Spotify Discovery Mode: a curse or a blessing for independent artists?
Spotify Discovery Mode is a new marketing tool made by Spotify, aimed to serve new tracks from artists to a new set of listeners.
As Spotify calls it:
Discovery Mode is a marketing tool that helps your music get heard when audiences are most open to discovery.
Artists or labels pitch priority tracks in Spotify for Artists and Spotify adds those tracks to the algorithm that determines a personalized listening session. This sounds pretty standard for Spotify, it doesn’t sound like anything groundbreaking.
However, there is a catch to it….
Labels and artists involved in Discovery Mode get a lower pay-out over the streams that have been generated. So in fact what Spotify says is “we’ll feature your tracks but in return, we’ll pay you less”.
Ok, so get paid less but get featured?
As with all major changes from key players in the music industry, a lot of companies commented on this new service of Spotify.
America’s Indie label body A2IM stated that the Discovery Mode “Brings into question the credibility of Spotify’s recommendation engine”. The US House of Judiciary Committee asked Spotify’s founder Daniel Ek what ‘Safeguards’ Spotify is putting in place to make sure there is no ‘race to the bottom’ when it comes to reducing royalty rate for streams.
What’s even more interesting is that the companies who co-promote Discovery Mode are large DIY music distributors. Those companies cope with large amounts of new content every week that needs to be featured. A big difference compared to a small label or artist who is merely handling features for itself.
The difference here is that for a large DIY distributor it doesn’t really matter what track from the catalogue is featured, as long as tracks are featured. Discovery Mode, for them, is an opportunity to get more tracks featured without actually having to worry about earning a smaller percentage of the royalties.
Why does Spotify test this with large DIY distributors?
What Discovery Mode needs is building good credentials, gaining good feedback. Spotify basically needs companies to praise the new service, gather testimonials and get traction.
Then of course it comes as no surprise that Distrokid is very enthusiastic about Discovery Mode… Spotify is a shareholder of Distrokid.
As Philip Kaplan of Distrokid said:
“Discovery Mode is a groundbreaking music marketing tool because it doesn’t require any upfront budget”
As Spotify is a stakeholder of that company, a positive testimonial is the least you can expect of course.
Pro’s and con’s
Leaving Spotify’s marketing campaign for Discovery behind (which is mostly focussed on getting valuable testimonials from large DIY distributors) let’s take a closer look at what’s in it for the artist.
Reach a larger audience
A good example is Believe Digital’s artist Natalie Perez. She promoted her album Detox using a mix of Discovery Mode and Canvas. Of the 33 tracks included in Discovery Mode, 14 performed exceedingly well. The tracks were included in personalized recommendations. A 26% growth in new listeners across all markets.
Spotify favoured the track in large playlists, reaching more listeners that she could not have reached before. This shows the power of Spotify and its algorithms.
The shift from mainstream media and radio
Spotify is becoming more and more important in building the careers of artists. Radio, TV and other ‘old’ mediums used to be the dominant channels used by record labels. This is shifting towards services like Spotify.
By launching Discovery Mode, Spotify adds yet another powerful marketing tool for music businesses.
No budget required
If Discovery Mode passes the trial period and is adopted on a wider scale, it means that artists can actually get access to this tool without having to allocate any budget.
Royalty pay-outs in jeopardy
As pointed out earlier, where does Spotify set the limit to lowering royalty pay-outs? Will they eventually allow artists to get their tracks featured without even receiving royalties? Would it lead to actual free music?
Is it a scalable solution? What if all artists on Spotify would like to use this service, has Spotify considered this?
If the majority of new releases each week get offered for Discovery Mode, what is the added value and will it work? Time will tell, as the 6 months trial period ends later this year.