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New Spotify terms seek to crack down on playlist payola

By Chris Cooke | Published on Thursday 20 August 2015

The word ‘payola’ has been back on the lips of record industry execs with increased frequency of late, amidst chatter that some in the business are now paying the owners of influential playlists on the big streaming platforms to include their new records in their lists.

Online playlists, of course, have become an important way of getting new music onto the radar of consumers using streaming platforms, ensuring initial and repeating listening of tracks, which then provides a boost in royalties for the rights owner and artist. Although the digital services and labels themselves control some of the most influential playlists, others are run by media, journalists, DJs and, importantly, random punters.

As previously noted, an increased effort is now being made to PR these playlist owners to get new tracks listed, and earlier this month Universal Music announced an alliance with one of the leading players in this space, Jay Frank’s DigMark. But is this new playlist marketing effort just about PRing playlist owners in the traditional way, or is money changing hands? At CMU @ The Great Escape earlier this year DigMark’s Aileen Crowley said that her company had made occasional payments to playlist owners, and some in the room said this seemed like a good use of marketing budgets.

But, of course, payments to influence playlisting are always controversial in music circles, bringing back memories of rampant radio ‘payola’ back in the day. It clearly gives an advantage to those labels and artists with bigger budgets, and potentially damages the credibility of the playlists that are secretly accepting payment, if said payments become public knowledge.

Though some might argue that if that’s a risk a playlist owner is willing to take, so what? After all, label-owned playlists are already popular and clearly skew (mainly or exclusively) towards tracks that that record company has released, so if another playlist wants to favour a label in return for payment, is that really any different?

Critics might argue that there is a kind of dishonesty when playlists secretly accept payment to showcase tracks, whereas a label-owned playlist is open about its biases (though not all label-owned playlists are immediately obvious as such to the average punter).

Either way, one American label source has told Billboard that playlist payola is now ‘a thing’, indicating fees are being paid considerably higher than those alluded to by Crowley at CMU@TGE. “The price can range from $2000 for a playlist with tens of thousands of fans to $10,000 for the more well-followed playlists” says the source.

Unlike with radio, where payola routinely breaks broadcasting rules, online such activity isn’t usually illegal, though according to Billboard’s sources, the digital service providers are starting to become opinionated on the practice. And indeed Spotify’s Jonathan Prince told the trade mag that its new terms of service will prohibit “accepting any ?compensation, financial or otherwise, to influence … the content included on an account or playlist”.

Though quite how such terms can be enforced – especially if rights owners fudge things by saying they pay playlist owners to listen to their new music, rather than to explicitly list it – isn’t clear.

And, of course, the issue remains that for media, pundits and individuals making playlists on platforms like Spotify – who are arguably now providing much value to the DSPs, labels and users – there isn’t actually any way to make money out of that pursuit without accepting payola bungs. Which brings us to the suggestion that has been made in some quarters of late that playlist creators delivering real value should perhaps receive a royalty from the DSPs.

Though even if that does happen, this all-new payola debate seems likely to rumble on for the foreseeable.