Spotify has been pushed into the spotlight again, facing multiple legal challenges that question how music is recommended, promoted, and paid for on streaming platforms.
Two recent class actions, and a separate high-profile complaint, raise overlapping but distinct issues, they allege a modern form of payola through Spotify’s Discovery Mode, and they claim widespread fraudulent streaming has skewed play counts in favour of certain artists. Spotify rejects the allegations, saying its systems are robust, but the cases have reignited debate about fairness, transparency, and who really controls music discovery.
At the heart of one suit, a long-time Spotify subscriber has argued that Discovery Mode, a feature launched in 2020, functions like pay-for-play, it allows artists to flag tracks for algorithmic priority in certain contexts, in return for accepting a 30% reduction in royalties for those plays. The complaint says listeners are misled into believing they are receiving personalised recommendations, when in fact some tracks are being commercially promoted. Plaintiffs say that without clearer disclosure, users cannot tell which songs are organic suggestions and which are commercially influenced.
Spotify defends Discovery Mode as an optional tool, saying it does not buy plays, it does not affect editorial playlists, and the feature is disclosed in the app and on its website. The company also points to artist testimonials and metrics that, it says, demonstrate Discovery Mode can help smaller acts reach new listeners. Supporters argue it is a pragmatic way for independent artists and labels to gain traction in a crowded market, at the cost of lower per-stream earnings but with potentially greater exposure.
Running in parallel, another lawsuit alleges Spotify has allowed vast numbers of fraudulent streams to persist on its service. That complaint, filed by a different plaintiff, asserts that artificial streaming, such as bot-driven plays or organised farms, has inflated counts for some major artists, diverting revenue and visibility away from genuine performers. The filing cites anomalous listening patterns, concentrated stream volumes from unusual geographies, and accounts with impossible listening behaviour.
Spotify’s public response to fraud allegations stresses its investment in anti-fraud technology, removal of fake plays, and cooperation with law enforcement. The company highlights enforcement actions, and points to an example where a criminal operation that stole millions across streaming platforms yielded only a fraction of the theft through Spotify, as evidence its systems limit abuse. The platform also says it educates artists about acceptable promotional practices, and it maintains that artificial streaming is an industry-wide problem, not unique to one service.
Commentators and lawmakers are split. Critics warn Discovery Mode can create perverse incentives, pressuring artists to accept reduced royalties to remain competitive, and they argue that editorial and algorithmic curation should be transparent. Some representatives have previously called for public reporting on which tracks are enrolled in such programs and the terms agreed. On the other side, some industry figures say the market has always relied on promotional spend, and Discovery Mode simply moves that negotiation inside algorithmic systems, with sellers and buyers knowing the terms.
Independent musicians, meanwhile, have a stark perspective, they say artificial streams and opaque promotional schemes dilute already small earnings, and they make it harder for genuinely popular songs to break out on merit alone. Others point out that algorithms now act as gatekeepers in the same way radio once did, so the stakes for transparency and fair access are high.
The lawsuits also underline a broader technological shift, cheap automation and AI have dramatically lowered the cost of creating content and of operating fraudulent farms. Platforms report large-scale removals of spam and AI-generated tracks, but critics insist enforcement is reactive, and that fraudsters adapt quickly. Legal outcomes could force platforms to disclose more about recommendation mechanics, to publish lists of commercially boosted tracks, or to accept independent audits, any of which would change how streaming promotion operates.
For listeners and artists, the core questions remain practical and ethical, are recommendations genuinely personalised, or are they shaped by commercial deals, and are streaming economics being distorted by manipulation? As the courts consider these claims, the industry watches closely, because rulings could rewrite transparency expectations, and because the balance between promotion, discovery, and fair pay is central to music’s digital future.
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