Spotify Users File Class Action Over Alleged “Pay-to-Play” Playlist Manipulation

Case Overview: A proposed class action claims Spotify’s playlists were shaped by label payments and royalty deals, misleading users about personalized recommendations.

Consumers Affected: Spotify subscribers who listened to playlists or recommendations shaped by label-funded promotion.

Court: U.S. District Court for the Southern District of New York

Spotify, the world’s largest music streaming service, is being hit with a new lawsuit claiming it tricks listeners into believing playlists and recommendations are customized to their taste, when in reality, they’re shaped by record label payments and royalty discounts. 

The proposed class action, filed in New York, accuses Spotify of quietly running a “pay-for-play” system that allows major labels and artists to boost their tracks’ visibility for a price, all while marketing its playlists as neutral and tailored, according to The Hollywood Reporter.

The complaint alleges that Spotify’s popular playlists, like Discover Weekly and Today’s Top Hits, aren’t purely based on user preferences or algorithms but can be influenced by labels who either pay for better placement or agree to reduced royalties in exchange for promotion. 

The result, the lawsuit claims, is a platform that gives the illusion of personalization while quietly prioritizing financial deals behind the scenes.

Plaintiff Says Paid Placement and Royalty Discounts Skewed Music Exposure

The lawsuit was brought by indie music fan Genevieve Capolongo, who says her carefully curated playlists kept surfacing the same mainstream hits from megastars like Drake and Justin Bieber, despite her consistent preference for lesser-known artists. 

Capolongo argues that Spotify’s marketing, promising “music made for you, with you”, is deceptive, since the platform doesn’t clearly disclose which tracks are promoted through paid programs.

Her experience, the lawsuit claims, represents a broader issue: that Spotify’s model favors major-label artists who can afford to pay for exposure, sidelining independent musicians and misleading users who think they’re getting authentic, data-driven recommendations.

Discovery Mode Allegedly Used to Trade Visibility for Lower Artist Payouts

At the center of the lawsuit is Spotify’s controversial Discovery Mode, launched in 2020, which lets artists and labels increase the chances their tracks appear in algorithmic playlists, if they accept lower royalty rates. The system, critics say, mimics the “payola” practices that once plagued radio, where airplay was secretly bought and sold.

According to the lawsuit, placement fees can range from a few thousand dollars for smaller playlists to over $10,000 for Spotify’s biggest lists. Independent artists without major-label backing are left at a disadvantage, while big record companies with expansive licensing deals allegedly use their leverage to dominate recommendation algorithms, the lawsuit alleges.

Music Fans Push Back Against a Platform They Say Isn’t Transparent

Spotify’s legal troubles don’t stop here. The company is already facing lawsuits over bot-driven streaming fraud and manipulation of song rankings, issues that echo similar concerns raised in the music industry for decades. 

The filing also references Drake’s recent lawsuit against Universal Music Group, which accused the label of using artificial means to inflate streaming numbers across platforms, including Spotify.

Capolongo’s lawsuit seeks damages for deceptive business practices and false advertising, along with a court order forcing Spotify to clearly label paid or promoted tracks. She hopes to represent all Spotify subscribers misled by the platform’s “personalized” marketing.

Do you think Spotify’s playlists truly reflect your taste, or the industry’s money? Share your view in the comments.