At a time when more are calling for reinventing steaming rates to better artist payout, Spotify is launching a new mode that invokes past concerns with payola infractions within the music community. Spotify's "Discovery Mode" offers creators the opportunity to increase their public visibility in exchange for a diminished royalty rate, which currently fluctuates between $.003 and $.005 per stream reportedly.

Payola, the practice of requiring compensation in return for airplay by broadcasters, decreases the diversity of music included in airplay and provides an unfair barrier of entry for smaller artists. While current antiquated payola legislation does not extend to digital streaming services, Spotify's anti-creator behavior of enticing struggling creators to further reduce their already low royalty rate in order to stay competitive with their music community peers is reminiscent of past payola practices. 

"Spotify's promotional royalty rate is yet another example of how the company avoids paying music creators their fair share," said Daryl Friedman, the Recording Academy’s Chief Advocacy Officer. "It's a predatory tool that can be likened to payola, and it's troubling that Spotify introduced this at a time when music creators are seeing their livelihoods devastated amidst the pandemic. With Spotify payouts already so low, I don't see how this experiment will benefit any musicians who are already struggling to earn a living wage."

The Recording Academy has a history combatting these anti-creator "pay-for-play" practices. In 2007, the Recording Academy penned a letter to then-Federal Communications Chairman (FCC) Chairman Kevin Martin in support of the FCC's pending payola investigations into Big Radio. Without commenting on individual investigations, the Academy urged the FCC to continue oversight to "ensure that future conduct in violation of the payola laws will not occur" and to intervene if any such conduct occurs.

At a time when COVID-19 has resulted in closed venues and canceled tours, causing a tremendous amount of financial distress for the entire music ecosystem, artists and creators need fairer compensation. Yet instead of providing a lifeline, Spotify's flirtation with "pay-for-play" will further damage the financial health of small-time music creators who want to remain competitive on their platform.

Spotify & Other Streaming Giants Are Fighting Songwriter Royalty Increases…Still