While the exact reduction in royalties that the company will be pursuing with Discovery Mode is unclear, modelling for several potential scenarios unveils a significant reduction in royalties paid through to the industry.īased on Spotify’s 2021 payouts to rightsholders, a 20% reduction in royalties due to Discovery Mode would result in an annual $420m drop in royalties paid out, while a 30% reduction would result in a $630m drop per year. Spotify claims to have paid $7bn to rightsholders in 2021, of which around 30% is estimated to represent algorithmic streams. Discovery Mode positions money as a proverbial “finger on the scale” and a deciding factor in music discovery – at an inopportune time when many artists are already pointing to streaming payments being too low, and other revenue streams such as touring have been affected by the pandemic. This acceptance of a lower payments in return for preferential treatment induces memories of payola, where historically radio stations in some markets accepted money in return for airplay before regulators intervened. Crucially however, Discovery Mode is available only to artists who are willing to accept a reduction in royalty payment. Spotify promotes Discovery Mode as having no upfront cost, claiming it “gives artists at any stage of their career the opportunity to participate”. It enables artists and labels to choose specific tracks to be prioritised and algorithmically served to listeners. In late 2020, Spotify quietly announced that it was beta testing a new “audience development tool” called Discovery Mode. © Worldwide Independent Network Limited SPOTIFY’S DISCOVERY MODE: A RACE TO THE BOTTOM The following article is extracted from the WINTRENDS 2022 report. IMPALA’s streaming plan calls for assurance that there will be no reductions in royalties in exchange for enhanced plays, or privileged treatment in algorithms, or other features that recreate elements of payola. But royalty payments for creators are already insufficient, with music subscription rates deflated compared to other markets. Streaming platforms are key partners to the independent sector, and we seek to develop a responsible marketplace together. It also violates its pledge to paid subscribers that they will not be served advertisements. Spotify doesn’t tell listeners that they are hearing paid content when it feeds them these songs. We know what happened to paid posts on Facebook Pages: unless you pay to boost their reach, your posts will barely get to any of your followers.ĭiscovery Mode amounts to hidden advertising. For them, it is an opportunity to feature more tracks without making less profit.ĭiscovery Mode threatens the credibility of Spotify’s trusted recommendation engine. Many companies promoting Discovery Mode are DIY music distributors with a fee-based business model for which it doesn’t really matter which track is featured. Could increasingly reduced rates eventually become zero – free music all over again? The scheme has the potential to damage the entire music ecosystem. It leads to a “race to the bottom”: what if all artists wanted to use this service? Using an analogy, if you are at the movies and one person stands to get a better view, this will work for them at first, but by the time everyone stands up, they are all back to square one.ĭiscovery Mode terms are not transparent and there is no guarantee that Spotify will apply caps on the royalty cut. This would seem beneficial for music creators, so what’s the catch? Labels and artists involved get a lower payout (royalty) on streams that originate through Discovery Mode.ĭiscovery Mode can be seen as a reverse payola scheme that effectively creates a “Discovery Tax”, capitalizing on Spotify’s market power to apply royalty discounts in exchange for a fighting chance to be heard. The tool is available at no upfront cost. Discovery Mode is a marketing tool that allows artists and labels to pitch tracks and influence Spotify’s algorithm to prioritize them when a user listens to songs on autoplay or a radio based on a song, album, artist or playlist they select.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |