Spotify's 'Discovery Mode' programme catches the attention of US Congress

By Emmanuel Legrand 

The US House of Representatives has warned Spotify that its scheme known as "Discovery Mode" could raise "significant policy issues."

  Discovery Mode lets artists and record labels identify particular songs that they would like to prioritise in Spotify’s recommendations in exchange for agreeing to be paid a lower “promotional” royalty rate.

  In a letter sent to Spotify Founder and CEO Daniel Ek, House Judiciary Committee Chairman Jerrold Nadler (D-NY) and Subcommittee on Courts, Intellectual Property, and the Internet Chairman Henry C. "Hank" Johnson, Jr. (D-GA) have requested information on the platform's "Discovery Mode" feature. 

Set a race to the bottom

  They fear that the scheme could "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."

  Nadler and Johnson are also concerned by unintended consequences of the scheme: "Depending on how the programme 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." 

  They added: "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. This is particularly true under Spotify’s current model, where artists’ returns are already low, with Spotify reporting to pay artists less than a cent per song streamed (estimated in the $.003 to $.005 range) and Spotify has challenged an administrative ruling setting a higher royalty rate for songwriters."

Threatens the core goal of copyright

  For the policy-makers, Spotify's race to the bottom "threatens to weaken the core goal of copyright and intellectual property — incentivising creativity by offering a fair return on one’s work."

  The letter contains a series of questions that will help "better understand the design and proposed implementation of the Discovery Mode tool and the impact that it will have on artists"

Five questions to Spotify

  > 1. Does Spotify intend to make this pilot program a permanent one, and if so, when does it anticipate that it will begin?   

  > 2. What types of safeguards will be in place to ensure that a large volume of boosts under the Discovery Mode program do not end up cancelling each other out or otherwise resulting in a race to the bottom where the only practical way to get recommended is to accept a reduced royalty?  

  > 3. In general, how will Spotify calculate the reduced, “promotional” royalty rate that an artist or record label will need to accept to use the Discovery Mode program?  Is this calculation the same for all artists and labels? 

  > 4. How will artists and record labels be able to measure the impact of the program on their streams, including which streams are served directly from participating in the Discovery Mode program?  

  > 5. What, if any, means of redress will be offered to artists to recover lost royalties in the event that they determine participation in the program has not yielded increased streams?  

  Spotify has been asked to respond by no later than June 16, 2021. The music streaming service has yet to comment on the matter.