Does Payola apply to Spotify and related services?

Question

If someone paid a Playlist Curator to host music on the curator's playlist, without any disclosure of the payment, would that be illegal?

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US Title 47 Section 508 states this kind of behavior is illegal for commercial radio broadcasts:

(a) Subject to subsection (d), any employee of a radio station who accepts or agrees to accept from any person (other than such station), or any person (other than such station) who pays or agrees to pay such employee, any money, service or other valuable consideration for the broadcast of any matter over such station shall, in advance of such broadcast, disclose the fact of such acceptance or agreement to such station.

(g) Any person who violates any provision of this section shall, for each such violation, be fined not more than $10,000 or imprisoned not more than one year, or both.

Are there any laws like this pertaining to services such as Spotify?

Answer 1

The main question is whether 47 USC 508 could apply to Spotify in such a case, since there is no other law that would prohibit promoting a product for money. The law applies to a "radio station" which is defined in terms of radio transmission of energy, but "radio" is itself not legally defined. Conventionally understood, Spotify is not a radio station, and it does not broadcast (which is defined in terms of "radio communication"). For example, no FCC license is required for Spotify to operate, whereas actual radio stations must have an FCC license.

Para (a-c) impose requirements for the payer and payee to disclose to the employee's station (or employee's employer, depending on paragraph). Were Spotify to become a radio station, you would be required to report a payment to Spotify just in case the curator is an employee of Spotify. "Payola" is a somewhat broader part of Public Law 86-752, which also includes §317, requiring paid announcements to be announced as being paid (a requirement imposed on the station).

Answer 2

47 USC 508 only applies to radio broadcasts, which would not include Spotify, etc.

But there are a host of other laws governing deceptive marketing and unfair trade practices that could apply to an online payola scheme. For instance, the FTC has gone after many large businesses for "failing to disclose an unexpected material connection with an endorser." If we can treat Spotify playing or promoting a song as an endorsement of that song, it seems the FTC might want to go after a label that paid for those plays.