Spotify's Discovery Mode, introduced in November 2020, allows artists to gain algorithmic promotion in exchange for a 30% reduction in royalty rates. The program has drawn criticism from music advocacy groups, who liken it to the payola practices of the 1950s radio industry, which were outlawed in the US for misleading listeners.
Under Discovery Mode, labels or rights-holders agree to a lower royalty rate for streams that occur through personalised listening sessions, such as user-specific mixes and Radio features. Only tracks older than 30 days are eligible, and Spotify has not committed to publicly labelling which songs are enrolled, raising concerns about transparency.
Internal documents reveal that by 2023, over 50% of Tier 2–3 artists—those earning between $50,000 and $500,000 annually in royalties—had tried Discovery Mode. Spotify employees celebrated this milestone, noting it surpassed an initial goal of 30%. The program generated €61.4 million (£51 million) in gross profit between May 2022 and May 2023, with nearly all of it coming from independent and DIY artists.
Critics argue that Discovery Mode forces artists to devalue their work to gain visibility, effectively creating a two-tier system where those who can afford to accept lower royalties get promoted. Spotify has defended the program as democratic, claiming it removes financial barriers by not requiring upfront payments.
