Spotify Faces New Class Action Lawsuit Alleging ‘Payola-Style’ Practices in Discovery Mode
Spotify has been hit with another class action lawsuit now accusing the streaming giant of operating what plaintiffs call a “modern form of payola” through its Discovery Mode feature, a tool Spotify markets as a way to personalize listening recommendations for users.
Filed Tuesday in federal court in Manhattan and first reported by AllHipHop, the 39-page complaint argues that Spotify’s Discovery Mode does not simply surface songs based on listener habits, but instead pushes tracks selected through undisclosed promotional arrangements with labels and artists.
According to lead plaintiff Genevieve Capolongo, a Spotify subscriber, the platform “charges listeners for the privilege of being deceived,” presenting recommendations as neutral and algorithmically derived even when financial incentives are “quietly driving the algorithm.”
“Spotify exploits that trust by marketing itself as a platform that offers organic music recommendations,” the lawsuit states, “only to secretly sell those recommendations to the highest bidder.”
Discovery Mode is billed by Spotify as a tool for artists and labels to “flag” priority tracks so that its algorithm might more readily consider them for placement in contexts such as Radio, Autoplay, and certain mixes. Spotify maintains that the feature is transparent and does not involve direct payment for plays.
However, plaintiffs allege that the reality is starkly different. Capolongo claims her Discovery Mode playlists routinely featured tracks by global superstars like Justin Bieber and Drake, despite her personal listening habits not aligning with those artists’ catalogs. Both artists are the focus of a separate lawsuit accusing Spotify of benefitting from large-scale fraudulent streaming.
Capolongo argues she is harmed every time she uses the platform because she “cannot discern which songs are recommended for legitimate editorial or personalized reasons and which are promoted due to undisclosed commercial arrangements.”
The lawsuit seeks restitution, punitive damages, and a court order requiring Spotify to disclose explicitly when financial arrangements influence Discovery Mode recommendations, the filing alleges violations of state consumer protection laws and argues that Spotify has misled subscribers by falsely advertising its recommendation system as organic and personalized.
The complaint underscores the trust users place in algorithmic curation: “Spotify has positioned itself as a steward of musical discovery,” it reads, “yet Discovery Mode undermines the integrity of that promise.”
Spotify strongly rejected the allegations. In a statement to The Hollywood Reporter, the company called the suit “nonsense” and said it “gets basic facts wrong.”
“Discovery Mode is a feature artists can use to flag priority tracks for algorithmic consideration in limited contexts,” Spotify said. “It doesn’t buy plays, it doesn’t affect editorial playlists, and it’s clearly disclosed in the app and on our website.”
Spotify added that Discovery Mode is intended to give emerging artists a chance to gain visibility without traditional marketing budgets, a characterization sharply at odds with plaintiffs’ depiction of the feature as a pay-to-play funnel for major-label releases.
The complaint arrives just days after Spotify was named in another class action lawsuit, this one filed in Los Angeles federal court, accusing the company of turning a “blind eye” to mass-scale fraudulent streaming activity. That case, led by rapper RBX, claims artists such as Drake benefited from “billions” of fake streams.
Together, the two suits underscore the increasing legal and regulatory scrutiny facing Spotify as the company continues to shape how music is discovered, consumed, and monetized. Discovery Mode, in particular, has been the subject of industry debate since its launch, with critics arguing it effectively functions as a royalty discount system that favors those able to participate in promotional deals.
If the lawsuit advances, it could force Spotify to reveal more about how its algorithms are influenced by financial incentives, a rare window into the opaque mechanics of recommendation engines that dominate modern music listening.
