Class Action Lawsuit Accuses Spotify of Engaging in ‘Payola’ in Discovery Mode

A class action lawsuit accuses Spotify of engaging in “payola” to allow record labels to secretly promote their artists in the streaming service’s Discovery Mode.

The lawsuit, filed Tuesday in a Manhattan federal court and first obtained by All Hip Hop, alleges that Spotify employs a “modern form of payola” where they sell visibility on the Discovery Mode playlists via undisclosed promotional deals, instead of providing paid users with a playlist catered toward their actual music interests.

The 39-page complaint, filed by Spotify subscriber Genevieve Capolongo and other users, argues that Spotify “charges listeners for the privilege of being deceived,” with Discovery Mode creating a “false impression of neutral, personalized recommendations when financial incentives are quietly driving the algorithm.” 

“Spotify exploits that trust by marketing itself as a platform that offers organic music recommendations … only to secretly sell those recommendations to the highest bidder,” the lawsuit states, adding that Capolongo’s Discovery Mode playlist was stuffed with hits by Justin Bieber and Drake, whose streams on the service are the focus of a separate lawsuit.

“Despite knowing that Spotify’s representations about personalization were false, [Capolongo] continues to suffer ongoing harm each time she uses the platform. She still cannot discern which songs are recommended for legitimate editorial or personalized reasons and which are promoted due to undisclosed commercial arrangements.”

The lawsuit seeks restitution, punitive damages, and a court order requiring Spotify to disclose whether Discovery Mode is tainted by money or royalty deals.

In a statement to the Hollywood Reporter, a Spotify rep called the class-action “nonsense” and said the lawsuit gets “basic facts” wrong. “Discovery Mode is a feature artists can use to flag priority tracks for algorithmic consideration in limited contexts: Radio, Autoplay, and certain Mixes,” the streaming service said. “It doesn’t buy plays, it doesn’t affect editorial playlists, and it’s clearly disclosed in the app and on our website.”

The class-action complaint comes just days after Spotify was hit with another lawsuit that alleges the company “turned a blind eye” to “mass-scale fraudulent streaming” on its platform, with Drake in particular the beneficiary of “billions” of fake streams. That class action lawsuit, filed in a Los Angeles federal court, was led by rapper RBX, the cousin of Snoop Dogg.

From Rolling Stone US.