A federal judge in New York has sent a lawsuit accusing Spotify of running a “modern payola” to arbitration, dismissing the plaintiff’s class action claims with prejudice.
In November, Genevieve Capolongo, who describes herself as a Spotify subscriber, sued the streaming giant, alleging that it deceives users by letting labels boost song visibility through reduced royalty payments while marketing playlists as “personalized” recommendations.
Capolongo claimed Spotify’s Discovery Mode feature amounts to “modern payola,” the practice of paying for airplay that regulators have clamped down on since the vaudeville era.
Capolongo described herself as someone who had “long preferred music outside of the mainstream.” What she got instead, she alleged, was a feed of Drake, Zach Bryan, and Justin Bieber.
“Spotify’s playlists and recommendations are shaped by undisclosed pay-for-play arrangements and hidden commercial incentives,” Capolongo argued.
The lawsuit, which you can read here, sought class-action status for 100 members, seeking more than $5 million exclusive of costs and interest.
However, Judge John G. Koeltl of the Southern District of New York issued a ruing on April 30, granting Spotify’s motion to compel arbitration and dismissing the class allegations with prejudice.
“The plaintiff continued to use Spotify after receiving both notices and did not opt out of changes to the arbitration agreement.”
John G. Koeltl, US District Judge
Capolongo’s complaint sought class-action status on behalf of Spotify users across the US and asked the court to compel Spotify to disclose when playlist placement or recommendations are influenced by paid promotion or other commercial considerations. She had sought “only… a few dollars, roughly $5 to $21.”
In January, Spotify moved to push the case into arbitration, citing mandatory arbitration provision in its Terms of Use.
When Capolongo created her Spotify account in February 2021, she clicked through a screen that linked to the Terms of Use and stated that tapping ‘Create Account’ constituted agreement to those terms.
Spotify later updated its terms in March 2023 and again in August 2025, notifying her by email and in-app pop-up each time.
“Spotify provided the plaintiff with conspicuous notice of the Current Terms by email and by an inapp pop-up, both of which contained a conspicuous hyperlink to the Current Terms and provided the plaintiff with the opportunity to review the applicable arbitration agreement.”
John G. Koeltl, US District Judge
“The plaintiff continued to use Spotify after receiving both notices and did not opt out of changes to the arbitration agreement,” Judge Koeltl wrote in his order, which you can read here.
The judge added: “Spotify provided the plaintiff with conspicuous notice of the Current Terms by email and by an inapp pop-up, both of which contained a conspicuous hyperlink to the Current Terms and provided the plaintiff with the opportunity to review the applicable arbitration agreement.”
“And the plaintiff manifested her assent to the Current Terms when she continued to use Spotify after receiving notice of the updated terms.”
With arbitration ordered, the class claims fell through. According to Spotify’s terms: “YOU AND SPOTIFY AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER IN ARBITRATION OR LITIGATION ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS, COLLECTIVE, CONSOLIDATED, PRIVATE ATTORNEY GENERAL, OR REPRESENTATIVE ACTION.”
Capolongo had argued that the arbitration agreement is unenforceable “because it provides for inadequate discovery.”
The two parties will now take their dispute to the National Arbitration and Mediation for resolution. Judge Koeltl said, “this case is stayed pending the outcome of the arbitration.”
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