Spotify Expands Access to Controversial Discovery Mode Program – Billboard
Written by GRB on 08/03/2023
Spotify officially announced that it has expanded access to Discovery Mode, a contentious program that gives artists the chance to gain more algorithmic exposure on the platform — through Spotify Radio and autoplay — in exchange for a lower royalty rate. The company made the announcement during its Stream On event on Wednesday (March 8), where CEO Daniel EK unveiled what he described as “an entirely new and updated Spotify experience.”
Artists or their teams can now easily enter tracks into Discovery Mode through the Spotify for Artists tool as long as their distributors are participating in the program. “While labels can continue to access Discovery Mode through our team, I’m excited that Discovery Mode is now available directly within Spotify for Artists today,” Joe Hadley, the streamer’s global head of artist partnership and audience, said on Wednesday. “Now, thousands of independently distributed artists and labels have access to Discovery Mode.”
Managers who are eager to get their artists’ music in front of as many people as possible have been enthusiastic about Discovery Mode — telling Billboard it’s a “brilliant tool” that can yield “incredible results,” for example. On the other end of the spectrum, music industry trade organizations and members of Congress alike have denounced the program as a new digital form of payola that will eventually lead to an overall decrease in the amount of royalties flowing from Spotify to labels and artists. Several members of Congress also questioned Spotify about whether Discovery Mode meets guidelines set forth by the Federal Trade Commission, which notes that “disclosures of paid content” should be “clear and conspicuous.”
Spotify’s announcement about Discovery Mode’s expansion should not come as a surprise to much of the music industry — for several months, it’s been quietly emailing artists to tell them they can use the program through Spotify for Artists. “We’ve been in testing mode, but the results speak for themselves,” Hadley told the Stream On audience. “On average, we’ve seen users save Discovery Mode songs 50% more often, add them to playlists 44% more, and follow the artists 37% more. And that’s just what they see in the song’s first month of Discovery Mode use.”
The streaming service first announced that it was testing Discovery Mode towards the end of 2020. In a blog post at the time, Spotify said it developed the program in response to artists “tell[ing] us they want more opportunities to connect with new listeners.” Discovery Mode provides artists and labels a chance to “identify music that’s a priority for them, and our system will add that signal to the algorithm that determines personalized listening sessions.”
“To ensure the tool is accessible to artists at any stage of their careers, it won’t require any upfront budget,” Spotify wrote in its blog post. “Instead, labels or rights holders agree to be paid a promotional recording royalty rate for streams in personalized listening sessions where we provided this service.” Last year, managers told Billboard that the royalties they received on plays from Discovery Mode were 30% less than the royalties they received from plays elsewhere on Spotify.
In 2021, Representatives Jerry Nadler (D-NY) and Hank Johnson Jr. (D-GA) expressed their concerns about Discovery Mode, noting in a letter to Spotify that it could “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.” Last year, Reps. Yvette D. Clarke, Judy Chu and Tony Cardenas also wrote to Spotify, worrying that Discovery Mode “preys on unwitting” listeners who aren’t aware they’re being served a song thanks in part to a promotional program with a back-end cost.
Spotify has defended Discovery Mode by touting its impact on artists’ streams and pointing to supporters, including TuneCore and Terrace Martin, that offer positive testimonials about the program on the company’s website. “Artist and label teams have told [us] for years that they want more agency in reaching new listeners and driving meaningful connections on our platform,” Spotify said in a statement last year. “Discovery Mode, in its early phase, delivers just that.”
The streaming platform also offers artists access to another paid advertising program called Marquee, which shows users a full-screen recommendation for a new release. Spotify has touted Marquee’s bang-for-buck, writing last year that it “delivered 10x more Spotify listeners for every dollar spent on similar social ads” and “a 100% higher click-to-listen-rate, on average, than similar social ads.”
During the company’s Stream On event, it announced that Marquee, which had previously just been available to artists in the U.S., will expand to acts in the U.K. and Australia as well. “It’s one of the most effective tools out there to market new releases,” said Sulinna Ong, Spotify’s global head of editorial.