June 12, 2008

"Payola"– a contraction of the words "pay" and "Victrola" (LP record player) – is a term used to describe the process of labels or artists paying money to radio station DJs or employees in exchange for radio airplay.

Payola began to attract public attention in the late 1950s and 1960s when rock and roll disc jockeys became powerful gatekeepers and kingmakers who determined what music the public heard. Starting in the 1960s, federal laws were passed forbidding the direct payment or compensation of DJs or other radio staff in exchange for the playing of certain records, unless such payments were announced over the air.

The prominence of payola was temporarily held in check as a result of these laws and hearings. Eventually, however, payola-like practices did resurface, albeit in a more indirect way. Standardized business practices employed by many broadcasters and independent radio promoters resulted in a de facto form of payola.

Consolidation in radio station ownership following the 1996 Telecommunications Act allowed an “independent promoter” system – in which cash and goods were exchanged through a paid middleman – to strengthen. That is, until 2003, when first Senator Feingold and then New York Attorney General Eliot Spitzer began following up on rumors that payola was alive and well in the music and radio industries. Using the subpoena power of the New York Attorney General’s office, investigators collected thousands of pages of evidence from radio promoters, program directors and label executives, which implicated the four major labels and the four biggest radio station owners in a pay-for-play system. In 2004, after exacting over $35 million in fines from the record labels and two station groups, the Attorney General sent documents to the Federal Communications Commission for additional investigation into the radio station group owners that had been implicated in the AG’s findings. After a lengthy process, the FCC announced a settlement in March 2007 with the four biggest radio owners – Clear Channel, Entercom, Citadel and CBS – that included $12.5 million in fines and a consent decree outlining the “Rules of Engagement” for the radio industry.

The New York State investigations and FCC scrutiny from 2003 to 2007 uncovered shocking evidence of wrongdoing, and resulted in large fines and many promises about better behavior. But what have the payola investigations meant for musicians, independent labels and music fans? Has there been any noticeable impact on the conduct of labels or radio station owners?

This payola education guide tries to answer these questions, and more. We briefly look at the history of payola, the development of the “indie promoter” system, the investigations by Spitzer and the FCC and the contents of the “Rules of Engagement” signed by the four largest radio companies. Finally, we put this all in the context of what it means for musicians and independent labels, and how artists are interacting with radio in the 21st century.

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The Payola Education Guide was written by Adam Marcus for the Future of Music Coalition and the American Association of Independent Music (A2IM).

The research and analysis contained in this report was made possible through support from the New York State Music Fund, established by the New York State Attorney General at Rockefeller Philanthropy Advisors. The views expressed are the sole responsibility of its author and the Future of Music Coalition.

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FMC Reply Comments in FCC Localism Proceeding
On June 11, 2008, FMC filed reply comments in the FCC's ongoing localism docket (04-233). FMC's comments offered highly targeted proposals designed to aid stations’ service to their local communities. FMC also urged the FCC to take definite steps to track and analyze playlists in order to fulfill their public interest obligations. The Payola Education Guide was attached to these reply comments.
June 11, 2008
PDF of Reply Comments |
Press release

FMC Reveals Programming for Fall Events
Fall 2008 "What's the Future for Musicians?" seminars in New York and Chicago; Sampling and Fair Use Panel in NYC.
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Press release | Event Page


FMC Announces Upcoming Events
Fall 2008 "What's the Future for Musicians?" seminars in New York and Chicago; Washington, D.C. Policy Day and Policy Summit set for 2009.
August 5, 2008
Press release | Event Page

FMC Seeks Fall/Spring Interns
See Complete Job Description

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July 8, 2008
Press release | Event Page

FMC Files Brief to Protect Creative Expression
FMC and the Center for Creative Voices in Media filed a brief at the Second Circuit Court of Appeals, arguing that the FCC's indecency policy has a chilling effect on creativity and expression and deprives the public of access to protected speech.
July 2, 2008
Press release | Indecency amicus brief (PDF)

FMC Files Reply Comments in FCC Localism Proceeding
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PDF of Reply Comments | Press release

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Press release | Rock the Net

Musicians Get the Hint About Health Insurance
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Press release
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March 25, 2008
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Pop Rockers OK Go "Tour" Congress in Support of Net Neutrality
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March 13, 2008
Press release
Spoken testimony
Written testimony
Rock the Net

New York State Music Education Events Examine Crucial Issues Facing Artists
Kick-off forum in Buffalo on April 2 to focus on music, media, technology and policy issues for songwriters, composers and performers from all genres.
March 7, 2008 | Event details

Philly Bands Rocking for Net Neutrality
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OK Go and Bonerama Rocked DC for New Orleans Musicians
Bands also champion FMC's "Rock the Net" campaign for net neutrality
February 2 benefit show at DC's 9:30 Club raised over $8,000 for New Orleans musicians. Bands played cuts off their new benefit EP, You're Not Alone, available on iTunes on February 5.
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Upcoming Washington, DC show and benefit EP from OK Go & Bonerama
On February 2, OK Go and Bonerama will play a benefit at D.C.'s 9:30 Club in support of You're Not Alone - an EP to support Sweet Home New Orleans and Al "Carnival Time" Johnson.
January 21, 2008

Successful New Orleans Concerts Aid Big Easy Musicians
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January 15, 2008
Press release | Event details

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FMC's New Executive Director
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