Spotify Accused of ‘Payola’ in Class Action Lawsuit

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Spotify faces a class action lawsuit alleging its Discovery Mode is just a form of “payola,” allowing record labels and artists to pay for promotions.

Spotify is facing a class action lawsuit from subscribers alleging that its Discovery Mode and curated playlists are a “modern form of payola” that misleads listeners, allowing record labels and artists to pay to promote their music.

Filed on Wednesday (November 5) in the U.S. District Court of the Southern District of New York, the lawsuit asserts that Spotify’s recommendation tools are merely a “deceptive pay-for-play” program. But the platform misleads users into believing that the recommendations are based on personal musical tastes and listening habits.

The class representative in the lawsuit is Genevieve Capolongo, a Spotify subscriber who seeks to represent “millions” of other users who were allegedly misled by Spotify’s recommendation tools. According to her lawyers, Capolongo used Spotify’s personalization features for years, but noticed she was “hearing the same major-label tracks,” which “bore little resemblance” to her actual listening habits.

“Spotify exploits [user] trust by marketing itself as a platform that offers organic music recommendations—whether through its algorithmic or curated playlists—only to secretly sell those recommendations to the highest bidder,” the lawsuit reads.

Discovery Mode first launched in late 2020. It allows artists and labels to get a boost to their visibility in exchange for reduced royalties. The practice has actually become a popular marketing tool in the industry, especially to hype the release of new music. But it was met with scrutiny upon release and was the subject of a Congressional investigation over its marked similarity to payola—secretly paying radio stations for airplay.

Capolongo’s lawsuit posits that Spotify does not disclose the exact nature of Discovery Mode to its users, despite offering a link explaining how it works. But “telling users that ‘commercial considerations may influence’ recommendations does not reveal which songs are being promoted commercially and which are being recommended organically,” Capolongo’s attorneys argue. “Without that specificity, users cannot distinguish between genuine personalization and covert advertising.”