Spotify is currently defending itself against a cluster of lawsuits attacking very different parts of its business: a proposed class action calling the Discovery Mode promotional tool an undisclosed pay-for-play scheme, a separate class action accusing the company of tolerating billions of bot-generated streams, a Connecticut suit from an independent musician over royalty rule changes, and an ongoing fight with the Mechanical Licensing Collective over how audiobook bundling slashed songwriter payments. One of those cases has already been pushed into private arbitration; the others remain pending as of mid-2026.
Discovery Mode Called a Modern Payola Scheme
In November 2025, Spotify subscriber Genevieve Capolongo filed a proposed class action in the U.S. District Court for the Southern District of New York, case number 1:25-cv-09216.1Forbes. Spotify Hit With Class Action Lawsuit Alleging Discovery Mode Is a Pay-for-Play Scheme The complaint alleged that Spotify marketed its playlists and recommendations as “personalized” and “made just for you” while quietly letting labels and artists boost song visibility by accepting reduced royalty rates through Discovery Mode.2ClassAction.org. Capolongo v. Spotify USA Inc. Complaint
Capolongo brought claims under New York law for deceptive business practices and false advertising, along with fraudulent inducement and unjust enrichment.3Billboard. Spotify Lawsuit Discovery Mode Modern Payola She said she would not have paid for a subscription had she known recommendations were shaped by “undisclosed pay-for-play arrangements and hidden commercial incentives.” The suit sought restitution for a nationwide class of subscribers and an injunction requiring Spotify to disclose when commercial payments influence song placement.2ClassAction.org. Capolongo v. Spotify USA Inc. Complaint
Spotify called the lawsuit “riddled with misunderstandings and inaccuracies” and said Discovery Mode does not allow artists to buy plays outright.1Forbes. Spotify Hit With Class Action Lawsuit Alleging Discovery Mode Is a Pay-for-Play Scheme Instead of fighting on the merits, the company moved to compel arbitration under its terms of service, which include a class action waiver.
On April 30, 2026, Judge John G. Koeltl granted that motion, dismissed the class claims with prejudice, and stayed the case pending individual arbitration.4Music Business Worldwide. Spotify Wins Motion for Arbitration in Payola Lawsuit The court found that Spotify had given “conspicuous notice” of its arbitration terms through email and in-app pop-ups, and rejected the argument that arbitration costs were disproportionate to a recovery estimated between $5 and $21.5Digital Music News. Spotify Payola Lawsuit Arbitration The dispute was routed to National Arbitration and Mediation.6Musically. Spotify Discovery Mode Payola Lawsuit to Move Into Arbitration It remains unclear whether Capolongo has actually pursued her individual claim in that forum.7The IP Press. Capolongo v. Spotify and Platform-Controlled Dispute Design
Discovery Mode itself launched in late 2020. Artists and labels flag specific tracks for algorithmic priority in Radio, Autoplay, and certain personalized mixes, and accept a commission widely reported as 30% of royalties on streams generated through those placements.8The Guardian. Spotify Discovery Mode Payola Playlist There is no upfront fee, and streams outside Discovery Mode contexts pay at normal rates.9Spotify for Artists. Discovery Mode Spotify does not label enrolled tracks for listeners, which is the disclosure gap at the heart of Capolongo’s complaint.
Bot Streams and the Drake Allegations
One day before Capolongo filed, rapper and producer RBX — Eric Dwayne Collins — filed a separate class action on November 2, 2025, in the U.S. District Court for the Central District of California.10The Hollywood Reporter. Spotify Streaming Fraud Lawsuit Drake Streams The claim is that Spotify has “turned a blind eye” to billions of fraudulent streams generated by bots that mimic human listening, create fake accounts, and use VPNs to disguise their location.
Drake is mentioned 32 times in the complaint but is not named as a defendant and is not accused of any wrongdoing. The lawsuit alleges that between January 2022 and September 2025, a significant portion of his roughly 37 billion streams were “inauthentic.”10The Hollywood Reporter. Spotify Streaming Fraud Lawsuit Drake Streams It points to statistical patterns: fewer than 2% of accounts allegedly produced about 15% of his total streams, and some accounts reportedly played his music nearly nonstop for 23 hours a day. One cited example claims at least 250,000 streams of the track “No Face” over four days in 2024 originated in Turkey but were geolocated to the United Kingdom.11CTV News. Lawsuit Against Spotify Alleges Drake Benefits From Bot Accounts Streaming His Songs
The legal theory is economic. Spotify pays royalties from a shared pool proportional to each track’s share of total streams, so fraud inflating one artist’s count mechanically reduces every other rights holder’s payment. The suit claims this has cost legitimate rights holders “hundreds of millions of dollars,” seeks damages exceeding $5 million, and asks for class certification covering all music rights holders who have received Spotify royalties since 2018.12Rolling Stone. Lawsuit Spotify Drake Streams
Spotify responded that it “in no way benefits from the industry-wide challenge of artificial streaming” and uses “best-in-class systems” to remove fake streams, withhold royalties, and apply penalties.11CTV News. Lawsuit Against Spotify Alleges Drake Benefits From Bot Accounts Streaming His Songs As of late May 2026, the case is pending. Spotify has asked the court to dismiss it, arguing there is no “special relationship” between the platform and artists that would support a negligence claim.13Law360. Spotify Says Class Suit Over Bots Lacks Special Relationship
An Indie Artist Sues Over Royalty Rule Changes
On June 3, 2026, Mark Kratter, a Connecticut-based independent musician and attorney, sued Spotify in Stamford.14Billboard. Spotify Lawsuit Royalty Rules Hurt Indie Artists He alleges that policy changes Spotify implemented in March 2026 caused a “sharp and measurable decline in counted streams” for his music even though listener engagement, measured through saves and playlist additions, held steady.15Los Angeles Times. Spotify Accused of Reducing Indie Artists Compensation in New Lawsuit
The complaint focuses on two policies. The first is the minimum-stream threshold Spotify introduced in 2024: a track must accumulate at least 1,000 streams from 50 unique users within 12 months before earning any royalty at all. The second is the alleged filtering of autoplay, algorithmic, and “low interaction” sessions out of stream counts without notice to artists.16Complete Music Update. Spotify’s Rule Changes and Thresholds Are Unfair and Deceptive Practices Says New Lawsuit Kratter alleges these practices violate the Connecticut Unfair Trade Practices Act and disproportionately harm independent artists while benefiting major labels with large catalogs.14Billboard. Spotify Lawsuit Royalty Rules Hurt Indie Artists Spotify declined to comment on the filing.15Los Angeles Times. Spotify Accused of Reducing Indie Artists Compensation in New Lawsuit
The MLC Fight Over Audiobook Bundling
In May 2024, the Mechanical Licensing Collective, the nonprofit Congress created to administer streaming royalties for songwriters and publishers, sued Spotify in the Southern District of New York over how the company calculates mechanical royalties on its subscription plans.17The Mechanical Licensing Collective. The Mechanical Licensing Collective Brings Legal Action for Unpaid Royalties Against Spotify USA Inc.
The trigger was Spotify’s March 2024 decision to reclassify Premium, Duo, and Family tiers as “Bundled Subscription Offerings” after adding 15 hours of audiobook access. Under the Phonorecords IV rate-setting agreement covering 2023 through 2027, bundled offerings qualify for lower mechanical royalty rates. Billboard estimated the reclassification would reduce songwriter payments by about $150 million per year.18Billboard. Spotify Sued MLC Bundling Cutting Songwriter Royalties The MLC argued Premium was “exactly the same service” it had always been and sought corrected reporting plus back payments to March 2024.
In January 2025, Judge Koeltl dismissed the suit, ruling the MLC lacked standing to sue on behalf of songwriters and publishers.19Reuters. Spotify Defeats US Licensing Group’s Lawsuit Over Royalties The litigation is not over. A judge later denied Spotify’s motion for reconsideration and granted the MLC leave to file an amended complaint, keeping the case alive as of mid-2026.20Music Row. Judge Grants the MLC to File Amended Complaint in Spotify Case Spotify maintains its bundling approach is consistent with the terms streaming services and publishers agreed to in 2022.21NMPA. Spotify to Pay Songwriters About $150 Million Less Next Year With Premium Duo Family Plan Changes
How Earlier Cases Shaped the Current Landscape
The present disputes sit on top of a settled layer of licensing litigation. In Ferrick v. Spotify, a 2016 class action consolidated from suits by songwriter David Lowery and singer-songwriter Melissa Ferrick, plaintiffs accused Spotify of streaming copyrighted songs without obtaining or paying for the mechanical licenses owed to songwriters.22Forbes. Spotify Settles $43 Million Class Action Copyright Lawsuit The case settled in 2017 for $43.45 million, with Spotify also agreeing to pay future statutory royalties and provide audit rights.23Susman Godfrey. Susman Godfrey and Gradstein Marzano Secure $43.45 Million Settlement With Spotify in Copyright Class Action
Wixen Music Publishing opted out of the Ferrick settlement and sued separately in December 2017, seeking $1.6 billion in statutory damages and alleging that Spotify failed to secure proper mechanical licenses and underpaid songwriter royalties about 21% of the time.24Variety. Spotify Settles $1.6 Billion Lawsuit From Wixen Publishing That case settled in December 2018 as part of a broader business partnership, on undisclosed terms reportedly well short of the $1.6 billion demand.
Eight Mile Style, publisher of Eminem’s catalog, sued in August 2019 in the Middle District of Tennessee over more than 200 compositions including “Lose Yourself,” “Stan,” and “The Real Slim Shady.”25Music Business Worldwide. Spotify Just Won a Long-Running Lawsuit Over Streaming of Eminem’s Catalog In August 2024, the court found Spotify had lacked valid licenses but ruled Eight Mile’s claims were barred by equitable estoppel, concluding the publisher had allowed unauthorized streaming to continue while “patiently accumulating leverage” for a maximum-damages suit. Kobalt Music Group, Eight Mile’s former administrator, was ordered to indemnify Spotify’s legal costs.26Mitchell Silberberg & Knupp. Eight Mile Style LLC v. Spotify USA Inc.
Together those cases exposed how fragmented the music industry’s rights data was in the early streaming years. The 2018 Music Modernization Act created the MLC and a blanket license system to address that gap. The ongoing fight over audiobook bundling shows the gap has shifted rather than closed: today’s lawsuits are less about whether Spotify has a license and more about how it counts, discloses, and pays on the streams flowing through it.