Payola

Scott and Matt don't have a problem with payola. I do. Here's why...

Payola deceives consumers and hurts recording artists. Payola is an explicit quid pro quo in which a record agent compensates a DJ for playing a specific song. Unlike other kinds of promotions, payola is covert and "contractual." Payola is distinct from other perks and promotions designed to instill a more nebulous sense of obligation (aka "good will").

Not all pay-for-play is payola. The FCC payola and sponsorship identification rules allow pay-for-play, as long as the paid material is identified as such:

Thus, for example, if record companies or their agents pay broadcasters to play records on the air, those payments are legitimate if the required sponsorship identification message is aired. If it is not aired as required by the Communications Act and the Commission's rules, the broadcast station will be subject to enforcement action.

If the Juice Tiger buys airtime for an infomercial, it shows up in your TV listings as "paid programming." If Sony wants to run a Celine Dion radio infomerical, the FCC won't stop them, as long as they disclose the sponsorship to the audience.

Slate's Daniel Gross doesn't think payola is a big deal because it doesn't really undermine consumer choice. He argues that if you don't like what your station is playing, you can change the channel. He also notes that radio isn't the all-powerful gatekeeper it once was. Today's consumers have a variety of sources of music and a variety of media to store and play it.

Nevertheless, payola undermines consumer choice. Consumer choice isn't just the ability to listen to a station whose programming you tend to like. Consumers should also be able to make an informed choice about the different services offered in the radio market.

The station that runs on payola is offering a fundamentally different service than a station whose DJs have creative control. An independent DJ is offering her expertise and aesthetic judgment. It's her job to listen to way more music than I'll ever hear and to choose the good stuff.

As a consumer, I want independence from my DJ. In a payola system, I can't choose to listen to independent radio because I have no way of knowing who's taking which bribes from whom.

Payola also hurts recording artists by distorting royalties. Sweeps week is one particularly egregious example. Royalties are supposed to be a function of total airplay. But it's too cumbersome to record each play individually. So, sweeps weeks are used as estimates. The record companies often bribe DJs to overplay certain artists during sweeps week. That's just plain stealing from artists who got more play during the rest of the year than they did during sweeps.

Payola was considered scandalous in the 1950s because consumers wanted the DJ's taste and expertise. A lot of people say that they know about payola and don't care, but if they're really as jaded as they let on, why do the record companies prefer to operate in secret? Sony just lost 10 million on secret deals that could have been legal if they'd put appropriate disclaimers on the paid material. Why take that risk? Because labels and stations know that consumers don't like being force-fed.

Comments

[Scott Lemieux]

I should specify that it's not exactly that I don't have a problem with payloa--I'm sure it's one of the factors that makes commerical music radio almost uniformly unlistenable--but I don't see any reason why it should be illegal, and nor do I think it's substantively different from other marketing technqiues. Do you think you would notice any difference between a Clear Channel music station of payola was illegal and if it wasn't? I don't. Whether you use direct payments or more elaborate relationships constructed through A&R spending, it all gets you to the same place in the end.

[Lindsay Beyerstein]

Paid programming should be identified as such. As long as stations are broadcasting on public airwaves, the FCC should enforce minimal standards of transparency.

Payola creates an unfair monopoly within a publicly regulated medium. Basically, the DJs are selling ad space in the form of airplay. If it costs $125 bucks to get your song on the air in New York, then every artist should have the opportunity to send in their dollars and get the DJ to play their tune. In the current payola system, only the elite promoters have the opportunity to bribe the DJ.

[Scott Lemieux]

But, again, this is true of *all* forms of marketing--even stations that don't take payloa (which I assume is a majority of them) are dominated by the products of big corporations with significant marketing budgets.

[Thad]

But why make it easy for them? At least force them to jump through a few hoops and keep up appearances, rather than engage in straight pay-for-play. If record companies thought they could get the same benefit from other marketing techniques as they get from pay-for-play, they'd never engage in payola. But clearly that's not the case. In fact, Sony BMG felt the benefits from straight pay-for-play were so much greater than the benefits from "regular" marketing, they were willing to risk breaking the law.

[Quisp]

Payola is dishonest and immoral in the same way fake-news-by-RNC-fake-reporters is, or, for that matter, disinterested op-eds by people who are secretly on the payroll of an interested party, or scientific studies with pre-ordained findings paid for by special interests. I agree with the Clear Channel point above, though; the whole business seems so utterly rigged now that I can't imagine (outside of a podcast or a blog) actually getting a valuable and respectable opinion on music that's unencumbered by corporate bias.

I am heartened, though, by the thought that soon enough there won't be anyone listening to these radio stations, since all we'll need is a handful of well-vetted geeks posting the equivalent of imixes on the equivalent of itunes. That's all I'm looking for, really: the ultimate version of that guy from high school who knew about the music I didn't know about and could say, "check this out."

[Quisp]

...by which I mean, there should be a majikthise button on the majikthise blog which is a link to a playlist of majikthise approved music, which zips into my computer and allows me to purchase or taste-test the majikthise radio hour. Obviously, these things are already happening, and, as with blogs, the ones that don't suck will rise to the top and get passed around.

All I need now is for someone to tell me what the good podcasts are.

[rob helpy-chalk]

Radio may not be the all powerful gatekeeper it once was, but it is still an important gatekeeper, and it has become much more monolithic recently. (See the study a while back from the Future of Music Coalition.) If even if radio is less of an overall gatekeeper, the fact that power is consolidated within ratio means that kickbacks to a few companies can get you a lot of access.

Also, as I understood it, payola, channelled through independent promoters, is the industry norm. Thad works in music, so he would know better than I.

And don't underestimate how important radio still is. People spend a lot of time in cars. Not everyone is all interweb crazy.

[Maureen Hay]

Songs that record companies pay radio stations to play are ads, not programming. They should be identified as such.

Be sure to read the op-ed articles in the NYTimes - one of them the drummer from Semisonic. He points out that the money for payola comes out of the band's pockets, and they have no say in how it is spent. (It's illegal, and therefore murky books.) That to me should be enough to do away with it. If a band discovers that illegal payments have been charged to their accounts, they get triple or quadruple damages on the amount. If the record companies are doing payola, let it come out of their money, not the band's. Musicians have a hit single today and don't make a dime because the money all went to payola.

Now some of the things lamented in the article didn't bother me. The band was playing at a station sponsored concert - playola. If I hear that a band is playing at the Kissfest or whatever, I think that I'm going to be hearing a lot of their music on Kiss. It seems only fair.

Actually - thought just popped into head - couldn't musicians sue for illegal payments made on their behalf, with their money, and without their consent?

[epistemology]

As Lindsay points out, the determining factor is the fact that the airways are public.

Like campaign finance reform, honest accounting is more important than regulation. Make tough laws letting the consumers know where the money goes. Knowledge is power.

[gordo]

In Australia, radio stations have to pay the record companies. That's why there are so many Australian singers who start their careers doing cover versions. While these fees are capped, there's a big push underway to double or quadruple the fees.

As it is, good radio is hard to find in Australia, because the fees have the effect of limiting the number of stations that can profitably compete. Now the same record companies that want to pay DJs in the U.S. want to boost the fees they charge DJs in Australia.

Both policies are designed to shut down competition from smaller labels. Charging fees limits the number of stations, so the smaller labels have fewer outlets in which they can showcase their artists. Payola ensures that radio stations will prefer the big labels to the upstarts. Any way you slice it, it's unfair trade practice, and it hurts consumers, artists, and entrepreneurs.

[Eli (creepandblink)]

I'm really enjoying the slight "use of regulation to promote informed decisionmaking" theme of the last couple days. I also have a minor point on the terminology - it seemed at least to me like you give the impression that the choice is between stations with DJ-chosen music and payola stations, and as per my understanding, that's not really reflective of most of the industry, where DJs have no creative playlist control, payola or no. It doesn't really change the point at all,of course.

[Eli (creepandblink)]

Oops, I saw that that point had already been made.

To add another voice to the pro-regulation side: it's important to remember that programs with slight benefits are perfectly fine as long as they have slight costs. If we had multimillion dollar taskforces launching stings and not recouping in fines, of course it'd be a stupid policy. I don't think, though, that that's the case.

[djhlights]

The other thing to keep in mind is that it is more than just station sponsored concert promotion, such as Kissfest, HFStivial, or XFest. Radio now and has been for several years a concert promotional tool for Clear Channel Entertainment a subsidiary for Clear Channel Communications group.

It is more than just the stations that they own, in which they can set the standard format of songs, which have to be played every quarter hour with no payola, involved at all. They play what's coming up at the outdoor shed or the arena. They also own the venues in which concerts are performed and are the main producer and promoter for the tours themselves. This summer they have their hands on everything from Ozzfest to Coldplay. They did Green Day’s American Idiot tour as well.

So is it why isn't it considered payola if you are doing it with subsidiaries of single company?

[Thad]

So is it why isn't it considered payola if you are doing it with subsidiaries of single company?

It should be. Peter Jackson is suing New Line over this very issue.

[bjr@yahoo.com]

I like the idea that artistic merit would somehow rule in the absense of payola. the idea that some notion of the public interest isn't being served by playing audioslave instead of jason mraz is kind of comical. but what if the payola is used to get new artists with no name recognition on the air?

[Herbert Browne]

The four "button" stations on my car radio are all DJ-controlled... but maybe Seattle is an exception. Three of them (all but classic KING) have shows that promote new music from regional performers, known & unknown. In a region where ClearChannel also bought the local billboard franchise, playola is pretty unavoidable; but payola is inexcusable. I'm sick of the "money talks, BS walks" bizness-as-usual modality. It needs slamming. Isn't it enough that the plutocrats buy congressmen? (It's too much, actually...)
Anyone with access to Stan Freberg's "The Old Payola-roll Blues" will find it as apt today (and as funny) as it was in the 50s- and unfortunately it's still germane, dammit!
^..^

[SamChevre]

Alex Tabarrok (Marginal Revolution) had an interesting article on payola--the link is below. One point deserves to be highlighted:
Record firms have been the most vociferous opponents of payola for the same reason that established firms everywhere want restrictions on advertising.

http://www.marginalrevolution.com/marginalrevolution/2004/06/payola.html

[Linkmeister]

Quisp wrote: "All I need now is for someone to tell me what the good podcasts are.

Can't help you there, but I can tell you where to go to search for them. From David Pogue's e-mail newsletter accompanying the NYT Circuits section:

Wrong. Somehow, the folks at Podscope.com have figured out how to do it. Introducing: the first search engine that can find podcasts according to the words spoken during them! It’s in beta, but I tried it, and it really, truly works. The search results offer you a ten-second preview of the podcast, plus links to the whole thing.

[Lex]

Clear Channel is justaboutthisclose to, effectively, a vertically integrated monopoly, the dangers of which ought to be clear to music lovers of all political stripes.

So, when I listen to radio at all anymore (and I was a DJ for seven years), it's XM.