Musicians Organization Renews Discovery Mode Criticism Amid Indie Expansion: ‘The Most Brazenly Anticompetitive Form of Payola We’ve Seen in Digital Music’

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Photo Credit: Bastian Riccardi

As it attempts to generate $100 billion annually by 2032, Spotify is rapidly expanding Discovery Mode to indie artists – a move that’s spurring new criticism of the long-controversial offering.

Multiple organizations and individuals are pushing back against the effort to build out Discovery Mode, which enables artists and labels to influence listener recommendations in exchange for a portion of the resulting streams’ royalties. First detailed in November of 2020, Discovery Mode grappled with congressional inquiries in both 2021 and 2022, and critics have taken aim at the tool for further diluting Spotify’s per-stream royalty rate.

Even so, the years-old program is now becoming available to a growing number of independent acts, an Ari’s Take report indicated in late February. (Spotify confirmed the overarching expansion during its Stream On event last week.) Regarding the decision to zero in on indie professionals – most of whom lack millions upon millions of monthly listeners – some have suggested that the major labels are entirely unwilling to participate in Discovery Mode (and accept the corresponding royalty cuts).

Of course, Universal Music Group has said that it’s working with Tidal, Deezer, and possibly other platforms to develop “an innovative new economic model for music streaming.” At present, the Big Three label, which kicked off 2023 by calling out “bad actors” in the streaming space, hasn’t announced Spotify as a partner on the initiative.

In any event, the Future of Music Coalition just recently encouraged its followers to reread a series of firmly worded tweets (initially published in March of last year) about the Discovery Mode expansion, describing the offering as Spotify’s “new wage suppression scheme.”

“Hearing that Spotify is starting to send around submission information for Discovery Mode, its new wage suppression scheme,” the 23-year-old entity penned. “It’s perhaps the most brazenly anticompetitive form of payola we’ve seen in digital music.

“Reports indicate that Discovery Mode involves a 50% cut in Spotify’s already low rates, in exchange for algorithmic manipulation that boosts these low cost tracks. Bad for artists and bad for fans,” the FMC proceeded.

And while the aforesaid Ari’s Take report placed Discovery Mode’s fee at 30 percent of royalties (solely for streams deriving from a campaign), logic suggests that the renewed criticism could prompt some creators to think twice about enrolling in the program, which is plugging music specifically via Radio and autoplay. (Distributors including but not limited to CD Baby, DistroKid, Stem, OneRPM, and Gamma’s Vydia are said to be participating in Discovery Mode.)

On the other side of the coin, though, it’s hardly a secret that a tremendous amount of music is arriving on Spotify and competing streaming platforms daily. Between this point and different factors – the major labels’ contractually guaranteed share of Spotify playlist spots among them – it goes without saying that certain eligible professionals will make use of Discovery Mode at once.

Meanwhile, with these acts accepting reduced royalties and presumably enjoying enhanced exposure, different artists yet, faced with the possibility of reaching fewer fans because their work is taking a back seat to projects supported by Discovery Mode, may ultimately feel compelled to sign up as well.