Allegations of payola in music streaming are being put in the spotlight by the Attorney General of Texas, Ken Paxton, who wants to know if there are any “undisclosed financial arrangements” between the streaming services and music companies that allow specific artists or tracks to “boost visibility, playlist placement or recommendation rankings” in violation of the state’s laws.
“Music artists deserve to compete on a level playing field, not one distorted by bribes, and listeners deserve transparency in what they are being recommended”, Paxton says. And that’s why, as the chief legal officer in Texas, he is now “investigating the popular streaming platforms”, including Spotify, Apple Music, Pandora, Amazon Music and YouTube Music.
“I will ensure that if any big streaming service is accepting bribes to push certain content and deceive users”, he goes on, “they will be held accountable to restore fairness and integrity in the music industry”.
As a statement from Paxton’s office explains, “payola is the practice of receiving compensation in exchange for preferential promotion without proper disclosure”. In the US, the most famous form of payola involved labels or their agents paying or otherwise bribing programmers at radio stations so that they would playlist specific tracks. Such conduct is “prohibited by federal law”, Paxton’s statement reminds us.
It’s no secret that lots of dodgy marketing tricks have been employed in the streaming era, including artificially boosting plays through stream manipulation, and paying third party playlisters and influencers to playlist and promote a track, without declaring that their support has been paid for.
But are the streaming services themselves involved in any of that dodgy conduct? And if so, does that involve secret envelopes of cash and other freebies for influential executives, as in the radio payola heyday?
Or is it more about secret promo benefits being included in the licensing deals of certain labels in return for them accepting lower royalty rates - which is more formal and less dodgy but, some would argue, has the same result.
Then there’s Spotify's controversial Discovery Mode, where independent artists and labels get an algorithmic boost in return for accepting a 30% discount on royalties. That’s not done in secret at all - the marketing scheme has its own website - but some argue that it’s basically a modern form of payola.
Indeed, last year Spotify was sued in the US by one of its users whose class action lawsuit claimed that Discovery Mode simply “represents the latest form of payola”, and is “unlawful” and “deceptive”.
Spotify has also been accused in the courts of turning a blind eye to stream manipulation, at least when it is employed on behalf of superstars artists. Rapper RBX filed a lawsuit making those arguments last year. His legal filing then accused Drake of being among the superstars to benefit from stream manipulation.
Which was interesting, because Drake had previously accused Universal Music of employing dodgy digital marketing to boost Kendrick Lamar’s ‘Not Like Us’. Before suing Universal for defamation over that track, Drake made two court filings, including one in Texas, seeking information about the respective roles of Universal, Spotify and iHeart in pushing Lamar's hit.
It’s not clear how much of all this will be covered by Paxton’s investigation. However, with plenty of allegations of dodgy music marketing doing the rounds - and ongoing criticism of things like Discovery Mode - it should be interesting to see what the Texas AG uncovers.