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(Credit: Fortune Live Media)

Spotify set to face US Congress investigation

The United States Congress has informed Spotify about its concerns with the Discovery Mode feature currently available on the streaming service platform.

The feature was announced last year and allows artists to boost their placement of specific tracks in the platform’s recommendation algorithms. The boost is in exchange for different royalty rates on how those songs perform once promoted. The ‘promotional’ royalty is lower than the standard rate and is currently in its trial stage.

A Spotify spokesperson told The Verge last year: “The idea is for artist teams to be able to earn a positive ROI by using the tool,” the said, before adding: “In this new experiment, artists and labels can identify music that’s a priority for them, and our system will add that signal to the algorithm that determines personalized listening sessions,” the statement reads Spotify’s blog post announcing the feature.

“This allows our algorithms to account for what’s important to the artist – perhaps a song they’re particularly excited about, an album anniversary they’re celebrating, a viral cultural moment they’re experiencing, or other factors they care about.”

The Hollywood Reporter have seen a letter that the House Judiciary Committee Chairman Rep. Jerry Nadler and Subcommittee on Courts, Intellectual Property, and the Internet Chairman Rep. Hank Johnson Jr. have sent to Spotify CEO Daniel Ek asking for clarification.

The letter states that they believe the feature will lead to a “race to the bottom” where artists “feel compelled to accept lower royalties as a necessary way to break through an extremely crowded and competitive music environment”.

Nadler and Johnson are concerned that the mode won’t even enhance artists exposure “if virtually all commercial artists are also doing the same.”

“At a time when the global pandemic has devastated incomes for musicians and other performers, without a clear path back to pre-pandemic levels, any plan that could ultimately lead to further cut pay for working artists and ultimately potentially less consumer choice raises significant policy issues,” they add.

The duo slam Spotify’s current model and acknowledge that the current royalty rate “already low”, with the Swedish streaming service reportedly pays less than a cent per stream. 

Nadler and Johnson end the letter by asking Ek five questions regarding Discovery Mode. They want to know whether this mode will be permanent, how they will prevent a “race to the bottom”, and how they will calculate the “promotional” royalty rate.

On top of that, they want to know how artists will understand how Discovery Mode has enhanced their exposure, and if it doesn’t lead to more streams, they want to know if musicians can recoup their lost earnings.

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