Congress representatives criticise Spotify in open letter

Three members of the US Congress have written to Spotify CEO Daniel Ek, criticising the streaming platform's policy for a perceived lack of financial transparency.

An exclusive report by Variety reveals that congress representatives Yvette D. Clarke (New York), Judy Chu (California) and Tony Cardenas (California) penned an open letter dated back to March 26. The letter's authenticity was confirmed by a spokesperson for Representative Clarke.

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It criticises the company’s policy of promoting an artist’s music on its Discovery Mode in exchange for reduced Spotify royalty rates.

Part of the letter reads: "Choosing to accept reduced royalty payments is a serious risk for musicians, who would only benefit if Discovery Mode yields more total streams for an artist across their entire catalogue, not just the track covered by the program."

On Spotify's website, Discovery Mode is described as “a marketing tool designed to help you find new listeners when it matters to you most.”

Discovery Mode was introduced in November 2020 and it allows artists to boost their content on the service in exchange for a lower royalty rate than they would otherwise receive.

However, there is a chance that any potential benefit from this proposal would be futile depending on how many artists opt into Discovery Mode.

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The letter states: "If two competing artists both enrol their newest track in the program, any benefit could be cancelled out, meaning that the only profit goes to your company’s bottom line.

"For artists of diverse backgrounds, who often struggle to access capital, the premise that they must now pay in order to be found by new consumers on Spotify represents an especially serious problem.

“We would ask that Spotify publish, on a monthly basis, the name of every track enrolled in the program and the royalty discount agreed upon,” the letter continues. “Without this transparency, you are asking artists to make a blind choice, and it represents a classic prisoner’s dilemma.”

House Judiciary Committee Chairman Rep Jerry Nadler and Subcommittee on Courts, Intellectual Property, and the Internet Chairman Rep. Hank Johnson Jr. wrote to Spotify's Daniel Ek last July asking for more information on the policy.

In the letter sent last July Committee representatives have asked Spotify to answer questions including whether Discovery Mode will be a permanent programme and how the streaming service plans to calculate the reduced royalty rate.

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To read the full letter, check out Variety's exclusive report here.

Aneesa Ahmed is Mixmag's Digital Intern, follow her on Twitter