SPOTIFY'S DISCOVERY MODE, MONEY FOR THE MAN, ENHANCEMENT FOR THE LISTENER, ALL AT THE ARTISTS EXPENSE

On November 3rd, 2020, Spotify announced that it will be launching a new feature called Discovery Mode. The initial intent is to boost songs based on algorithmic placement in exchange for lower royalties. Tipping its hat the main issue that was first addressed by the Union of Musicians and Allied Workers with the Justice At Spotify campaign in late October. The Campaign demands more equitable financial arrangements from Spotify. Spotify consists of 286 Million users and 130 Million Subscribers making it the number one music streaming platform in the world. The platform provides each stream a general range of $0.00348, and the Justice At Spotify campaign is asking for one cent per Passive and Active stream. Active streams are from listeners who actively seek out the track through search or have played it from their library of saved tracks. They’re also known as 'engaged' or 'lean-forward' streams. Passive streams are from listeners via radio station, algorithmic playlist, or platform editorial. In 2019 Spotify made $7.3 billion on revenue alone, with the gross profit of $1.8 billion and $5.5 billion going to labels and artists. Providing one whole cent per stream would increase their margin, and essentially would have them paying out the artist more than what the company would be taking in, ultimately putting investors at risk.

Spotify claims that Discovery Mode is merely a tool, and it will be tested allowing record labels to influence the songs selected by its algorithm for personalized recommendations. Spotify claims that with this new feature, artists should be in charge of what their success looks like on the platform, thus taking more control into their careers. The streaming tool will ultimately cost artists and labels more in royalties, but Spotify claims that they see a positive projected ROI (Return On Investment). There's much controversy about this new tool.

Many independent musicians are not in favor of the platform's new feature due to the already present decrease in stream revenue. The average artist makes approximately $3.00-$5.00 per 1,000 streams off Spotify. For an independent artist, the cost of making a full LP can cost up to tens to thousands of dollars. Rendering the small pay off Spotify provides, (or lack thereof) incredibly lackluster. Many artists have gone as far as to call the new feature a form of Payola, the illegal practice of payment to commercial radio in which the song is presented as being part of the normal day's broadcast without announcing that there has been consideration paid in cash for its airplay. The Urban Dictionary bluntly defines Payola as 'Music Biz Prostitution' rendering it a term the music industry does not take lightly.

In order for Spotify to get around the Payola allegations, the company has decided not to charge artists for this feature, but to offer Discovery Mode at their own expense. By participating, artists and labels agree to be paid lower royalty rates for streams. A rate that is smaller than the current obnoxiously low $0.00348. If the artist chooses not to participate, the track will continue to be played on Spotify radio and autoplay, but it will not be prioritized and they will get the standard royalty rate for streams. If Spotify were to require a fee to access Discovery Mode, it would suggest the company is operating out of Payola by featuring paid-for content to premium subscribers, contradicting their pledge of no ad interruptions.

 With the new Discovery Mode, the listener has zero price hike and the rights holders and creators have an increased ARPU (Average Revenue Per User). The group with the most risk here are the investors. Spotify is encouraging investors to measure their investments on growth and market share rather than margin or ARPU. Growth and Market have a huge part to play in these new tools, and it's essentially both the artist and the listener who are taking the cuts. Both the Discovery Mode and Marquee features have a similar effect in curating the listener’s experience and improving profitability due to the net amount of income that goes back to rights holders. However, because of the Discovery Mode feature, it takes away steaming income and damages the listener's overall experience riddling the Spoti-verse with music that has hit ears because of dollar signs, not because of the listener's preferences and tastes.

Spotify continues to say that it's all about the listener. The company continues to make statements implying that it's not at all about the creators and artists, but about those who consume it and those who provide it. Knowing this, the question still stands: If you can’t afford to support the artists themselves on your platform, should you even exist at all? It goes without saying that without the musician, you wouldn’t have content. And without content, you wouldn’t have music streaming platforms. This is not a debate of what came first, the chicken, or the egg. This is an opportunity to challenge the social norm we have all grown accustomed to in the way that we stream our music. Will we continue to give money and power to The Man? Or will we take a stance and not submit to hollow promises of the industry, and play fair. The choice is up to you, and that choice will ring in your ears louder than the music you stream when you open Spotify.