The text of the new letter appears in full below: These nine-figure deals come at a time when the company, along with Amazon, Google and Pandora, has spent millions in an effort to lower the rate it pays to music publishers and by extension songwriters. The letter comes during a challenging time for Spotify, which came under intense criticism for hosting Joe Rogan’s controversial podcast earlier this year in a $200 million deal, and followed by the company’s decision to sponsor the Barcelona soccer team in a $300 million deal. Music Business Worldwide published a lengthy criticism of the policy last year, calling it a “Pay for Influence Tool.” On its website, Spotify bills Discovery Mode as “a marketing tool designed to help you find new listeners when it matters to you most.” However, it has come under criticism from the media and the artist community for many of the reasons the letter above outlines. The Discovery Mode program seems identical to deceptive native advertising like undisclosed promotional tweets from paid social media influencers or inadequately described sponsored search results.” “Based on our understanding of the program, this appears to make Discovery Mode a straightforward example of misleading native advertising, which preys on unwitting consumers, and has been a recent area of enforcement activity by the Federal Trade Commission. In fact, Spotify advertises to listeners that its Radio feature offers ‘continuous music based on your personal taste and no ads if you are a Premium member.’ We believe there is no meaningful distinction between paying a lower royalty rate and accepting payment for placement on the service. “Spotify fails to tell consumers that they are listening to paid content when it feeds them Discovery Mode songs. “Regarding consumers, they too deserve transparency,” it continues. The March 26 letter accuses the company of a lack of transparency for consumers in Discovery Mode as well. Discovery Mode makes it possible for independent artists at every level to reach new fans in a whole new way.” Philip Kaplan, CEO of independent distributor Distrokid, is among the executives and artists who praise the program on the company’s website, saying “Discovery Mode is a groundbreaking music marketing tool because it doesn’t require any upfront budget. On the whole, the response to Discovery Mode from our listeners and partners has been incredibly positive and we will continue to be transparent about how it is working.” We have been transparent about the use of Discovery Mode and the commercial considerations associated with it to our users and partners by publicly discussing this test in many forums and describing its use within the user experience. The company emphasizes that the program requires no up-front costs, although it is still a method whereby artists or labels pay for better placement, with hit-or-miss results.Ĭontacted by Variety, a Spotify spokesperson said: “Artist and label teams have told Spotify for years that they want more agency in reaching new listeners and driving meaningful connections on our platform – Discovery Mode, in its early phase, delivers just that. To be fair, the program is essentially no different from traditional brick-and-mortar promotional campaigns whereby record companies pay retailers for premium store-display placement for their CDs and vinyl and unlike those programs, Spotify is at least upfront about the advance-royalty-payment aspect of Discovery Mode. (D-GA) wrote to Ek requesting more information on the policy, voicing concerns that it “may 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.” Jerry Nadler (D-NY) and Subcommittee on Courts, Intellectual Property, and the Internet Chairman Rep. Last July, House Judiciary Committee Chairman Rep. “Without this transparency, you are asking artists to make a blind choice, and it represents a classic prisoner’s dilemma.” “We would ask that Spotify publish, on a monthly basis, the name of every track enrolled in the program and the royalty discount agreed upon,” the letter continues.
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