concerns about Discovery Mode and instructing the company to respond to their questions by June 16.



The program “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. Depending on how the program is implemented, there is a further concern that accepting lower rates for this boost in Spotify’s algorithm may not even guarantee more airplay if virtually all commercial artists are also doing the same.”

The letter notes that the pandemic has already “devastated incomes” for artists, and further reducing their income could ultimately reduce consumer choice—particularly given that Spotify currently pays artists less than a cent per song streamed, and has challenged a Copyright Royalty Board ruling ordering streaming services to increase their payments to songwriters.

“Core copyright industries like music play an integral role in the U.S. economy, and the vitality of the industry is undermined when artists’ hard work is undervalued,” it adds.

The letter asks for responses to five questions, starting wither whether Spotify intends to make the pilot program permanent, and if so, when that will happen.

It also asks what safeguards will be in place to ensure that a large volume of algorithmic “boosts” under Discovery Mode don’t end up cancelling each other out or essentially forcing artists to participate in order to get recommendations; how Spotify will calculate the promotional royalty rate; how artists and labels will be able to measure the results of the program on their streams; and how they will be compensated if the program fails to increase their streams.

In announcing the program, Spotify said that artists and labels will be able to “identify music that’s a priority for them, and our system will add that signal to the algorithm that determines personalized listening sessions. This allows our algorithms to account for what’s important to the artist — perhaps a song they’re particularly excited about, an album anniversary they’re celebrating, a viral cultural moment they’re experiencing, or other factors they care about.”

As of press time, Spotify had not released a public statement in response to the letter.

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