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This article is an edited extract of an article from The Guardian.
Spotify’s controversial Discovery Mode offers artists greater exposure – at the cost of a 30% royalty reduction. Critics argue that it exploits musicians while misleading listeners.
In November 2020, Spotify quietly announced a new initiative through a carefully worded blog post titled, “Amplifying Artist Input in Your Personalised Recommendations”. This marked the debut of Discovery Mode, a program that promised artists increased visibility in exchange for reduced royalty payments. Rather than charging upfront fees, Spotify invited artists and labels to opt into a system where tracks would receive algorithmic boosts, but only if the rights-holders agreed to a 30% royalty reduction for streams generated through the program. Spotify framed this as an opportunity for artists to “identify music that’s a priority for them”.
The system’s structure immediately raised red flags. Tracks could only enter Discovery Mode after being released for at least 30 days, and Spotify offered no public disclosure of which songs were promoted this way. This lack of transparency has drawn comparisons to radio payola practices of the 1950s, when DJs were covertly paid to play certain songs – a practice eventually outlawed by the US Federal Trade Commission for misleading the public and distorting musical popularity.
Despite the ethical concerns, Spotify presented Discovery Mode as a tool for democratization. One employee rationalized it by emphasizing the absence of upfront costs, claiming this removed barriers for smaller artists. Yet, the reality was that more artists now faced the pressure of devaluing their work just to remain competitive. If an artist opted out, they risked losing visibility to those willing to sacrifice royalties for algorithmic attention. For many independent artists, participation felt less like a choice and more like a survival strategy in an already precarious streaming economy.
The inner workings of Discovery Mode reflect broader trends in how Spotify curates content. Playlists are built through a combination of human curation and personalization algorithms, which rank tracks based on user behavior. Discovery Mode injects a new variable into this equation, reshuffling songs based not just on listener preferences, but on an artist’s willingness to take a financial hit. This means that artists with deeper pockets – or labels with bigger budgets – can buy a better shot at listener discovery, further stacking the deck against smaller, independent musicians.
By 2023, internal messages revealed that Spotify employees were celebrating Discovery Mode’s success. More than 50% of artists earning between $50,000 and $500,000 annually had participated, surpassing internal goals. In a single year, the program generated €61.4m (£51m) in gross profit, with the majority coming from the independent and DIY sectors. These profits coincided with the rollout of Spotify’s controversial “artist-centric” royalty policies, which demonetized tracks with fewer than 1,000 annual streams, making Discovery Mode feel even more like an inevitable obligation for struggling artists.
For smaller labels, the pressure was immense. One indie label manager described how Discovery Mode created a zero-sum game: if competing labels used the program and they didn’t, their artists would suffer decreased exposure. Yet, even those who used Discovery Mode felt conflicted. While it could increase streams, the fact that listeners weren’t told which tracks were promoted raised ethical concerns. Artists were caught in a cycle where declining streaming payouts pushed them toward programs like Discovery Mode, even as those programs eroded the value of their music further.
Spotify’s experiments with paid promotion extend beyond Discovery Mode. Since 2019, the company has introduced several ad products, like “Marquee” pop-ups and “Showcase” homepage placements, which allow artists to buy visibility for a price. In 2023, the company launched Campaign Kit — bundling Discovery Mode, ads, and playlist submissions into an all-encompassing marketing package. The underlying message was clear: it’s no longer enough for artists to create music. To be heard, they now have to pay, give up royalties, or both.
The push for monetizing every layer of artist promotion has drawn fierce criticism. In 2021, the Artist Rights Alliance labeled Discovery Mode as “exploitative” and a “money grab,” warning that smaller artists and independent labels would be the biggest losers. That same year, the US House Judiciary Committee sent a letter to Spotify CEO Daniel Ek, cautioning that Discovery Mode could trigger a “race to the bottom” where musicians feel forced to accept lower pay just to stay visible. The letter highlighted how Discovery Mode exacerbated the financial precarity that many artists faced, especially after the COVID-19 pandemic decimated live performance revenue.
Internally, even some Spotify employees questioned the program’s ethics. Messages shared in a Slack channel called “ethics-club” show employees expressing discomfort with Discovery Mode’s impact on smaller artists. One employee noted that boosting some songs inherently reduced opportunities for others, while another worried that Discovery Mode’s trajectory would ultimately strip artists of any benefit, leaving Spotify as the sole winner.
Despite mounting criticism, Spotify continues to defend Discovery Mode. The Guardian shared: “In response to points raised in this article, a Spotify spokesperson disputed the characterisation of Discovery Mode as the contemporary equivalent of payola. While users cannot see which individual songs are part of Discovery Mode, the “about recommendations” link in algorithmically generated playlists discloses factors that may have influenced the tracklisting. Spotify disputes the accuracy of views shared by employees in some internal messages featured in this chapter. According to the company, these internal messages “appear to be largely from former employees who were chatting with each other about their views on different company matters, including matters that they may not have been working on or even have direct knowledge of”. The company adds: “We have a culture where employees are free to share their views even when they have concerns or constructive criticism.” They also dispute the claim that Discovery Mode is anticompetitive. The company would not comment on whether the Discovery Mode profits were accurate.”
For music advocacy groups like the Future of Music Coalition, Discovery Mode exemplifies the unchecked power of tech platforms over creative industries. Unlike radio payola, which operated in the shadows, digital payola happens in plain sight — yet regulators have been slow to catch up. The Coalition argues that programs like Discovery Mode contribute to wage suppression and market distortion, and calls on regulators to investigate Spotify’s murky royalty structures and major-label contracts.
At its core, the Discovery Mode controversy isn’t just about Spotify. It’s about what happens when a handful of corporations control music distribution, dictating not only who gets heard but under what terms. Artists face dwindling royalties, limited leverage, and an ever-expanding list of ways to pay for visibility in an increasingly pay-to-play ecosystem. In this landscape, musicians are left with few choices, making it harder for artists to succeed without paying for these services. And listeners, unknowingly, may never know what they’ve lost.
