FMC Letter to FCC on Payola, Media
Consolidation and HD Radio
February 15, 2006
The Honorable Kevin Martin
Chairman, Federal Communications Commission
445 12th Street, SW
Washington, DC 20554
Dear Mr. Chairman:
The Future of Music Coalition is encouraged by recent press reports
that the Commission is launching an investigation to examine allegations
of commercial radio licensees engaging in an illegal practice: payola.[1]
Without question, FMC believes this is a tremendously important issue
for musicians and the public, and we are glad to see the Commission is
willing to shed much needed sunlight on this shadowy practice.
We are writing today to reiterate our belief that the flagrancy of labels
and station owners and the pervasiveness of this practice cannot be examined
outside the context of the drastic consolidation in the radio industry
following the 1996 Telecommunications Act.
FMC and other artist organizations have consistently urged the Commission
to recognize the independent radio promotion structure that developed
in the 1990s as a once-removed form of payola.[2]
Most prominently, we discussed payola in our 2002 study “Radio
Deregulation: Has It Served Citizens and Musicians?” This report,
which was filed in the Broadcast Ownership proceeding (MB 02-277), argued
that consolidation in the radio industry, coupled with consolidation
in the recording industry, made conditions more ripe for payola by reducing
the number of gatekeepers and facilitating secretive, payola-like business
practices.[3]
We were heartened when the Commission included payola in its 2004 Notice
of Inquiry into Localism in Broadcasting (MB 04-233). In the NOI,
the Commission stated:
When payola causes stations to broadcast programming based on their
financial interests at the expense of community responsiveness, the practice
is inconsistent with localism.
Then the Commission posed a number of key questions including:
What are the various types of payola practices today, and how frequently
do they occur? Do these practices comply with the disclosure
requirements of the Act and our sponsorship identification regulations? Are
the existing rules in any way deficient in addressing the current practices?
[…] Are the Commission’s current disclosure requirements
sufficient to ensure that listeners understand the nature of the programming
they hear? Do radio stations seek payment for back announcing – that
is, announcing songs and artist information after a song is played? If
so, does this practice violate our sponsorship identification rules?
[4]
We saw this as a clear indication that the Commission was at the very
least aware of the widely reported accusations. Now that New York
Attorney General Eliot Spitzer has announced the initial findings of
his wide-ranging investigation, it is becoming clear that major radio
companies did engage in business practices that, at the very least, deserve
a full and immediate investigation by the Commission.
For this reason, as the Commission approaches its next review of the
broadcast ownership rules, we respectfully request that you first complete
a comprehensive investigation of radio consolidation and payola before
moving ahead with any rulemakings that would allow for a) further radio
deregulation, or b) the granting additional resources to commercial radio
broadcasters during the transition to HD radio.
First, it would be irresponsible for the Commission to further loosen
local ownership regulations, as the NAB has recently requested,[5] before
understanding the relationship between consolidation and payola.
Second, HD radio greatly expands the capacity of each station licensee
by increasing the number of uses of their licensed spectrum. It
would send the wrong signal to the public and to the commercial radio
industry if the Commission were to let the HD radio transition proceed
without first identifying which of these commercial broadcasters is guilty
of engaging in payola.
Commissioner Adelstein stated recently that radio stations that have
engaged in the practice of payola “are putting their licenses at
risk”.[6] If this is true,
we should not inadvertently reward these bad actors with added capacity
without establishing a full investigation into payola allegations, and
setting measurable public interest guidelines that will ensure that musicians
and the public are served well in the future.
In conclusion, FMC urges the Commission to take the following steps:
Launch a full and thorough investigation into allegations of payola
in the commercial radio industry.
If alleged payola-like abuses are found to be true:
The Commission should pledge to hold bad actors in the radio industry
accountable.
The Commission should not grant the benefits of HD multicasting to
the commercial radio industry without first establishing specific,
measurable public interest guidelines.
The Commission should not consider any rule changes that would pave
the way for further consolidation in parallel markets, including lifting
the ban on broadcast-newspaper cross-ownership.
The Commission should take steps to protect and expand non-commercial
radio, including low power FM.
Future of Music Coalition reiterates
our willingness to work with the Commission in any way as you continue
your efforts to manage and regulate the public airwaves.
Sincerely,
Jenny Toomey, Executive Director
Michael Bracy, Policy Director
Kristin Thomson, Deputy Director
Future of Music Coalition
February 15, 2006
Cc: Commissioner Deborah Tate
Commissioner
Jonathan Adelstein
Commissioner
Michael Copps
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