Spotify Lawsuit Alleges ‘Personalized’ Song Recommendations Are Based On Pay-for-Play Monetary Incentives

A proposed class action lawsuit alleges that Spotify deceptively employs its own version of “payola” to curate recommended songs and playlists based not on a user’s listening activity and preferences, but on pay-for-play song placements bought by the highest bidder.

The 39-page Spotify lawsuit contends that the streaming service has circumvented certain bribery and promotional regulations designed to prevent artists and labels from buying their way into users’ purportedly algorithmically personalized playlists.

The case says that although Spotify, the world’s largest music streaming service, claims to prohibit undisclosed pay-for-play arrangements, “the reality on the ground” is that the platform’s influential Discovery Mode and other personalized playlists are rooted in a modern-day version of payola, a scheme whereby money is paid to promote a piece of music with the hope of it gaining wider exposure.

“Listeners are never told when a track has been promoted through the [Discovery Mode] program, creating the false impression of neutral, personalized recommendations when financial incentives are quietly driving the algorithm,” the Spotify class action lawsuit summarizes.

The filing explains that undisclosed payola has existed in the music industry since the days of vaudeville, and for over a century, “gatekeepers” in the business have secretly accepted payments or other considerations to promote certain songs to increase visibility. Though regulators have attempted to curtail payola time and time again, the rise of streaming in the music industry has birthed new gatekeepers positioned to filter and recommend music to listeners through curated playlists, the case relays.

According to the complaint, although Spotify aggressively markets its promise to provide users with neutral music recommendations curated to their own tastes, the streamer has instead kept alive “the industry’s oldest deception—pay-for-play—in a modern algorithmic form,” violating the trust of proposed class members.

“Spotify exploits that trust by marketing itself as a platform that offers organic music recommendations—whether through its algorithmic or curated playlists—only to secretly sell those recommendations to the highest bidder,” the case reads.

Case claims Spotify inadequately discloses pay-for-play songs in “personalized” playlists

The lawsuit highlights that Spotify itself discloses that “commercial considerations may influence recommendations” made in personalized playlists, including the platform’s Discover Weekly playlist and AI DJ feature. The company concedes that it offers a “promotional tool that enables artists and record labels to highlight priority songs,” which increases the likelihood of them being recommended in algorithmically-generated playlists, the filing says.

However, the case states that Spotify does not disclose that commercial considerations may influence its song recommendations until after a user has already subscribed to the platform. Even then, the lawsuit says, the disclosure is hidden deep within Spotify’s platform.

Even if a user finds the “belated and insufficient” disclosure, the deception by Spotify nevertheless remains, the complaint charges.

“Telling users that ‘commercial considerations may influence’ recommendations does not reveal which songs are being promoted commercially and which are being recommended organically,” the case argues. “Without that specificity, users cannot distinguish between genuine personalization and covert advertising.”

Spotify’s business model makes true personalization impossible, lawsuit says

The suit emphasizes that consumers pay for Spotify because the service promises to offer music recommendations tailored to their own tastes. In the streaming era, the case says, listeners prioritize authenticity by way of personalization, and the time Spotify users invest in saving or skipping songs, building playlists and following artists purportedly helps the platform “learn” what they like and dislike.

According to the case, however, Spotify’s business model makes true playlist personalization impossible. The filing contends that the platform’s “systematic preference for major-label artists” produces a “feedback loop” that serves to boost their visibility and solidify their dominance.

Further, the case alleges that “[t]he same bias” plagues Spotify’s algorithmic song recommendations, as the defendant’s system “treats high stream counts as proof of popularity and promotes those tracks more frequently, even when the numbers are inflated by paid promotion.”

The class action lawsuit contends that playlist placement comes with an implied promise that a song was selected organically, and not because of surreptitious commercial influence.

“Plaintiffs and Class members paid for a service they believed was neutral and personalized, and they were deprived of the benefit of that bargain,” the lawsuit alleges.

Who is covered by the Spotify payola lawsuit?

The Spotify lawsuit looks to represent all individuals in the United States who used Spotify during the applicable statute of limitations period.

How can I sign up for the Spotify lawsuit?

Typically, you don’t need to do anything to sign up for or join a class action lawsuit when it’s initially filed. Should the case be resolved via class action settlement, the settlement class members will typically be notified of the deal with instructions on what to do next and their options and legal rights moving forward.

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