Co. to reach out to labels for direct relationships
Bowing to heavy pressure from Washington, radio giant Clear Channel Communications will sever all ties with independent radio promoters, letting existing contracts run out over the summer.
Move is the most significant result to date of the growing anti-indie promotion sentiment that has flowed through the music industry in recent years. Costs of employing indies spiraled into the tens of millions and critics became more vocal in slamming what they saw as sanitized payola.
In a surprising statement, Clear Channel prexy and operating chief Mark Mays admitted guardedly that the system, in which indies effectively channel money from labels to radio stations in the process of promoting records, has given the impression of a pay-for-play relationship.
“We now recognize that these relationships may appear to be something they’re not,” said Mays. “We have zero tolerance for pay for play, but want to avoid even the suggestion that such a practice takes place within our company.”
Separately, Clear Channel Radio boss John Hogan said his division would be reaching out to the labels to form direct promo relationships to replace those cultivated with the indies.
Conglom’s decision was a direct result of withering criticism from Capitol Hill, where key execs testified in Senate hearings convened to investigate consolidation and other areas of concern in the radio industry.
Lawmakers leading the charge included Sens. John McCain (R-Ariz.), Orrin Hatch (R-Utah) and Russ Feingold (D-Wis.), who recently reintroduced a bill that would seek to rein in consolidation and market power among the radio industry’s biggest congloms.
“Clear Channel’s action validates the concerns I and other lawmakers have expressed over the past,” Feingold said Wednesday in a statement. “I hope that Clear Channel considers this a first step toward reforming the industry, not a single concession aimed at pacifying Congress and the (Federal Communications Commission).”
Feingold stressed that legislation is still needed to ensure that a different type of pay for play system does not emerge. Solon also stressed that radio stations should follow Clear Channel’s lead and sever their ties to indie promoters.
Feingold noted that Clear Channel’s announcement underscores the need for the FCC to obtain a more complete record and conduct a thorough public examination of the radio industry before moving forward on the media consolidation rule-making set for June.
Indie promotion has been a growing problem for record labels since it was instituted decades ago to address the payola scandals of the 1960s. Labels pay indies to get a song played at radio stations; indies in turn pay stations a flat fee for access to their airwaves. While the system doesn’t violate the letter of anti-payola laws (which ban direct payments from labels to radio for playing individual songs), it has been widely derided for flouting their intention.
And as payments to indies have spiraled into the tens of thousands per single, the labels have increasingly come to resent the system they helped create. The problem has only increased as power consolidated into the hands of a few indies servicing giants like Clear Channel.