Spotify expands controversial Discovery Mode program, offering artists more exposure for less royalties

Spotify has expanded its controversial Discovery Mode program, which will offer artists more exposure for less royalties.

The streaming giant first announced its move to offer labels the chance to influence its complex recommendation algorithm in exchange for a ‘promotional royalty rate’ back in 2020. Now it will be available directly within Spotify for Artists.

The announcement was made during Spotify's Stream On event on Wednesday (8th March), and described by Spotify CEO Daniel Ek in an interview with CBS News as “an entirely new and updated Spotify experience". The tool is part of a suite designed "to help artists find the fans who’ll love their music most".

"While labels can continue to access Discovery Mode through our team, I’m excited that Discovery Mode is now available directly within Spotify for Artists today,” Joe Hadley, Spotify's global head of artist partnerships and audience said on Wednesday. "Now, thousands of independently distributed artists and labels have access to Discovery Mode.”

As well as unveiling a new TikTok-style vertical homepage feed, and Marquee, a new promotional tool comprising a dynamic interface for mobile "built for deeper discovery and more meaningful connections between artists and fans" — which aims to give music fans "more of an active role" in discovery — Spotify also unveiled its annual music royalties report, Loud & Clear. 

As Spotify's rates are already incredibly low, with just 0.4 percent of artists in the UK make a living from streaming plays of their music, according to a 2021 study, the move has attracted controversy with the Union of Musicians and Allied Workers in US equating the practice with payola in an open letter and urging for to be stopped in an open letter in November 2020.

The streaming business model has long been criticised as insufficient for artists, writers and publishers. In 2020, US-based groups The United Musicians and Allied Workers Union (UMAW) launched the Justice At Spotify campaign for increased payouts to artists, and in 2021, the UK government said the streaming economy needs a "total reset" in a damning report. 

However, a new report published in November 2022 found that music streaming services are unlikely to make sufficient "excess profits" to improve paying artists. The study also found that in relation to greater competition to reach listeners, an artist could expect to earn around £12,000 from 12 million streams in the UK in 2021, but less than 1% of artists achieve that level of streams.

Last month, Spotify launched an AI “DJ” function with "stunningly realistic" voiceover, powered by generative AI while also hitting the milestone of 200 million paid subscribers, becoming the first streaming platform to do so.

Image via Spotify