Spotify Sued Over Discovery Mode: ‘A Modern Form of Payola’

Spotify is facing a class action lawsuit claiming its Discovery Mode and editorial playlists are a “modern form of payola” that allow record labels and artists to secretly pay to promote their music.

The lawsuit, filed on Wednesday (Nov. 5) in New York, alleges that Spotify’s recommendation tools are a “deceptive pay-for-play” program, but that the streamer misleads consumers into trusting that they are neutral and based on personal musical tastes.

“Spotify exploits that trust by marketing itself as a platform that offers organic music recommendations — whether through its algorithmic or curated playlists — only to secretly sell those recommendations to the highest bidder,” reads the lawsuit, obtained by Billboard.

The case was filed by a Spotify subscriber named Genevieve Capolongo, who seeks to represent “millions” of other users who were allegedly misled by Spotify’s offerings. Her lawyers say she used the platform’s personalization features for years, but “kept hearing the same major-label tracks” that “bore little resemblance to her listening habits.”

In a statement to Billboard, a spokesperson for Spotify called the accusations “nonsense” and pointed to its detailed explanation of the program.

“Not only do they misrepresent what Discovery Mode is and how it works, but they are riddled with misunderstandings and inaccuracies,” the company said. “Discovery Mode is a feature artists can use to flag priority tracks for algorithmic consideration in limited contexts: Radio, Autoplay, and certain Mixes. It doesn’t buy plays, it doesn’t affect editorial playlists, and it’s clearly disclosed in the app and on our website.”

The new case is the latest to claim that major labels are buying placement on Spotify to boost their artists. The high-profile lawsuit filed by Drake over Kendrick Lamar’s “Not Like Us” included accusations that Universal Music Group used bots and payments to juice the song’s popularity on many platforms, including Spotify. Another case, filed earlier this week, claims that Spotify “turned a blind eye” to bots and other forms of fraudulent streams designed to inflate certain artists.

First unveiled in 2020, Discovery Mode allows artists and labels to get boosted on Spotify in return for accepting reduced royalties. It was initially met with scrutiny, including a Congressional investigation, over its similarities to payola, or the practice of secretly paying radio stations for airplay. But it has become a popular industry marketing tool around the release of new music.

Much of Wednesday’s lawsuit is focused on the extent to which Spotify discloses the exact parameters of Discovery Mode to its users. Though listeners are offered a link to an “About Recommendations” explainer when using it, Capolongo’s attorneys say that isn’t enough.

“Telling users that ‘commercial considerations may influence’ recommendations does not reveal which songs are being promoted commercially and which are being recommended organically,” her lawyers write. “Without that specificity, users cannot distinguish between genuine personalization and covert advertising.”

The lawsuit also claims that Spotify’s editorial playlists, like the hugely influential Today’s Top Hits and RapCaviar, are also subject to pay-for-play. But it fails to offer any concrete examples of such payments, citing only unnamed “industry insiders” confirming that it happens and circumstantial evidence about the “disproportionate” rates of major-label music on such playlists.

In technical terms, the lawsuit claims Spotify’s conduct violated New York state law with deceptive practices and false advertising. It also claims Capolongo was fraudulently induced to subscribe and that Spotify was unjustly enriched by its behavior.

In more straightforward language, Capolongo says she simply wouldn’t have paid for Spotify if she had “known the truth” about the service: “That Spotify’s playlists and recommendations are shaped by undisclosed pay-for-play arrangements and hidden commercial incentives, not by her listening history alone.”