Spotify facing probe by Congress into its Discovery Mode feature

The United States Congress has aired concerns to Spotify about its Discovery Mode feature, which allows artists to receive additional exposure for specific tracks through the platform’s recommendation algorithms.

In exchange for the boost in visibility, artists and their labels agree to receive a “promotional” royalty rate on those streams, believed to be lower than the standard rate. The feature was announced in November of last year and is currently being trialled with a pilot programme through Spotify’s Radio and Autoplay functions.

Per The Hollywood Reporter, House Judiciary Committee Chairman Rep. Jerry Nadler and  Subcommittee on Courts, Intellectual Property, and the Internet Chairman Rep. Hank Johnson Jr. have sent a letter to Spotify CEO Daniel Ek expressing concerns and seeking clarification around the feature.

The letter, dated June 2, airs concerns that Discovery Mode could encourage a “race to the bottom” wherein artists and their labels “feel compelled to accept lower royalties as a necessary way to break through an extremely crowded and competitive music environment”.

Nadler and Johnson further express concern that, assuming widespread use of the feature, accepting a lower rate for a song may not even guarantee an increase in its visibility “if virtually all commercial artists are also doing the same”.

“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,” they write.

Nadler and Johnson note that under Spotify’s current model, royalty rates for artists are “already low”, acknowledging that the platform reportedly pays less than a cent per stream, and that the company has challenged an administrative ruling setting a higher royalty rate for songwriters.

Nadler and Johnson conclude the letter by asking Ek five questions regarding Discovery Mode. They ask whether it will be made permanent, what kind of safeguards Spotify will put in place to avoid the aforementioned “race to the bottom”, and how the “promotional” royalty rate will be calculated.

They also enquire as to how artists and labels will be able to measure the impact of participation in Discovery Mode on their streams, and if they will be offered any means to recover lost royalties in the event that using the feature does not yield an increase in streams.

A response to the letter and the queries raised by Nadler and Johnson is requested from Spotify no later than June 16. NME has reached out to Spotify for comment.

Spotify’s announcement of Discovery Mode feature in November came less than a week after the United Musicians and Allied Workers Union launched their ‘Justice at Spotify’ campaign demanding higher artist rates – at least a penny per stream – and greater transparency around the company’s practices.

Since the campaign was launched, it has gained over 28,000 signatures from artists including Thurston Moore, King Gizzard and the Lizard Wizard, Deerhoof, Julianna Barwick, DIIV, Alex Somers, Zola Jesus and more.

In March of this year, musicians protested outside Spotify’s offices worldwide as part of the campaign, reiterating their demands for a fairer payment structure and more transparency. That same month, the streaming service launched the website Loud & Clear, which Spotify said aimed to give more transparency into how it pays artists.

Last month (May 4), over 180 musicians signed an open letter taking a stand against Spotify’s new speech monitoring patent. The company had a patent approved earlier this year for a piece of technology that can monitor and record both users’ speech and background noise to help curate music for Spotify users.