Spotify shares fall on Texas payola investigation

Investing.com -- Shares of Spotify are spiking lower on Wednesday, briefly trading down nearly 3%, after Texas Attorney General Ken Paxton disclosed an investigation into streaming services over alleged payola schemes. The probe also includes Apple Music, Pandora, Amazon Music, and YouTube Music.

The investigation centers on claims that streaming platforms accept bribes to artificially promote certain songs, artists, or content. Paxton stated that music artists deserve to compete on a level playing field, not one distorted by bribes, and that listeners deserve transparency in what they are being recommended.

As part of the investigation, Paxton has issued Civil Investigative Demands to the companies. The investigation will examine whether streaming services have entered into undisclosed financial arrangements with record labels, promoters, or third parties to boost visibility, playlist placement, or recommendation rankings in violation of Texas law.

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