The Evolution Of Payola Practices

Payola practices are longstanding in the music industry, dating back to Universal Music Group’s $12 million settlement in 2006.

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When Drake’s “Taylor Made Freestyle” vanished from social media shortly after its release in April 2024, it sparked widespread speculation about whether the “world’s largest music company,” Universal Music Group (UMG), was behind the takedown. The track’s AI-generated Tupac vocals turned a hip-hop feud into a legal battle exposing deeper structural issues in the music industry’s streaming ecosystem.

While the Drake-Kendrick feud captured headlines, trophies, and fan loyalty, the legal allegations point to something larger: a call for transparency in a fast-evolving and mostly unregulated digital industry.

The Evolution of Payola Practices

The music industry’s relationship with promotion has always been fraught, with major labels repeatedly scrutinized for illicit payola practices. In 2006, Universal Music Group and other major labels settled with New York State for $12 million over traditional payola, where radio stations received payments or expensive gifts in exchange for airplay. In 2016, Stephanie Himonidis, a Hispanic public figure known as “Chiquibaby,” and her husband Gerardo Lopez accused their employer, the Spanish Broadcasting System, of firing employees who refused to engage in a payola scheme of charging musicians ‘music spots’ for SBS to play their music on air.

Despite decades of enforcement, illegal payola practices appear to persist. According to Drake’s lawsuit, New York radio DJ Funkmaster Flex allegedly published a payola price list in November 2024, including a $350,000 tag for pop radio airplay. Drake further alleges that whistleblowers confirmed the continued existence of pay-for-play schemes, and that UMG paid “at least one radio promoter” to secure spins of his rival’s tracks on New York stations.

Today’s payola may look different, but the mechanics are familiar. According to Drake, label-favored promotion has simply shifted from brown envelopes to back-end deals, including allegations that UMG offered discounted licensing fees to DSPs in exchange for amplified playlist support or algorithmic visibility.

These tactics can be more difficult to detect, but no less powerful in shaping outcomes.

Major label influence in the streaming era remains entrenched. Goldman Sachs projects that over 75% of global recorded music revenue still flows through the majors, while a 2018 Citi report estimated that artists (even household names!) capture only around 12% of industry income. In such a landscape, access to playlisting, licensing discounts, and algorithmic momentum can shape careers – or stall them.

The complaint notes that UMG, by virtue of its copyright ownership, can “strategically waive or reduce the customary fees” for licensing — a power it allegedly used in partnership with Spotify to amplify Lamar’s music.

These licensing waivers are lawful in themselves, but Drake’s lawsuit claims they were weaponized for competitive advantage, raising questions about transparency, favoritism and whether artists outside the major label system can ever truly compete on equal footing.

Independent Artists Left in the Dust

Drake’s lawsuit doesn’t just allege breach of contract — it invokes federal racketeering laws designed to combat organized criminal conduct. While invoking RICO may seem dramatic, the claim reflects growing frustration with opaque promotional practices and industry concentration.

Is that a stretch? For many independent artists navigating opaque DSP ecosystems, it may not feel like one.

For unrepresented artists, these systems are nearly impossible to navigate, let alone challenge. Visibility can rise or fall without explanation, and without recourse. And because these tools increasingly determine who gets heard, access to them is critical, yet is often restricted to those inside the major label system.

Add to this is the growing dominance of superfans in streaming revenue (Goldman estimates the top 20% of fans can drive up to 70% of an artist’s streaming income), making the need for targeted exposure even more urgent.

But for independent acts, winning algorithmic placement or featured playlist slots remains a black box. Without direct label leverage or detailed reporting, it’s difficult to know whether a slow-growth campaign reflects lack of traction, or active suppression.

The music industry’s challenges have simply evolved and so has payola. If Drake’s dispute shows anything, it’s that old practices now wear new digital clothes. And while the case is personal to him, the implications could be systemic.

Legal Entertainment has reached out to representation for comment, and will update this story as necessary.