WASHINGTON — Payola in the music biz — and new evidence of a different form creeping into the TV industry — is raising eyebrows and the specter of new regulation in Washington.
Sen. John McCain (R-Ariz.) sent a letter to the Federal Communications Commission railing about the problem of payola earlier this week, and Democratic FCC commissioner Jonathan Adelstein devoted a speech to the topic Wednesday.
Congress and the FCC are getting an earful on the topic since the New York Times and the Washington Post detailed several examples of “pay for play” on television and radio broadcasts in the past month.
The reports included examples of paid advertising passing as news on Peacock affil WFLA-TV in Tampa, Fla. According to press accounts, the station’s anchors for its local morning show, “Daytime,” interview guests who pay $2,500 to appear on the program. The only mention of money changing hands comes at the end of the program, when the words “the following segments were paid advertisements” appear in small type on the screen for about four seconds. The Washington Post recently cited another example of a TV station that charges for interviews, WLBT Jackson, Miss.
Reports about payola creeping back into the music biz also are bubbling to the surface. Several recent press accounts have explored the pressure recording artists face to promote radio stations during live concerts or run the risk of being dropped from the radio station’s playlist.
“In light of this apparent emergence of novel means of profiting from broadcast airtime in ways that appear not fully disclosed to the public, I am writing to inquire whether you believe the commission’s rules on sponsorship identification and ‘payola’ are adequate,” McCain wrote the FCC Monday.
McCain, who chairs the powerful Senate Commerce Committee, also asked the FCC’s commissioners to let him know if they thought congressional action is necessary “to ensure broadcasters do not continue to deceive viewers through such ‘sham’ television programs as ‘Daytime,’ or to preclude radio stations from demanding performances from musicians as compensation for airtime.”
In a speech Tuesday to the Federal Communications Bar Assn., Adelstein said that during a recent FCC hearing in Charlotte, N.C., several local artists and musicians expressed their frustration with what they viewed as payola: the need for big labels to pay radio broadcasters for airtime.
“As one commentator put it, ‘Payola is alive and well in Charlotte,” Adelstein recalled.
Adelstein said the government and music industry thought they had conquered the problem in the 1950s and ’60s, but many in the biz believe payola is just as prevalent today, although it has morphed into different forms.
“Today payola could mean influencing artists and musicians to play at certain concerts in certain venues that benefit the radio broadcasters,” he said. “It could come in the form of lunches or cocktail parties, where music companies must pay thousands of dollars just to talk with radio programmers from increasingly consolidated companies.”
Another known form, he added, is music companies paying “independent promoters,” who then pay radio companies for the privilege of consulting for the station and getting early notice of the station’s playlists.
“Now, isn’t that a bit backward?” Adelstein asked. “In most industries, the company receiving the benefit of outside consultants pays for those services. How many consultants or lawyers in this room want to pay your clients to take your advice? I think you get my point.”
Independent promoters pay between $100,000 and $400,000 per station for the special treatment, he estimated. Depending on the size of the market, that’s roughly $5,000 per song for stations in large markets. Each year, he said, payola costs the music industry $150 million-$300 million — costs that often are passed on to the artists.
In April, the Senate Commerce Committee began scrutinizing the music promotion practices. At that time, Clear Channel announced it would no longer work with independent music promoters; artists hoped other radio companies would follow suit.
“It’s now been six months and many are unsure of the structural changes that have resulted,” Adelstein said. “We need to find out what changes have taken place, and whether that company’s experiences can serve as a model for others.”