Members of Congress slam Spotify on ‘troubling’ Discovery policy

Members of Congress slam Spotify on 'troubling' Discovery policy

Updates: Three members of Congress have written Spotify Co-founder and CEO Daniel Eck criticized the company’s policy of promoting an artist’s music on its Discovery Mode platform in exchange for a low royalty rate. In other notes, the letter requests that Spotify label such songs as paid content; Company announces policyWhich has been heavily criticized in 2020.

letter, written on official Congress stationery and retrieved by variety, is dated March 26, 2022 and is signed by Reps Yvette D. Clark (D-NY), Judy Choo (D-CA) and Tony Cardenas (D-CA), representing the Congressional Caucus on Multicultural Media; Its authenticity was confirmed by a spokesperson for Rep. Clark.

This explains in part: “Accepting low royalty payments is a serious risk for musicians, who will only benefit if Discovery Mode offers a greater total streams for an artist across their entire catalog, not just those covered by the program.” Track done. And if two competing artists both nominate their latest track to the program, any benefits can be forfeited, meaning only profits go to your company’s bottom line. Artists from diverse backgrounds For those who often struggle to access capital, the groundwork they now have to be found by new consumers on Spotify represents a particularly serious problem.

“We will ask that Spotify publish, on a monthly basis, the name of each track enrolled in the program and the agreed upon royalty waiver,” the letter continues. “Without this transparency, you’re asking the cast to make a blind choice, and that represents a classic prisoner’s dilemma.”

Last July, Rep. Jerry Nadler (D-NY), chairman of the House Judiciary Committee and Rep. Hank Johnson Jr. (D-GA), chairman of the Subcommittee on Courts, Intellectual Property, and Internet, wrote a letter requesting more information on the policy. Raised voice. There is concern that this “could trigger a ‘race to the bottom’ in which artists and labels feel compelled to accept lower royalties as a necessary way to break the overly crowded and competitive music environment.” We do.”

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 no-royalty-paying aspect of Discovery Mode. The company emphasizes that the program does not require any upfront costs, although it is still a way for artists or labels to pay for better placements with hit-or-miss results.

contacted by variety, A spokesperson for Spotify said: “The artist and label teams have told Spotify over the years that they want more agency to reach new listeners and drive meaningful connections across our platform – Discovery Mode, in its early stages, is just that. 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 on multiple forums and describing its use within User Experience. 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.”

Philip Kaplan, CEO of independent distributor DistroKid, is among executives and artists who praised the program. Company Websitesaying “Discovery Mode is a groundbreaking music marketing tool because it doesn’t require an upfront budget. Discovery Mode makes it possible for independent artists to reach new fans at every level in a whole new way.”

The March 26 letter has accused the company of lacking transparency for consumers even in discovery mode.

“With respect to consumers, they also deserve transparency,” it continues. “Spotify fails to tell consumers that they are listening to paid content when it feeds them Discovery Mode songs. We believe that there is no meaningful difference between paying a lower royalty rate and accepting payment for appointment on service. 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’.

“Based on our understanding of the program, this makes Discovery Mode a direct example of deceptive native advertising, which relies on unwitting consumers, and enforcement by the Federal Trade Commission has been a recent area of ​​activity. The Discovery Mode program deceptive native Sounds akin to advertising like undeclared promotional tweets from paid social media influencers or insufficiently described sponsored search results.

on its website, Spotify bills Discovery Mode as “a marketing tool designed to help you find new listeners when it matters most to you.” However, it has come under criticism from the media and the artist community for a number of reasons, including the reasons the letter outlined above. Music Business Worldwide publishes lengthy critique of policy Last year, it was called the “Pay for Influence Tool”.

The letter comes during a challenging time for Spotify, which earlier this year came under intense criticism for hosting Joe Rogan’s controversial podcast in a $200 million deal, and subsequently for the company’s Barcelona soccer team. The sponsorship was decided in a deal worth $300 million. These nine-figure deals come at a time when the company has spent millions with Amazon, Google, and Pandora in an effort to reduce the rate it pays to music publishers and expanding songwriters.

The text of the new letter appears in full below:

Dear Mr. A:

We write to you, as co-chair of the Congressional Caucus on Multicultural Media, to express our concerns about Spotify’s approach to consumer transparency and disclaimer. Your company’s questionable outlook has been brought to light by the recent scandal and your company’s decision to add “content advisory flags” to podcast episodes about the COVID-19 pandemic that contain misinformation, such as the Joe Rogan podcast.

As you are well aware, the recent episode led to a standoff between your company and several iconic artists including Neil Young and Bharat. Erie. The New York Times reported that it is “the latest strain in the company’s complicated and often troubled relationship with the cast.” We believe that your new music promotion program, Discovery Mode, is yet another disturbing move by your company that sacrifices integrity in the name of profit.

As reported by the press and on your website, Discovery Mode allows recording artists and copyright owners to use them in exchange for a reduced royalty payment of songs that the algorithm plays on, including streams through Spotify’s radio and autoplay formats. Provides great push. Sound recording by stage. However, it is our understanding that your program is unfair to both artists and consumers, as it again lacks transparency.

Accepting low royalty payments is a serious risk for musicians, who will only benefit if Discovery Mode provides a greater total stream for an artist across their entire catalog, not just the tracks covered by the program. And if two competing artists both nominate their latest track to the program, any benefits can be forfeited, meaning only the profits go to your company’s bottom line. For artists from diverse backgrounds, who often struggle to access capital, the groundwork they now have to be found by new consumers on Spotify represents a particularly serious problem.

We want Spotify to publish, on a monthly basis, the name of each track enrolled in the program and the agreed upon royalty waiver. Without this transparency, you are asking the cast to make a blind choice, and this represents a classic prisoner’s dilemma.

With regard to consumers, they also deserve transparency. Spotify fails to tell consumers that they are listening to paid content when they feed Discovery Mode songs. We believe that there is no meaningful difference between paying a lower royalty rate and accepting payment for appointment on service. 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”.

Based on our understanding of the program, this makes Discovery Mode a direct example of deceptive native advertising, which preys on unintentional consumers, and has been a recent area of ​​enforcement activity by the Federal Trade Commission. The Discovery Mode program sounds akin to deceptive native advertising such as anonymous promotional tweets from paid social media influencers or insufficiently described sponsored search results.

We ask your company for information to determine whether Discovery Mode violates the fundamental truth-in-advertising principle that “it is deceptive to mislead consumers about the commercial nature of the content.” ii We understand that the relevant FTC Guidelines disclosure of Paid Content must be “explicit”. and specific.” iii The factors considered under this Standard include whether the disclosure is major and unavoidable, and that nothing we see on your website or any interface of your service is subject to those criteria. Why doesn’t Spotify follow these federal guidelines designed to protect consumers?

We would appreciate a response to the above question to help inform the concerns raised in this paper and the priorities of our caucus for the year. We also invite you to join us in promoting a more equitable media landscape and in that spirit ask that you seriously consider whether Discovery Mode deceives consumers and undermines independent artists.

Signed,

Yvette D. Clarke Judy Choo Tony Cardenas Members of Congress Members of Congress Members of Congress

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