Spotify is testing "Sponsored Songs" which gives labels the ability to pay to have songs featured on the music streamer's free tier. While "pay to play" or payola is illegal on terrestrial radio, there are no regulations that prohibit it on internet streamers like Spotify.
Spotify is testing "Sponsored Songs," an option that will remind some of the dark days of broadcast radio payola, when labels often "paid" DJs and programmers to get a song on the air.
With "Sponsored Songs," labels can pay to have their songs added to playlists. Using Spotify's rich data, the streamer can deliver sponsored tracks that fit each listener's taste. Spotify has confirmed the test, which users can opt out of; and say that if successful, it will roll out only on it's free ad-supported tier.
The Playing Field Isn't So Level Anymore
For Spotify, "Sponsored Songs" represents a new way to monetize free listening without bombarding the user with more (obvious) ads.
But for indie labels and D.I.Y. musicians just learning to thrive by reaching Spotify's growing audience, this could represent a new barrier of entry that only the richer players like the major labels can afford.