Class Action Lawsuit Accuses Spotify of Engaging in 'Payola'

Spotify faces a class action lawsuit alleging the streaming giant engages in "payola" through its Discovery Mode feature, deceiving paid subscribers about the authenticity of their personalised playlists.

As per Rolling Stone, the 39-page complaint, filed on Tuesday in Manhattan federal court by subscriber Genevieve Capolongo and other users, accuses Spotify of operating a "modern form of payola" by selling playlist visibility through undisclosed promotional deals with record labels. The lawsuit argues that Discovery Mode creates a "false impression of neutral, personalised recommendations when financial incentives are quietly driving the algorithm."

According to the filing, obtained by All Hip Hop, Spotify "charges listeners for the privilege of being deceived" by marketing itself as a platform offering organic music recommendations while secretly selling those recommendations to the highest bidder. The complaint specifically mentions that Capolongo's Discovery Mode playlist contained tracks by Justin Bieber and Drake, whose streaming numbers are already the subject of separate legal proceedings.

"Spotify exploits that trust by marketing itself as a platform that offers organic music recommendations… only to secretly sell those recommendations to the highest bidder," the lawsuit states. The plaintiffs claim they cannot distinguish between genuinely personalised recommendations and songs promoted through commercial arrangements.

The legal action seeks restitution, punitive damages, and a court order requiring Spotify to disclose whether Discovery Mode recommendations are influenced by financial or royalty agreements with record labels.

Spotify has strongly rejected the allegations, with a representative telling the Hollywood Reporter that the class action is "nonsense" and contains fundamental factual errors. The streaming service maintains that Discovery Mode allows artists to flag priority tracks for algorithmic consideration in limited contexts including Radio, Autoplay, and certain Mixes, but "doesn't buy plays" and "doesn't affect editorial playlists."

"It's clearly disclosed in the app and on our website," the Spotify spokesperson added, defending the transparency of the feature's operation.

This lawsuit emerges just days after Spotify was hit with another class action filing in Los Angeles federal court. That separate case, led by rapper RBX, alleges the company ignored "mass-scale fraudulent streaming" on its platform, with Drake allegedly benefiting from "billions" of fake streams.