The Price of Payola
Do you want what's in the box or what's behind door No. 3? The latest episode in the radio payola version of Let's Make a Deal is looking like a zonk. Then again, New York Attorney General Eliot Spitzer's heroic crusade against payola netting more than $35 million in settlements from the four major record labels and two broadcasters, spread piecemeal over the past three years may still produce the change it initially promised and clean up a perpetually dirty business. But the institutionalized practice of trading radio airplay for money and favors from record labels has proved stubbornly resistant to eradication since the first scandals in the late '50s.
Spitzer's raid uncovered a flood of incriminating e-mails among major labels, independent promoters, and radio stations in which the stations were promised ticket giveaways, free concerts, and personal booty in exchange for airplay. His tenacious pursuit not only netted a lot of money and pledges of reform, but it forced the federal government to stop looking the other way.
Unfortunately, there's only so much Spitzer can do about the FCC's lack of regulatory will. Rumors of a settlement with the radio giants implicated by Spitzer (Clear Channel, Citadel, Entercom, and CBS Radio) first surfaced in January and cropped up in greater detail in early March, though the FCC still has failed to announce anything. According to reports, the broadcasters would pay a fine totaling $12.5 million and agree to a variety of measures aimed at increased transparency. The settlement, or consent decree, would require the stations to keep a database of any items of value they received, and to adhere to a gift limit. It also mentions independent compliance officers and a whistleblower hotline.
All of it is fine and good. But in the end, it feels like a drop in an empty bucket of promises. Since consolidation consumed the industry in the wake of the Telecommunications Act of 1996, localism and adventurousness have been sucked out and replaced with risk-averse homogeneity. Most markets are chain-dominated. Clear Channel remains the poster child, having grown from 40 stations to almost 1,200, including 10 in the Phoenix area, KMXP, KZZP and KESZ among them. From DJs recording their between-song patter hundreds of miles away to canned requests, it's questionable whether you can even call them "local" stations anymore.
Perhaps a worse problem is their refusal to play independent music. Norah Jones sold millions of records before radio ever caught on. From commercials to late-night talk shows, television has embraced hundreds of artists who apparently aren't "commercial" enough for radio. How is that?
"Why is it that only 10 percent of the spins at radio are from the independents, whereas 30 percent of the sales are from independents?" asks Tommy Silverman, CEO and Founder of Tommy Boy Records. "It's obvious enough it's because of payola."
As a shameless sop, the broadcasters have offered a once-a-week, half-hour radio show of "indie" music chainwide as part of a side agreement with the American Association of Independent Music (A2IM). The free airtime would be granted to companies not owned or controlled by the majors Sony BMG Music Entertainment, Warner Music Group, Universal Music Group, and EMI Group. The beneficiaries also can't have a market share larger than 5 percent and must be represented as independent through sales tracking firm Nielsen SoundScan. The decree comes with a rule prohibiting stations from broadcasting the show within the 12-to-6 a.m. dead zone, but don't be surprised to hear it early Sunday morning or at 11:30 on a weekday night.
Longtime observers are skeptical. "For your ills, we're going to smack you on the wrist and make you do what you should've been doing in the first place," gibes USC professor and former radio programmer Jerry Del Calliano.
Michael Bracy, policy director for the Future of Music Coalition, is more sanguine. Their organization has issued several reports criticizing media ownership and major-label policies. While he sees the indie half-hour as a new opportunity, he doesn't believe it's the essential piece. "The most important part of the deal is the agreement between the broadcasters and the independent community to say, 'This is how we're going to work together,'" Bracy says. "Anything has to be viewed with skepticism. Just because they put their names on a piece of paper doesn't mean it means anything. But the consent decree does have increased enforcement."
If radio does follow through on its promises, and the airwaves start reflecting a more vibrant mix of artists, perhaps it can repeat the success of the early '90s musical boom. When Billboard charts were based entirely on sales and not partially on the ever-shady radio "spin," N.W.A.'s Niggaz4Life immediately rocketed to No. 2. Several weeks later came Nirvana's Nevermind. Hip-hop, alternative, and country all took off when the charts came unshackled, and in a best-case scenario, something similar could happen again. Of course, this was before consolidation changed radio.
"Hopefully, this period of intensive investigation and new allegations will lead to better practices by the industry," says FCC commissioner Adelstein. "I'm already hearing from people in the industry that people are a lot more cognizant of the issue, and taking a lot greater care. I hope it's not just taking greater care they don't put things in e-mails."
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