Hated by politicians, loved by managers – Billboard
Last week, Spotify was reprimanded by several members of Congress. “We believe one of your new music promotion programs, Discovery Mode, is another troubling move by your company that sacrifices honesty in the name of profit,” reps Yvette D. Clarke, Judy Chu and Tony wrote. Cardenas. The letter went on to say that Discovery Mode’s implications were “particularly severe” “for artists from diverse backgrounds” and that the program “targets unwitting consumers” who don’t know they’re listening to a particular song because The artist actually paid Spotify – offering his music at a discounted royalty rate – to stream it to him.
The government’s concern stands in stark contrast to the mostly rave reviews of this ‘new music promotion scheme’ from 10 managers or independent label heads who tested it and agreed to speak about their experiences last week under covered with anonymity.
“If Spotify’s mission is to stop the gatekeepers from stopping good music from reaching the top, Discovery Mode certainly does that,” says an official. “We started using it a year ago and have seen incredible results,” adds an independent label manager. And one particularly effusive manager of a pop band called Discovery Mode “a brilliant, amazing tool for music marketing.”
It was notable that the managers who spoke to this story were almost uniformly unaware that Congress had Discovery Mode in their sights. Instead, they were thrilled to be able to rip their artists’ streams up to 200% to 300%.
The dissonance between government apprehension and managerial enthusiasm has been almost constant during the brief and tumultuous life of this Spotify program. The streaming service announced Discovery Mode towards the end of 2020. If artists choose to participate in the program, their music is given higher priority in Spotify’s algorithm, which provides music to listening initiatives passive like Spotify Radio and autoplay. The problem? Artists receive lower royalties on games that go through this additional algorithmic exposure, and a good number of artists are already quite unhappy with Spotify’s low royalty rates.
“If people are boosted, you have to compete”
Discovery mode was immediately dubbed a modern payola – by both its detractors and supporters. (Streaming services aren’t regulated like the airwaves, where undisclosed compensation is prohibited.) The Artists Rights Alliance denounced “Spotify’s cynical decision to use this moment to launch a new pay-per-view system.” act of pressuring vulnerable artists and small labels to accept lower royalties”. in exchange for a boost on the company’s algorithms,” calling the initiative “exploitative and unfair.” In June, members of the House Judiciary Committee wrote to Spotify, concerned that Discovery Mode could “trigger a ‘race to the bottom’ in which artists and labels feel pressured to accept lower royalties as a means necessary to break through an extremely crowded world. and a competitive musical environment.
But others have argued that ‘payola streaming’ would benefit those same ‘vulnerable artists’, replacing ‘a closed, secret system where major record labels control access to the public’ with ‘a lottery for tickets cheaply to success”. In response to last week’s letter from Congress, Spotify said in a statement that “the artist and label teams have said [us] for years that they want more agency to reach new listeners and drive meaningful connections on our platform – Discovery Mode, in its initial phase, delivers just that.
Concerns expressed by members of Congress and the Artists Rights Alliance, among others, stem in part from the belief that once payola-like behavior becomes an option in a brutally competitive environment where everyone seeks an advantage , everyone is encouraged to participate. – even if this widespread participation ultimately blunts any advantage.
In the radio world, for example, “on the whole, labels would be better off if everyone cooperates” and refuses to pay for airplay, says Gabriel Rossman, an associate professor at UCLA who studied payola. “But at any time, no matter what you do, I have an incentive to pay. If you don’t pay a bribe and I am, then I get the whole broadcast. And if you’re paying bribes and I’m also paying a bribe, then at least I’m getting some airplay. The end result, according to Rossman, is that competitors raise the price of radio towers to the point where it negates the promotional value of the broadcast.
Even some of the managers and label heads who oppose Discovery Mode have started using it, which offers potential support for the “race to the bottom” theory. “I was advocating from the start that they shouldn’t do this at all – you punch a hole in a dam,” says an indie label frontman. “But if people are energized, you have to compete in that environment,” so he tests Discovery Mode for his deeds. “It makes me uncomfortable,” he says.
“You get streams you wouldn’t otherwise get”
The divide between managers on the one hand and music industry advocacy bodies and regulators on the other can be partly explained by their orientation. The former see it as their job to help their artists stand out from the competition in any way necessary, and Discovery Mode is another tool in their arsenal; they only take care of a few trees. The Artists Rights Alliance is studying the impact on the whole industry, trying to figure out what will happen to the forest. “Some managers are taking advantage of the small number of users and seeing positive results,” says an industry veteran who is adamantly opposed to discovery mode. “It had to happen because managers command all revenue streams and can use Spotify as promotion for tours and merchandise sales.”
It is not difficult to find managers in the “positive results” camp. “We’ve had artists go from 5,000 streams a day to 100,000 streams a day,” one said. “We have seen hundreds of thousands of dollars in revenue generated from this. We saw about six months of growth.
Another label frontman said several of his acts had seen daily streams increase by a factor of two to three. “It was really great for pop and dance music,” according to a manager who watched artists who were already earning six-figure daily stream counts enjoy their “double or nearly double” numbers. Another manager of a pop group that was gaining even more daily streams saw a jump of a similar magnitude. And a third manager saw huge gains on songs that were already earning over 500,000 streams a day.
According to one label exec who has seen it have a positive impact on hip-hop tracks, the key to reaping the benefits of Discovery Mode is to focus on songs “that are already doing well”. “It won’t improve a record that isn’t streaming,” adds the label executive. “Where that has an impact are the viral recordings” or songs that listeners are already recording and adding to personal playlists. “If you manage it effectively,” the executive says, “you’re going to make money no matter what.”
For this to happen, the jump in streams must compensate for the drop in revenue from these priority radio plays. A pair of managers saw 30% less revenue from Discovery mode games. But as streams almost doubled when they put songs on the schedule, the two managers consider the trade-off worth it.
Some distributors and artists, including TuneCore and Terrace Martin, are named as Discovery Mode supporters on Spotify’s website. But more than half a dozen members of the music industry who were excited about the program and wanted to shout its praises to the heavens weren’t comfortable talking about it, describing the initiative as a “taboo” subject. “.
It’s not because they were aware of the letters reps sent to Spotify, though. “You don’t want anyone to know that you’re doing a hack that may not be entirely organic,” according to the hip-hop label frontman. Skipping streams from Discovery mode “is artificial,” adds another official. (He still puts viral songs on the show, noting that it helps them “stay viral longer.”)
A third manager believes that “it would hurt us if we went to the majors with these [boosted] numbers and they were like, ‘oh, Discovery Mode did that.’ He’s even wary of telling his buddies that he’s on the program. “When I started telling friends I trusted about it, they were like ‘this is evil, I hate this’,” he says.
“It’s the golden age for that right now”
Keeping a secret from your friends is one thing. More troubling, perhaps, is that some discovery mode users are beginning to feel the impact of the program is diminishing. It’s hard to prove, because each manager or label can only make judgments based on their own limited experiences. The only organization with a big data set to study and a good idea of how effective Discovery’s Mode is — in terms of influencing streams and, perhaps more importantly, overall payouts — is, of course, Spotify, which is notoriously low-key.
A manager who saw 200%-300% gains for his artists from Discovery mode last year recently saw the impact drop to 20%-30% – but he admits it’s hard to draw conclusions at from just a few acts. Still, there’s a logic to the idea that the punch of Discovery Mode would wear off over time. Bringing a gun to a knife fight gives you a pronounced advantage, until one day you show up and everyone else has armed themselves the same way. “If more and more people sign up, space ends up being limited,” says a label executive. “I think there’s probably another year left to extract value from it.”
If this theory turns out to be true, it would mean that early adopters would reap the benefits of Discovery Mode, entering at a time when increased streaming outweighs declining revenue, while latecomers would participate primarily to avoid taking further delay. The only entity that could continue to extract value from the program in the long term is Spotify, thanks to a growing number of streams that pay at a lower rate.
Two sources claim that independent labels and Merlin Network distributors got access to Discovery Mode earlier this year, which will increase competition. On top of that, sources claim that some distributors put the entire catalog of artists into discovery mode at once. “I’m against it,” says a manager. He supports putting only one or two songs in the program, but thinks throwing a whole catalog in there becomes greedy.
Another manager who agrees Discovery Mode is “going to be absolutely flooded” is still eager to enjoy it while he can. “It’s the golden age for that right now,” he says. “I think that’s an excuse for Spotify to pay people less when they don’t pay them much to start with. But an artist in the developmental stage needs everything they can get.