Payola

Payola [pey-oh-luh], in the American music industry, is the illegal practice of payment or other inducement by record companies for the broadcast of recordings on music radio in which the song is presented as being part of the normal day’s broadcast.

A radio station can play a specific song in exchange for money, but this must be disclosed on the air as being sponsored airtime, and that play of the song should not be counted as a ‘regular airplay.’ The term has come to refer to any secret payment made to cast a product in a favorable light (such as obtaining positive reviews). Some radio stations report spins of the newest and most popular songs to industry publications. The number of times the songs are played can influence the perceived popularity of a song.

‘Payola, in one form or another, is as old as the music business.’ In earlier eras there was not much public scrutiny of the reasons songs became hits. The ad agencies which had labored for the NBC radio and TV show ‘Your Hit Parade’ for 20 years refused to reveal the specific methods that were used to determine top hits, only stating generally that they were based on ‘readings of radio requests, sheet music sales, dance-hall favorites and jukebox tabulations.’ Attempts to create a code to stop payola were met with lukewarm appreciation by publishers. However, in the 1950’s prosecution for payola arose as a reaction of the traditional music establishment against newcomers. Hit radio was a threat to the wages of song-pluggers. Radio hits also threatened old revenue streams; for example, by the middle of the 1940s, three-quarters of the records produced in the USA went into jukeboxes.

Alan Freed, a disc jockey and early supporter of rock and roll (and also widely credited for actually coining the term), had his career and reputation greatly harmed by a payola scandal. Dick Clark’s early career was nearly derailed by a payola scandal, but he avoided trouble by selling his stake in a record company and cooperating with authorities. Attempts were made to link all payola with rock and roll music. The amount of money involved is largely unpublished; however, one DJ, Phil Lind of WAIT in Chicago, disclosed in Congressional hearings that he had taken $22,000 to play a record. Payola to DJs is less of a concern today, as they are rarely involved in choosing the songs. Modern radio is widely based on company-delivered playlists, often scheduling every song, commercial break, and DJ talk time, and most shows are pre-recorded well in advance of their broadcast.

The term ‘Congressional Payola Investigations’ refers to investigations by the House Subcommittee on Legislative Oversight into payola, the practice of record promoters paying DJs and radio programmers to play their labels’ songs. Payola can refer to monetary rewards or other types of reimbursement, and is a tool record labels use to promote certain artists. Other forms of payola include making arrangements to purchase certain amounts of advertising in exchange for staying on a stations playlist, forcing bands to play station-sponsored concerts for little or no money in order to stay in a station’s good graces, and paying for stations to hold ‘meet the band’ contests, in exchange for air time for one of the label’s newer, lesser known bands.

After the initial investigation, radio DJ’s were stripped of the authority to make programming decisions, and payola became a misdemeanor offense. Programming decisions became the responsibility of station program directors. As a result, the process of persuading stations to play certain songs was simplified. Instead of reaching numerous DJs, record labels only had to connect with one station program director. Labels turned to independent promoters to circumvent allegations of payola. This practice grew more and more widespread until a 1986 NBC News investigation called ‘The New Payola’ instigated another round of Congressional investigations. With the creation of Napster and other now illegal music sharing websites, the power of the independent promoters began to decline. Labels once more began dealing with stations directly. In 2002, investigations by the office of then- New York District Attorney Elliot Spitzer uncovered evidence that executives at Sony BMG music labels had made deals with several large commercial radio chains. In 2005, the company acknowledged their improper promotional practices and agreed to pay a $10 million fine.

A different form of payola has been used by the record industry through the loophole of being able to pay a third party or independent record promoters (‘indies,’ not to be confused with independent record labels), who will then go and ‘promote’ those songs to radio stations. Offering the radio stations ‘promotion payments,’ the independents get the songs that their clients, record companies, want on the playlists of radio stations around the country. This newer type of payola was an attempt to sidestep FCC regulations. Since the independent intermediaries were the ones actually paying the stations, it was thought that their inducements did not fall under the ‘payola’ rules, so a radio station need not report them as paid promotions. Concern about contemporary forms of payola prompted an investigation during which the FCC established firmly that the ‘loophole’ was still a violation of the law. Because of the increased legal scrutiny, some larger radio companies (including industry giant Clear Channel) now flatly refuse to have any contact with independent promoters.

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