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.
Mediapost reports 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.
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.
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