Congress question Spotify over Discovery Mode feature

Spotify is facing a probe from the United States Congress over their Discovery Mode feature, which gives artists more exposure for specific tracks at an allegedly reduced royalty rate.

Artists and labels agree to receive a “promotional royalty” rate for streams received by the boost in visibility. This rate is believed to be lower than the standard rate, which is approximately one third of a cent, as reported by the Wall Street Journal.

Discovery Mode was announced last November, and is being trialed through Spotify’s Radio and Autoplay programmes. House Judiciary Committee Chairman Rep. Jerry Nadler and Subcommittee on Courts, Intellectual Property, and the Internet Chairman Rep. Hank Johnson Jr. sent a letter to Spotify CEO Daniel Ek expressing their concerns on the feature.

The letter, which was released on June 2nd, expresses concerns over a possible “race to the bottom,” as artists and their labels “feel compelled to accept lower royalties as a necessary way to break through an extremely crowded and competitive music environment.”

In the letter, Nadler and Johnson also raised the concern that if “virtually all commercial artists are also doing the same,” the feature won’t guarantee any increase in exposure for artists or labels.

The pair acknowledged that royalty rates are “already low” and noted Spotify has challenged an administrative ruling that sets a higher royalty rate for songwriters. Nadler and Johnson also noted how potentially damaging this could be for artists already on their knees.

“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 choice raises significant policy issues,” they said in the letter.

Nadler and Johnson asked the Spotify CEO if Discovery Mode will be made permanent, how will the company avoid a “race to the bottom,” and how the “promotional” royalty rate will be calculated in the conclusion of the letter.

They also asked how artists can determine the effectiveness of the feature, and if they can recover royalties if it does not result in an increase in streams. Nadler and Johnson requested a response from Spotify by no later than June 16th.

Spotify announced their Discovery Mode feature a week after United Musicians and Allied Workers Union launched their ‘Justice at Spotify’ campaign. The campaign demanded higher rates of at least a penny per stream and more transparency from the company.

The campaign has over 28,000 signatures from artists including Alex Somers, King Gizzard and the Lizard Wizard, DIIV, Julianna Barwick, Deerhoof, Zola Jesus, Thurston Moore and many more.

Musicians protested outside of Spotify’s offices in March to back up demands for fairer pay and more transparency. Spotify launched Loud & Clear in the same month which the company said aimed to provide more transparency as to how musicians are paid.

Earlier in the year Spotify had a patent approved for a piece of technology which monitored users’ speech and background noises in order to tailor Spotify users’ music. In May, over 180 musicians signed an open letter taking a stand against the patent.