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Spotify announced on 2nd November 2020 that it will soon roll out an experimental tool - ‘Discovery Mode’ for Artists and Record labels to promote their music.
What does ‘Discovery Mode’ do?
- Artists/Record labels obtain higher exposure for certain tracks BUT, they get paid less in royalties per stream.
- They can opt-out of this and be paid at the standard royalty rates BUT, their songs won’t be prioritised
- The music community did not appreciate the announcement and found it to be distasteful.
- Many artists have been fighting for fairer royalties since Spotify’s inception. Just a week prior to the announcement, UMAW (Union of Musicians and Allied Workers) launched a petition seeking “Justice at Spotify” for higher royalty rates per stream and more transparency in contracts.
- ‘Discovery Mode’ was equated as a streaming platform ‘payola’. (Payola was termed to be a form of bribery by record labels to radio stations to boost their songs’ airtime on radio.)
Spotify’s tone-deaf announcement, amidst a global pandemic, of the ‘pay-for-play’ model, if used extensively, will make it difficult for smaller labels and indie artists to stay competitive if they opt out, reinforcing the ‘struggling artist’.
Spotify’s ad sales have been on the decline recently. The company has invested heavily in the podcast sector as well. ‘Discovery Mode’ could be a way to sustain the company financially. The announcement, however, does reiterate that the tool is still experimental and have not specified how much lower the stream royalty rates will be. It would be logical to assume that they will react to the industry response to make changes to the feature or even scrap it entirely.