Spotify Under Congress Spotlight For Dodgy ‘Discovery Mode’
Members of Congress have taken aim at Spotify co-founder and CEO Daniel Ek for its controversial Discovery Mode platform.
Discovery Mode promotes an artist’s music in exchange for a reduced royalty rate. This is basically a form of payola, the heavily criticised ‘pay for play’ model favoured by US radio stations throughout the 20th Century and frowned upon by almost everyone else.
A letter to Ek, written on official Congress stationary and signed by Reps. Yvette D. Clarke, Judy Chu and Tony Cardenas representing the Congressional Caucus on Multicultural Media, slams the practice, and lack of transparency, saying “it represents a classic prisoner’s dilemma.”
“Choosing to accept reduced royalty payments is a serious risk for musicians, who would only benefit if Discovery Mode yields more total streams for an artist across their entire catalogue, not just the track covered by the program. And if two competing artists both enroll their newest track in the program, any benefit could be cancelled out, meaning that the only profit goes to your company’s bottom line.
“For artists of diverse backgrounds, who often struggle to access capital, the premise that they must now pay in order to be found by new consumers on Spotify represents an especially serious problem.
“We would ask that Spotify publish, on a monthly basis, the name of every track enrolled in the program and the royalty discount agreed upon,” the letter continues. “Without this transparency, you are asking artists to make a blind choice, and it represents a classic prisoner’s dilemma.”
Last July, House Judiciary Committee Chairman Rep. Jerry Nadler wrote to Ek with similar concerns over Discovery Mode, saying it “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.”
Spotify calls Discovery Mode “a marketing tool designed to help you find new listeners when it matters to you most.”