Cash, pushed into the palm of a disc jockey or stuffed in an LP sleeve was once a great way to make sure your new acts got played on the radio.
The technical term for this illegal activity that dates back to the nineteenth century is payola.
A lawful form of payola is now seeping into the digital age courtesy of Spotify’s algorithms.
Spotify’s music streaming service is fast-growing but chronically lossmaking. So the platform is constantly thinking up new ways to eke out better terms with big music labels that supply the content in return for a set share of Spotify’s revenues.
Under the “discovery mode” unveiled this month, labels can now promote tracks in the Spotify algorithm, which creates personalised radio feeds or autoplay for its 320m monthly users.
In return for higher streaming volumes, participating lables will receive reduced royalties when the song is played. Because there is no direct payment, judges see it as a perfectly legal commercial arrangement.
But does it still qualify as payola?
Listeners — around 144m of whom pay for a premium, ad-free service — will be unaware of the specific commercial deal that tipped the balance towards a particular song reaching their ears.
For a music service that relies on subscriber trust, Spotify seem to be playing with fire.
But whatever listeners think, it may not generate much revenue for Spotify anyway.
Insiders have pointed out that if everyone pays to promote their artists, no one will get incremental revenue from it, because the pie — based on subscription income — stays the same. The labels will realise it amounts to paying to take money from one another.
Or put another way, within the streaming economy hits may only come at another artist or label’s expense.
Posted in: Uncategorized | Leave a Comment