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Spotify’s Discovery Mode feature may lead to probe from Congress

Written by on June 5, 2021

Congress has expressed concern over Spotify‘s Discovery Mode feature, which allows artists to receive more exposure via the streaming giant’s recommendation algorithms. In order for an artist’s tracks to be highlighted in the Discovery Mode feature, artists and labels receive a “promotional” royalty rate on the streams, which is lower than the standard rate received from music streaming on songs.

Now, House Judiciary Committee Chairman Rep. Jerry Nadler (D-NY) and Subcommittee on Courts, Intellectual Property, and the Internet Chairman Rep. Hank Johnson Jr. (D-GA) are looking into the feature, citing worries that it may be a “race to the bottom” for artists. The letter states,

“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. 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.”

Spotify has long faced controversy over its streaming royalty rates, with artists making an average of $0.0038 per stream. The streaming platform’s founder, Daniel Ek, spurred even more anger from artists after he claimed musicians not earning enough from streaming is a “narrative fallacy.”

With touring having put on hold during the pandemic, many artists have been struggling financially. Due to low rates from streaming, the bulk of money artists receive come from touring, and Spotify encouraging smaller rates in order to promote their music may set a precedent for artists to begin receiving an even smaller cut. The letter goes on to say,

“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 choices raises significant policy issues […] Core copyright industries like music play in integral role in the U.S. economy, and the vitality of the industry is undermined when artists’ hard work is undervalued.”

The letter includes five questions asking Ek whether the Discovery Mode feature is to remain permanent, and how Spotify plans to calculate the reduced rates. Ek has been instructed to respond to Congress’ questions by June 16.

H/T: Hollywood Reporter

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