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Liz Pelly on Spotify and the ‘Cost of the Perfect Playlist’

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 (Bence Bezeredy via iStock)

Spotify was originally marketed as a democratic, anti-establishment music streaming platform. But according to journalist Liz Pelly, it has become a system favoring major labels and its own algorithmic playlists featuring “ghost artists,” all while underpaying independent artists. Pelly draws on interviews with former employees, music industry veterans and artists to pull back the curtain on the music streaming giant in her new book, “Mood Machine: The Rise of Spotify and the Cost of the Perfect Playlist.

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The Birth of Spotify and Its Shifting Promises

Founded in 2006 by Daniel Ek and Martin Lorentzon, Spotify started in Sweden—a country where piracy wasn’t just common, but deeply ingrained in the culture. With the music industry largely giving up on Sweden as a profitable market, Spotify saw an opportunity: a free, ad-supported streaming service that could lure users away from illegal downloads.

Initially, Spotify positioned itself as a democratizing force, promising to level the playing field for artists through data-driven access. But as the platform grew, it increasingly catered to major labels, prioritizing algorithm-driven playlists over the organic discovery it once championed.

The Rise of Algorithmic Playlists

In its early years, Spotify functioned like a search engine—users actively looked up specific artists and albums. But around 2012–2013, internal research showed that listeners wanted something different: a concierge-like experience. This prompted a big move toward curated playlists and algorithmic recommendations.

“These playlists became hugely influential—not just for listeners, but for musicians too,” says Liz Pelly, author of “Mood Machine: The Rise of Spotify and the Costs of the Perfect Playlist. However, this shift gave Spotify outsized control over what users heard, allowing it to push cheaper, lower-royalty music into rotation.

How Spotify Shapes What You Hear

Spotify’s influence on listening habits isn’t accidental—it’s built into the business model. Programs like Discovery Mode allow artists and labels to trade lower royalty rates for increased algorithmic exposure, a practice Pelly describes as “commercial relationships that the average listener doesn’t know about, but that directly shape what they hear.”

Another strategy involves passive-listening playlists, like Sleep or Deep Focus, which are filled with tracks from stock music companies at lower costs. “There’s actually a small team within Spotify dedicated to ensuring that this music from select licensors ends up on these playlists,” Pelly says.

Meanwhile, major labels—Sony, Universal, and Warner—leverage their dominance to negotiate exclusive perks, ensuring their artists get priority access to Spotify’s most valuable real estate: curated playlists. “Because these labels hold so much power in the industry, they get contracts that give them advantages smaller artists don’t have,” Pelly explains.

The Toll on Artists and Music’s Value

The economics of streaming have profoundly devalued music, both financially and culturally. Caller Michael, a musician, illustrates this harsh reality: “Pandora pays three thousandths of a cent per play. That means if you have a thousand plays, you get three cents.”

Beyond low payouts, Pelly argues that streaming platforms obscure the labor behind music. “So much work goes into making music, and yet streaming services have made that labor invisible,” she says. She also questions whether $10.99 per month is a fair price for unlimited access to nearly all recorded music.

The dominance of playlists means that individual artists matter less than the playlist itself. “If a user has a relationship with the Chill Dinner playlist, then if one of the artists on that playlist protests Spotify’s royalty rates, that’s fine for Spotify—they can just replace them with someone else,” Pelly explains.

Also, algorithmic recommendations reinforce existing habits rather than fostering true discovery. “Streaming recommendations are extremely metrics-driven,” she notes. “The goal isn’t to introduce you to new music—it’s to keep you streaming.”

Fighting Back: Alternative Models and the Music Labor Movement

Pelly doesn’t believe in a single solution, but she encourages listeners to take action: buy music directly from artists, support independent radio like NTS, and seek out trusted critics and curators instead of relying on algorithms.

She also points to the rise of a new music labor movement, where musicians are organizing for better working conditions through legislation, antitrust efforts, and public funding models that treat music as a cultural good—akin to other public arts.

“We have to participate in the cultural ecosystems we want to see thrive,” Pelly argues. “That means taking an active role in reshaping the music industry rather than waiting for a one-size-fits-all fix.”
Ultimately, reclaiming the value of music will require multiple approaches—but it starts with recognizing that streaming, as it stands, is built to serve platforms and major labels, not artists or listeners.

This content was edited by the Forum production team but was generated with the help of AI.

Guests:

Liz Pelly, writer; contributing editor to The Baffler

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