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Making Sense of Payola

Ever wonder why corporate radio sucks? Here are ten things you need to know about it.
 
 
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Ever get the sinking feeling that the same terrible Celine Dion song is on the radio every time you turn it on? It's not your imagination. Local radio stations everywhere have been swallowed up by a handful of giant corporations, playlists have shrunk, and local and independent acts have been drowned out, as Big Radio soaks listeners in a mind-numbing mix of bland commercial acts.

The rapid concentration of radio ownership has also ushered in a new age of "payola." Major recording labels now shower radio station owners with money and prizes to plug and play their most bankable stars, securing spins of Dion, Ricky Martin, J. Lo, Jessica Simpson and even major label indie kids Franz Ferdinand at the expense of struggling local acts.

There's the catch: Payola is against the law. The New York Attorney General's Office, Federal Communications Commission and members of Congress are investigating radio industry corruption. There's no better time than now for music lovers to protect the radio airwaves from insatiable corporate greed and end payola once and for all.

1. What is radio payola?

For decades, radio payola has been an unpleasant fact of American music. Radio stations hold valuable broadcast licenses and are the main drivers of sales for the record industry. More than 75 percent of music buyers say their CD purchases are influenced by songs heard on the radio. All a record executive has to do is convince popular DJs to put their artists in heavy rotation. Money has long proved the elixir of persuasion. In 1960, disc jockey Alan Freed was indicted under commercial bribery laws for accepting $2,500 to play certain songs; he claimed the money was a "token of gratitude" that did not affect airplay. But the FCC disagreed, passing regulations that ban payola in broadcasting. The playing of music or other programming in exchange for payments is now illegal, punishable by as much as $10,000 in fines and a year in prison. To date, no one has served a day in jail on payola charges.

2. Is payola still a problem?

In many ways, it's worse. Shadowy independent promoters are hired by the recording industry to launder hundreds of millions in cash and prizes each year, lining the pockets of big radio broadcasters who agree to add label "hits" to playlists nationwide. Last summer, Clear Channel and Infinity Broadcasting -- America 's two largest radio owners, controlling 42 percent of listeners -- were implicated with other major radio owners in a multi-million dollar payola scheme. Investigators called this single payola case the "tip of the iceberg."

3. How does payola work?

Payola involves the flow of money and other perks from music labels to radio stations, and, through resulting record sales, back to the labels themselves. It's a closed loop that shuns local talent, artistic merit and listener preferences. Once involving envelopes stuffed with cash and even drugs, payola in 2005 has taken on new forms, including back stage passes to Michael Jackson concerts, first-class tickets to Miami, Las Vegas hotel rooms and even Adidas sneakers. (Use Free Press' interactive map to find stations near you suspected of accepting payola). By law, radio disc jockeys must fully disclose to their listeners whether airplay of a chosen song was paid for by promoters. They never do.

4. Do the big media companies really control what gets played on commercial radio?

The 1996 Telecommunications Act eliminated national limits on station ownership. Prior to 1996, no one radio owner held more than 65 stations; now, radio colossus Clear Channel boasts some 1,200 stations. More than 75 percent of radio market share nationwide is controlled by companies owning more than 40 radio stations. In a consolidated radio marketplace, recording labels have fewer palms to grease to get their acts on the air, even if listeners don't want to hear them.

5. Does radio play really affect sales?

These conglomerates use redundant playlists to air a limited choice of artists, even in the same markets. Commercial airwaves are flooded by only those artists that are acceptable to the corporations that profit from their sales. And more than 80 percent of the $12 billion in annual music sales are controlled by the four largest labels - Sony BMG, EMI, Universal and Warner Music Group. When consolidated radio and recording labels control the music industry, musical diversity is threatened.

6. Doesn't payola help musicians?

On average, performers on major labels see only $1 out of the $16 retail price paid by consumers for a CD. The bulk of sales revenue returns to the record labels, and through them to the promoters and big radio. This closed loop feeds the insatiable appetites of greedy recording labels and radio broadcasters. Big label artists see little of these profits. Independent musicians are even worse off. The corporate control of promotion, sales and airplay almost entirely prevents local artists from competing in the mainstream.

7. Aren't big radio companies and labels just giving listeners what they want?

In a 2002 survey by the Future of Music Coalition, 78 percent of listeners said they want more variety on the air. More than half of survey respondents (51 percent) said that, at most, they only occasionally hear the music they enjoy the most when listening to the radio. Yet the radio behemoths continue to force feed listeners a mind-numbing stew of focus-group tested "urban," "classic rock" and "easy listening" formats.

8. Don't stations have a right to play whatever they want - even if it's monotonous corporate tunes?

The airwaves belong to the public, not to the media companies with the fattest wallets. The vitality of radio is sapped when music is selected based on bribes rather than merit. Big media owe it to the American public - and especially the music lovers and creative artists who are hurt most by payola - to end this deception. Radio stations receive free licenses to broadcast on public airwaves in exchange for an agreement to serve their communities' best interests. They are supposed to put the public's needs before their bottom line. Unfortunately, none do.

9. How can payola be stopped?

While anti-payola statutes have been in place for 40 years, recent developments offer the best chance in years to throw the book at payola once and for all.

• In July, New York Attorney General Eliot Spitzer reached a multi-million-dollar payola settlement against Sony BMG. Spitzer's office is now investigating reported payola deals between other large recording labels (including EMI Group, Vivendi, Warner Music and Universal) and the nation's biggest radio station chains (including Infinity Broadcasting, Clear Channel Communications, Emmis Communications and Cox Radio).

• In August, the FCC launched an investigation into payola allegations involving stations owned by Clear Channel, Infinity and other radio giants. FCC Commissioner Jonathan Adelstein has called for an overhaul of toothless payola rules.

• Sen. Russ Feingold (D-Wis.) is planning to attach an amendment to an appropriations bill that would require the FCC to report to Congress on what can be done to counter the negative fallout of media consolidation, especially payola.

10. How can I make a difference?

The campaign to scrub payola from our airwaves now hinges on the public's ability to force stronger accountability and enforcement across a radio industry dominated by conglomerates. A coalition of activists, public advocates, independent musicians and recording labels are joining together to protect the public's airwaves. Concerned Americans can take action in several ways:

• Act locally against the hundreds of conglomerate-owned stations that were implicated in New York State Attorney General Spitzer's investigation. Use Free Press' interactive map to find implicated stations near you and contact them with your concerns.

• Support homegrown acts and independent radio stations by buying CDs from the local bin at your independent music store, checking out independent music sellers, going to local performances and encouraging your favorite stations to add these artists to their playlists.

• Urge the FCC to launch federal investigations, review payola abuses by local broadcasters and impose harsher penalties.

• Support any new congressional legislation that presses for stronger enforcement of payola laws.

Learn More:

Free Press
Youth Media Council
The Future of Music Coalition
Media Alliance

Get Active:

Tell the FCC to fight payola

Join the Free Press Action Squad to meet up with other media activists in your community.

Timothy Karr is the author of MediaCitizen, a weblog about the future of America's media. He is the campaign director of Free Press.