Thursday, October 23, 2008

Payola and Indie Access to Commercial Airwaves

As part of our ongoing work to improve the state of terrestrial radio and create more opportunities for artists to reach potential audiences, FMC has worked closely with the American Association of Independent Music (A2IM) — a group that represents a broad coalition of independent labels — to determine whether independently-released music is reaching the commercial airwaves.

Having observed trends in terrestrial radio since the turn of the millennium, we realize two things: a) consolidation in station ownership after the 1996 Telecommunications Act has led to a loss of independent owners and local control over programming decisions at commercial stations, and b) pay-for-play schemes like payola have made it incredibly difficult for non-major label talent to score commercial radio play.

While consolidation still remains a problem, attempts have been made to curb payola. In 2003, then-New York Attorney General Eliot Spitzer launched an investigation into whether the nation’s biggest radio chains were participating in payola. The answer was a resounding yes. Spitzer uncovered blatant pay-for-play arrangements, including major label inducements and a corrupt system of middlemen (independent promoters) who acted as gatekeepers to commercial programming. (You can read some of Spitzer’s published evidence here, or learn more about the history of payola and the NY AG investigations in our Payola Education Guide.)

While Spitzer's probe resulted in consent decrees and the collection of over $30 million in fines from the four major labels, it was up to the FCC to complete the investigation on radio stations. In March 2007, the FCC decided to settle with the four largest radio station groups that had been accused of engaging in payola – CBS, Citadel, Clear Channel and Entercom. Although the agency was successful in collecting small fines from the station group owners and implementing consent decrees, the FCC resisted calls for oversight, leaving no means through which to guarantee implementation or compliance. So, the independent music community – led by A2IM and FMC – helped implement a separate set of voluntary "Rules of Engagement" with the broadcasting chains. The hope was to create the conditions for a more productive relationship between the indies and the major broadcasters.

So where are we, some 18 months later?

A new survey of A2IM label members conducted by investigative journalist (and former FMC Communications Director) Justin Jouvenal found that indie labels are still having difficulty getting airplay on commercial radio.

A2IM sent out a 42-question survey to its label membership, which asked about whether their relationship with commercial radio had changed over the last year. The report, which was released on October 20, 2008, at an A2IM-sponsored roundtable discussion in New York City, revealed near-unanimous sentiment among label owners; little has changed over the last year and a half, with 92 percent of label respondents describing their relationship to commercial radio as “the same” as before the Consent Decree and Voluntary Agreements. You can see the press announcement here; read the report here; and download the full report with appendices (PDF) here.

FMC continues to research, analyze and document commercial radio play to better understand if and when independent music is played on corporate radio. At the same time, we continue to push for and support non-commercial and Low-Power FM as an alternative to the homogenized sounds heard on commercial stations. We also believe that, for terrestrial radio to be viable in the 21st century, it must reaffirm its commitments to serving the communities in which it holds licenses. In other words, it needs to think, program, and act locally. In this way, we hope to rebuild the vital connections between listeners, artists, labels and programmers so everyone can benefit from the public airwaves.

For more information on radio issues, visit our articles and research pages.

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