How Payola Laws Keep Independent Artists Off Mainstream Radio

Nick Messitte Forbes.com 11/30/14

There exists, in our country, a chasm between the perceived problems of payola (paying under-the-table for radio airplay) and the actual problems of payola.

The actual problems of payola—or rather, the problems with how major labels, radio stations and independent promoters operate within U.S. payola laws—are far more counterintuitive than you’d imagine.

Let’s examine:

Payola laws were first enacted in the 1930s, and like most legal decrees, their wording is quite interesting when examined under a linguistic microscope: contrary to popular opinion, you can still pay to play a song on the radio in the United States, but the broadcaster must disclose who paid for the tune. Not only that, but said disclosure must be handled in a particular way; from DJ to Station Manager to Program Director and beyond, “the information must be provided up the chain of production and distribution before the time of broadcast, so the station can air the required disclosure.”

Should an artist decide to weather this bureaucracy and pay openly for radio spins, any return on the investment would be scant: an artist would constantly have to pay many individual stations at once (and disclose these payments every single time through the proper channels) in order to compete with the rate at which major label material is broadcasted.

To be sure, certain bands have gotten around this problem in the not-too-distant past. Limp Bizkit’s label infamously purchased airtime for their first single, but their success is the exception, not the rule: since a 1959 congressional investigation into Payola scandals, bribing disc jockeys for radio play has largely gone out of fashion—at least in the conventional sense.

Plenty of unconventional kinds of payola still abound these days, but first, let me ask you a question crucial to understanding the enforcement of payola laws:

Why, after more than twenty years of these laws being on the books, did congress only conduct an investigation in 1959?

The answer lies in the era: Rock’n’Roll was starting to gain traction, gradually winning out over cultural biases against “race music,” and doing so, in so small part, through radio airplay, much of it purchased.

As rock’n’roll rose to prominence, major labels found themselves competing against independent rock’n’roll upstarts like Chess Records, while the performance rights organization ASCAP (who catered to the old, white guard) found itself competing with BMI (who tended to represent a bunch of rock’n’roll upstarts). In response, ASCAP and the labels pushed for the investigation under the guise of evening the playing field for everyone.

But this was a guise pure and simple, as the evidence of our modern day radio landscape would suggest: if the playing field were truly even, any artist would sport roughly the same merit-based chance of appearing on the radio, so long as consumers liked the music and demanded to hear it.

Can anyone with two functioning ears say that radio is a more varied climate than it used to be? Racially, sure, but in terms of artist variation, genre and sub-genre, no; as the Wall Street Journal reported, FM Radio currently broadcasts less new music than ever before.

Why is this the case, given that payola laws were put in place to ensure competitive fairness, at least nominally?

“The fact of the matter is payola laws have not stopped people from paying or compensating others for playing their music,” George Howard told me recently. “Period. Full stop.”

He should know—in addition to being the former president of Rykodisc and managing Carly Simon, George wrote a fascinating treatise on the subject, available here (he’s also the Board Advisor to a company attempting to innovate within the boundaries of payola laws, but more on that in a subsequent post).

Indeed, within radio’s “many, many formats—not all formats, but certainly the higher-level formats—there is a quid pro quo going on,” said George.

The quid pro quo comes indirectly: major labels have historically found a way to circumvent these laws through the use of independent promoters, or “indies” as they’re more commonly known (not to be confused with independent labels, or “indies” as they’re also more commonly known).

“The indies are the shadowy middlemen record companies will pay hundreds of millions of dollars to this year to get songs played on the radio,” Eric Boehlert wrote in an article for Salon some time ago. “Indies align themselves with certain radio stations by promising the stations ‘promotional payments’ in the six figures. Then, every time the radio station adds a Shaggy or Madonna or Janet Jackson song to its playlist, the indie gets paid by the record label.”

Check out those names: Shaggy, Madonna, Janet Jackson—when was this article written? Fifteen years ago?

Almost: the article was published in 2001, and since then, little has changed; indeed, the proper word would be “upgraded”: as recently as October, it came to light that Pandora, entering into a deal with Merlin (a large rights holder for many independent labels), was “‘steering’ its algorithms to perform more music from the Merlin catalogue in exchange for lower rates”—a practice that “sounds uncomfortably like the age-old practice of payola.”

Now in theory, anyone with a checkbook could fork over money to these independent promoters for spinning a specific song.

But, as we indicated before, the problem becomes one of competitive frequency: most individuals don’t have nearly enough money to compete for a healthy volume of spins with major labels, who, up until recently, often kept such promoters on retainer.

As a result, independent artists have found themselves “locked out of that system,” George Howard told me recently, “because the major labels—the ones…doing the quid pro quo—have the resources to do it on a regular basis, and they do it because it’s a good return on investment.”

Indeed it is: common belief has held that radio airplay helps to drive sales, and what little data-driven analysis there exists on that hypothesis largely bears out the claim.

“It’s not even ‘do you have the most money,’” George Howard said. “In the radio world, that won’t even do it for you if you don’t have the frequency. You need both money and frequency.”

Right now, a question might be fomenting in your brain: if so many entities are frequently trying to “get over” on payola laws, why has there been no substantive probe into this matter since 1950s?

There actually have been two: one in 1986, when an NBC news investigation entitled “The New Payola” inspired congressional hearings to reexamine the matter, and one again in the early 2000s.

The latter probe even yielded monetary results: the Attorney General pushing for the investigation—Eliot Spitzer—reached settlements with Sony BMG (10 million), Warner Music Group (5 million) and Universal (12 million). More settlements were reached with other entities (CBS radio, citadel, Clear Channel, Entercom) in 2007.

Yet for all these strides forward, little has changed, at least in my estimation: as recently as January, reports surfaced that Macklemore and Ryan Lewis “hired an independent arm of Warner Music Group, the Alternative Distribution Alliance (ADA), which helps independent acts get their stuff on radio.” Zach Quillen, manager of Macklemore and Brian Lewis, discussed how “they paid the alliance a flat monthly fee to help promote the album.” Many in the Hip Hop world have remarked on how this tack resembled payola, and how their indie success was essentially a fiction.

If the above narrative displays anything, it’s that our payola laws have enabled the erection of a grey market, one in which shady, quasi-legal deals take place, and independent artists lose out more often than not (again, Macklemore is the exception, not the rule; by the metrics of his independent success, he fell into the ADA’s criteria of “the right artist, the right time, the right record.”)

Clearly payola laws have done nothing for evening the playing field of mainstream radio, because the menu of selection provided by mainstream radio is always shrinking.

Clearly congressional probes into the matter haven’t made much of a difference, because not much has changed in the wake of three different investigations; as Neil Young astutely mentioned at the top of “Payola Blues,” “This one’s for Alan Freed—wherever you go, whatever you do—cause the things they’re doing today will make a saint out of you.”

So the question then becomes, how does an independent artist reckon with such a marketplace, one that is innately stacked against the indies (artists, not promoters—boy that’s confusing)?

Is there a solution to this problem in our newfangled, mixed-up ecosystem of music and tech? Is there any entity which can sidestep the indie promoters, the pay-to-play swindlers (several of whom targeted my old band in the early 2000’s), and the payola laws to allow independent artists greater reach?

Stay tuned—we’ll have an answer for you later in the week.

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