Spotify faces criticism for 30% royalty deduction in exchange for exposure in Discovery Feed

Spotify, the popular music streaming service, has faced criticism from artists and other members of the music industry for reducing royalty payments on songs played through its Discovery feed. 

Under the expanded plans of its Discovery Mode feature, Spotify will decrease royalty payments for streams in exchange for increased exposure through its algorithm on the feed. However, the feature is optional for artists, and they can choose to forgo the reduced royalty rate and receive full royalties for streams of their music. 

The Discovery feed is an algorithm-driven section of the app that suggests artists to users based on their listening preferences. Spotify also takes an undisclosed percentage of revenue from streams played through its Radio and Autoplay features. 

The news has sparked concerns, with some artists expressing concerns over exchanging royalties for exposure,  while members of Congress have denounced the change as a form of digital payola.

Speaking to MusicTech, a spokesperson for Spotify clarified that the reduced royalty rate is only applicable for streams that occur within Radio & Autoplay and for the duration of the content’s inclusion in the Discovery feed. “In exchange for promotion, creators agree to a lower ‘promotional’ royalty rate for those streams, where Spotify charges a 30 per cent commission,” they explained, while specifying that all other streams outside of these areas will remain commission-free.