The controversy surrounding Spotify's divisive "Discovery Mode" has not subsided since the streaming giant announced the initiative in late 2020. The feature offers some artists and record labels a chance to boost the rankings of their music in the platform's playlisting algorithm—a crucial tool for exposure—in exchange for a reduced royalty rate.
Considering the notion that royalties are already extremely low—fractions of one penny per stream, to be exact—the contentious "Discovery Mode" feature seems to make things even more difficult for artists hoping to get their music in front of as many people possible while earning fair compensation for their works.
"Discovery Mode" has now come to the attention of Representative Jerrold Nadler (chairman of the House Judiciary Committee) and Representative Hank Johnson Jr. (chairman of the Subcommittee on Courts, Intellectual Property, and the Internet) who recently penned a letter to Spotify founder Daniel Ek to probe the issue.
"We write regarding the new 'Discovery Mode' feature that Spotify has begun pilot testing on its Radio and Autoplay features," reads the letter, which was shared by THR. "Although public details are limited, Discovery Mode appears to allow artists and record labels to identify particular songs that they would like to prioritize in Spotify’s algorithmic recommendations in exchange for agreeing to be paid a lower, 'promotional' royalty rate for those prioritized streams. This 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."
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David Israelite, president and CEO of the National Music Publishers Association, said major streaming services "have proposed the lowest royalty rates in history."
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"At a time when the global pandemic has devastated incomes for musicians and other performers, without a clear path back to pre-pandemic levels, any plan that could ultimately lead to further cut pay for working artists and ultimately potentially less consumer choice raises significant policy issues," Nadler and Johnson Jr. continue. "This is particularly true under Spotify’s current model, where artists’ returns are already low, with Spotify reporting to pay artists less than a cent per song streamed (estimated in the $.003 to $.005 range) and Spotify has challenged an administrative ruling setting a higher royalty rate for 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. Such a race to the bottom threatens to weaken the core goal of copyright and intellectual property—incentivizing creativity by offering a fair return on one’s work."
Since Spotify is a Swedish company, the company may ultimately have little to worry about in terms of the probe from Congress. However, the House Judiciary Committee's letter could galvanize the company to provide clarity on some timely concerns surrounding royalty rates, the measurement of the controversial feature's success, and what Spotify's plans are to prevent a scenario wherein artists receive less money for seemingly fruitless promotion opportunities.