Texas AG Investigates Streaming Platform Payola Schemes

Attorney General Ken Paxton has launched an investigation into leading streaming services including Spotify, Apple Music, Pandora, Amazon Music, and YouTube Music, over alleged payola schemes in which they accept bribes to artificially promote certain songs, artists, or content.

Payola is the practice of receiving compensation in exchange for preferential promotion without proper disclosure. The practice was used by radio stations in the early twentieth century and was eventually prohibited by federal law. As digital streaming platforms have become the dominant force in music distribution, concerns have grown that similar schemes may be occurring behind the scenes, distorting competition and misleading consumers. A range of activities have been identified as payola, including record labels or artists paying to be included in certain editorial or algorithmic playlists and song suggestions.

“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,” said Attorney General Paxton. “That is why I am investigating these popular streaming platforms. I will ensure that if any big streaming service is accepting bribes to push certain content and deceive users, they will be held accountable to restore fairness and integrity in the music industry.”

As part of the investigation, Attorney General Paxton has issued Civil Investigative Demands (“CIDs”) to the companies.

The investigation will examine whether streaming services have entered into undisclosed financial arrangements with record labels, promoters, or third parties to boost visibility, playlist placement, or recommendation rankings in violation of Texas law.