Spotify Faces Payola, Fraud Class-Action Suits

Spotify is facing two class-action lawsuits filed in federal courts this week, accusing the streaming service of deceptive practices that undermine user trust and harm artists through alleged payola and unchecked streaming fraud.

The first lawsuit, filed on November 4 in Manhattan federal court by New York subscriber Genevieve Capolongo, targets Spotify's Discovery Mode feature, launched in 2020 to help artists increase visibility. Capolongo, who subscribed in September 2023 and primarily listens to independent artists such as Próxima Parada and Julia Cooper, claims the platform repeatedly recommended mainstream tracks from artists like Drake, Justin Bieber, and Zach Bryan, despite her preferences. The 39-page complaint alleges that Discovery Mode functions as a modern form of payola, the historical practice of undisclosed payments for airplay that regulators banned decades ago. It accuses Spotify of allowing record labels to boost songs in algorithmic playlists, such as Radio, Autoplay, and certain Mixes, in exchange for reduced royalty rates, while marketing recommendations as neutral and personalized based solely on user habits.

"Spotify exploits that trust by marketing...