Spotify Pushes to Dismiss ‘Payola’ Lawsuit, Says Users Waived Right to Sue

Spotify has formally pushed back against a class action lawsuit accusing the company of operating a “modern form of payola,” arguing not only that the claims are legally flawed but that users have no right to sue in the first place. In court filings submitted Tuesday (Jan. 20), the streaming giant asked a federal judge to dismiss the case brought by New York subscriber Genevieve Capolongo, who alleges Spotify’s Discovery Mode secretly prioritizes music from artists and labels willing to pay for algorithmic promotion.

The Spotify Payola lawsuit claims the streaming giant misled listeners into believing its recommendations are driven purely by personal taste, while allegedly selling preferential placement behind the scenes.

Spotify: No Deception, No Courtroom

Spotify’s legal team argued the complaint fails to identify any misleading statements or deceptive practices. More significantly, the company said Capolongo agreed to binding arbitration when she signed up for Spotify, effectively waiving her right to pursue a lawsuit in court.

“When plaintiff signed up for Spotify’s streaming service and throughout her relationship with Spotify, plaintiff agreed to the Spotify terms of use,” Spotify stated, adding that the agreement explicitly blocks jury trials and court proceedings.

Mandatory arbitration clauses have become a common defense strategy for large corporations, with similar provisions currently under scrutiny in high-profile cases involving companies such as Live Nation.

Drake Sues UMG, Spotify Over Alleged Plot to Boost Kendrick Lamar’s ‘Not Like Us’

What Is Discovery Mode—and Why It’s Controversial

Spotify’s Discovery Mode, launched in 2020, allows artists to flag certain tracks for increased algorithmic consideration across Spotify’s radio, autoplay, and select mix features. In exchange, Spotify takes a 30% commission on royalties generated when those tracks are streamed through these algorithmic channels.

Genevieve Capolongo’s Spotify lawsuit argues that this model amounts to pay-for-play promotion similar to radio payola, a practice outlawed in the broadcasting industry. She claims Spotify repeatedly recommended major-label artists such as Drake, Zach Bryan, and Justin Bieber, despite those songs allegedly clashing with her listening preferences.

Spotify counters that Discovery Mode does not allow artists to buy streams, does not influence editorial playlists, and is clearly disclosed within the app and on its website.

Lawsuit Highlights Broader Industry Tensions

The case is one of two recent lawsuits accusing Spotify of platform manipulation. Another suit, filed by rapper RBX, alleges the company enabled billions of fraudulent streams that inflated the popularity of major artists.

Discovery Mode has also drawn political scrutiny. Multiple U.S. lawmakers have previously raised concerns that the program could pressure artists—especially independents—into accepting lower royalties to remain competitive in an increasingly algorithm-driven music economy.

Spotify, however, maintains the program benefits artists, citing internal data showing higher save rates, playlist adds, and follower growth for participants.

If the court agrees with streaming giant’s arbitration argument, Genevieve Capolongo’s case could be forced into private proceedings—or dismissed altogether. Regardless of the outcome, the lawsuit has reignited debate over transparency, algorithms, and who really controls music discovery in the streaming era.