Spotify is facing a major lawsuit that calls it “a modern form of payola,” accusing it of promoting songs through its Discovery Mode program in a way that misleads users. The lawsuit claims that the platform allows record labels and artists to pay to appear in users’ recommendations without them knowing it’s a paid promotion, calling into question the streaming giant’s transparency.
Η Spotify is at the center of a major legal battle as it faces a class-action lawsuit that calls it “a modern form of payola.” The lawsuit claims that its Discovery Mode program, as well as the platform’s curated playlists, allow record labels and artists to secretly pay to promote their songs, misleading listeners into believing that the music recommendations are based solely on their personal preferences.
The lawsuit was filed in New York by a subscriber to the platform, Genevieve Capolongo, who claims to represent “millions of users” who were deceived by the way Discovery Mode worked. According to the lawsuit, Capolongo had been using the app’s personalized playlists for years, but was constantly listening to songs from major labels that had nothing to do with her usual musical choices.
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At the center of the lawsuit is the accusation that Spotify is “exploiting user trust,” presenting Discovery Mode as an organic recommendation tool, when in reality it functions as a mechanism for promoting songs in return for financial rewards. The lawsuit describes the system as a form of “pay-for-play,” a model where artists or labels pay to gain visibility in the platform’s recommendations and playlists.
The term payola dates back to the 50s and refers to the paid or covert promotion of music tracks on radio stations or in the media, without informing the public that it was an advertisement. Back then, record labels would pay DJs to play specific songs so that they would appear to have a natural appeal. In modern times, “digital payola” has spread to streaming platforms, such as Spotify or YouTube, where the promotion can be done through algorithms or playlists — often without fully disclosing to users that it is paid content.
The company, for its part, categorically rejects the accusations. In a statement, Spotify called the reports “nonsense” and stressed that Discovery Mode “does not buy streams or influence editorial playlists.” According to a company spokesperson, “the accusations completely misrepresent how the program works. Discovery Mode simply allows artists to flag their songs for algorithmic consideration in specific contexts, such as Radio or Autoplay. Users are clearly informed in the app and on the website about how it works.”
The legal action comes at a time when Spotify has been under fire for similar issues. A recent lawsuit related to the Drake-Kendrick Lamar feud alleged that Universal Music Group used bots and paid promotions to artificially boost streams on Spotify. Meanwhile, another lawsuit filed the same week accuses the platform of “turning a blind eye” to fake streams and automated plays that benefited specific artists.
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Discovery Mode was first introduced in 2020 as a “promotion tool” that allows artists to promote their songs in exchange for lower royalties. From the start, the model caused a backlash, as it was reminiscent of the old practice of payola, i.e. secretly paying radio stations to unfairly promote songs. The US Congress had even launched an investigation into whether Discovery Mode was operating ethically and legally. Despite criticism, the feature quickly became a popular marketing tool, used by many record labels to release new music.
According to the lawsuit, the problem isn’t just whether there’s paid promotion, but that Spotify doesn’t clearly disclose exactly how Discovery Mode works. While the platform provides a link titled “About Recommendations” that generally explains the process, Capolongo’s lawyers argue that this “is not enough for the average user to understand which songs are being promoted commercially and which are being selected algorithmically.”
As the lawsuit states: "Informing that 'commercial considerations may influence recommendations' is not enough. Users need to know which songs are being recommended due to paid promotion and which ones are being recommended because they truly match their musical preferences."
Capolongo's legal team also argues that even the platform's most popular playlists, such as Today's Top Hits and RapCaviar, may be influenced by financial agreements between labels and Spotify, although the lawsuit does not present specific evidence beyond statements from "anonymous industry people."
The lawsuit accuses Spotify of violating New York’s false advertising and unfair trade practices laws, and also alleges that the company “obtained an unfair financial benefit by deceiving subscribers.” Capolongo argues that she would not have paid for a subscription if she had known that the platform’s playlists and recommendations were “determined by hidden commercial agreements and not solely by her musical preferences.”
The case is expected to be a landmark for the way streaming platforms operate and promote music in the future. If the court rules in favor of subscribers, Spotify may be forced to publicly disclose its commercial partnerships and redefine the way it recommends music to its users.
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Until then, the company remains steadfast in its position that the allegations are unfounded and that Discovery Mode is transparent, "giving artists the ability to showcase their work without buying airplay or publicity."
But the question remains: is this a clever advertising tool or the modern version of payola in the streaming era?
