Spotify ‘Payola’ Class Action Lawsuit Heads to Arbitration

Photo Credit: Faustina Okeke

Six months later, a federal judge has shut down a lawsuit centering on Spotify’s allegedly deceptive editorial playlist placements and algorithmic recommendations. Now, the proposed class action complaint is heading to arbitration, and its class claims are no more.

Judge John G. Koeltl just recently granted Spotify’s motion to compel arbitration and do away with the mentioned class claims. The latter date back to November 2025, when a self-professed subscriber named Genevieve Capolongo accused the DSP of reviving “the industry’s oldest deception—pay-for-play—in a modern, algorithmic form.”

As alleged in the suit, Spotify Discovery Mode, while purportedly tailored to one’s preferences, actually represents “the latest form of payola” owing to the alleged influence of paid recommendations therein.

Additionally, Capolongo levied similar allegations with regard to the service’s first-party playlists.

“Major-label artists dominate these [play]lists because their labels can buy visibility by leveraging industry relationships,” the plaintiff claimed. “Once featured, their tracks generate millions of streams, justifying renewed placement and cementing their dominance. What appears to be organic popularity is actually pay-for-play.”

And in the relief department, Capolongo sued on behalf of a nationwide class of Spotify users in an attempt “to put an end to this modern form of payola” – in part by compelling the defendant “to disclose when commercial incentives drive playlist placement.”

Unsurprisingly, none of this sat right with Spotify, which promptly moved to compel arbitration. As some will recall from our coverage of Live Nation’s class action woes, from the enforceability perspective, there’s quite a lot riding on the precise terms within arbitration agreements and how said agreements are presented to consumers.

Here, though, Judge Koeltl found that Spotify had done enough to inform the plaintiff of the fine print, including when she signed up for the service years ago and when she received subsequent emails concerning updates.

“Spotify provided the plaintiff with conspicuous notice of the Current Terms by email and by an in-app pop-up, both of which contained a conspicuous hyperlink to the Current Terms and provided the plaintiff with the opportunity to review the applicable arbitration agreement,” Judge Koeltl wrote.

The court was also unconvinced by the argument “that the arbitration agreement is unenforceable because the applicable filing fees [$215] far exceed the value of any damages award [‘roughly $5 to $21’]” the plaintiff may receive.

Finally, the judge nixed the class component of the complaint because the arbitration terms allow one to litigate against Spotify only in his or her “individual capacity.” And with that, the “case is stayed pending the outcome of the arbitration,” the judge concluded.