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Believe, TuneCore and DistroKid formally endorse Spotify’s controversial Discovery Mode

By | Published on Thursday 1 July 2021


With Spotify’s Discovery Mode having garnered plenty of criticism from within the music community, the streaming service has published more case studies about and testimonials from artists who have successfully taken part in its pilot of the service.

That includes artists working with DIY distribution firms DistroKid and TuneCore, as well as the latter’s parent company Believe, all of which have formally endorsed the initiative.

Discovery Mode, which began piloting last year, allows artists and labels to inform the ever powerful Spotify algorithm that drives streams via the machine-created playlists, personalised radio options and auto-play functions on the streaming service. However, in return for influencing the algorithm in that way, artist and labels have to accept a lower royalty rate on any streams that are subsequently generated.

For many artists and indie labels, that doesn’t seem like a good deal. Although not specifically naming Discovery Mode, the pan-European trade group for the indie sector, IMPALA, earlier this year called on “the entire music sector to stand with IMPALA to reject any proposals by services that reduce royalties for plays, or privileged treatment, in algorithms or other features – this is payola, and has no legitimate place in improving viability and opportunity for creators”.

Meanwhile, the Artist Rights Alliance in the US stated in May that “artists must unite to condemn this thinly disguised royalty cut”. It then added: “If Spotify genuinely wants to partner with artists and labels on playlists, priorities, and listener recommendations it should start by sharing basic information about the algorithms and data powering those processes. Transparency would allow creators to make informed choices and pursue commercial success on the platform in a straightforward way, rather than the current game of digital blind man’s bluff creators are forced to play”.

The concerns raised by the ARA were then taken up by two members of US Congress, who recently wrote to Spotify boss Daniel Ek to express their concerns about the Discovery Mode pilot. Jerry Nadler and Hank Johnson said in their letter to Ek: “At a time when the global pandemic has devastated incomes for musicians and other performers, without a clear path back to pre-pandemic levels, any plan that could ultimately lead to further cut pay for working artists and ultimately potentially less consumer choice raises significant policy issues”.

However, there are some music marketeers who reckon Discovery Mode could be a valuable new promo tool, seeing it not so much like the dodgy practice of paying radio stations to play your music (aka payola), and more like offering retailers a discount in return for getting your discs stocked in premium places around the record shop, as happened in the CD era.

At its big Stream On event back in February, Spotify insisted that – despite the lower royalty rate – artists who have participated in the Discovery Mode pilot have seen an overall royalty boost. It claimed that labels had seen on average a 30% growth in streams when they had used the service, meaning they made more money overall despite the lower rates paid on those streams.

They also referenced one case study involving an independent artist and music company – Odie and Empire – who, Spotify said, had achieved a 69% audience growth and 75% royalty increase by participating in their Discovery Mode pilot.

Among the latest round of case studies and testimonials published by Spotify is Believe-allied Natalie Perez who, the streaming service says, was able to use Discovery Mode to grow an audience beyond her home market of Argentina, in particular in North America.

“Perez’s team turned Discovery Mode on for 33 tracks over a period of three months and saw fourteen tracks perform exceedingly well”, Spotify reports, “which helped Perez grow her daily listening base in the US and Mexico by 57% across Spotify”.

Results like this, Spotify goes on, are why Believe is backing Discovery Mode. Its CEO Denis Ladegaillerie is quoted thus: “The democratising power of Discovery Mode will enable a wider community of artists to benefit from boosting their music”.

“It’s helping artists cross borders, especially ones from territories that historically haven’t had equal access to the global music industry stage. And, in these early tests, we’re already witnessing how Discovery Mode is helping talented Believe artists from all over the world find their next fans. Spotify is building tools and resources that ensure success is no longer limited to a select few”.

Artists working with Believe’s DIY distributor TuneCore have also been involved in the pilot, with the company’s Co-Head, Andreea Gleeson, stating: “At TuneCore, we believe there’s never been a better time for independent artists worldwide. We’re seeing a paradigm shift where an artist’s success is no longer tied to radio or traditional mainstream media. Discovery Mode maximises the reach of the music, based on the merit of the music – not because a gatekeeper said so. If the music’s good, Discovery Mode will help artists find new fans”.

Rival DIY distributor DistroKid – in which Spotify invested back in 2018 – is also unsurprisingly involved in and backing the Discovery Mode pilot. Its CEO Philip Kaplan provides this endorsement: “Discovery Mode is a groundbreaking music marketing tool because it doesn’t require any upfront budget. Discovery Mode makes it possible for independent artists at every level to reach new fans in a whole new way”.

Whether any of this will placate the Discovery Mode critics in the artist community, indie label domain and Congress remains to be seen.

This story is discussed on this edition of our Setlist podcast