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Thursday, July 28, 2005

Pull My Strings

In 1962, Alan Freed, an American DJ and pioneer of rock 'n' roll, pleaded guilty to two charges of commercial bribery for which he received a fine and a suspended sentence. Freed often called himself the "Father of Rock 'n' Roll", and helped to popularize the music and the name of the genre on his radio show. After Freed pleaded guilty, he found that his real punishment was that his career was over, and his accomplishments in music would always come second to his title of the "Payola DJ".

At its roots, Payola is a form of bribery in which radio stations accept gifts or money from record labels to play certain songs on the radio. It was first made illegal in 1960 and has continued to be so ever since. And if it's illegal, then we can expect that modern radio stations don't take bribes to play certain songs anymore, right?

Not exactly. There's a good reason that you hear J-Lo and Maroon 5 every single time you turn on the radio, and it's not because the people want to hear "She Will be Loved" every hour, on the hour.

The current FCC regulations require that if a song is promoted and paid for by a record company, the radio station must state that it was paid for. The transaction is legal as long as it's reported, but the song that's paid for by the label must state on the air that what's being aired is "sponsored airtime" (kind of like watching "paid programming" which is really just infomercials).

Instead, labels hire independents, or "indies" to "promote" songs to the stations. The indies will pay a "promotion payment" to the radio station, and in return the stations play the songs that the clients of the indie (the labels) want played. Since the labels don't pay radio stations directly, they don't have to report the transactions.

How do they get away with it? For the four decades that have passed since payola was made illegal, record labels have found loopholes in the law, or been subtle enough with their rewards to stations that they could disguise the bribes as mere suggestions or assistance in making playlists.

The New York Times reported yesterday that
To disguise a payoff to a radio programmer at KHTS in San Diego, Epic Records called a flat-screen television a "contest giveaway." Epic, part of Sony BMG Music Entertainment, used the same gambit in delivering a laptop computer to the program director of WRHT in Greenville, N.C. - who also received PlayStation 2 games and an out-of-town trip with his girlfriend.

In another example, a Sony BMG executive considered a plan to promote the song "A.D.I.D.A.S." by Killer Mike by sending radio disc jockeys one Adidas sneaker, with the promise of the second one when they had played the song 10 times.
So it's not like the stations are being handed sacks full of money, but when you think about how many stations a company like Clear Channel Communications owns (over 1200), you begin to realize that it adds up.

And Clear Channel is in trouble too. New York's attorney general Eliot Spitzer anounced two days ago a $10 million settlement with Sony BMG in which the recording industry as a whole has been exchanging gifts for the airplay of specific songs with radio stations. Now that the cat is out of the bag, the inquiry is expected to move towards three other major record companies: Vivendi Universal, Warner Music Group, and the EMI Group, as well as the radio companies like Clear Channel and Emmis Communications.

And it couldn't come at a better time. Most of the music played on the radio is terrible (of course, it always sounds terrible to someone who makes it a goal to go out of their way to listen to what they consider "good" music), and the truth is that people will usually take the path of least resistance when it comes to things like music and listen to what's on the radio. There is so much great music out there, and most people will never hear it because what's available is only there in highly-concentrated form and with little variety.

The comment the Times got from Don Rose, president of the American Association of Independent Music, sums up my feelings nicely:
This sounds to us like something that will be very helpful. It's obvious to us that we're not getting the fair share because of the embedded relationships with big radio.