Big Radio Greed

The concentration of radio ownership has ushered in a new age of payola. Huge recording labels pay off radio conglomerates to play their most bankable performers. Commercial "talent" is pushed to the top of playlists nationwide, shoving local artists off the airwaves. When labels pay big radio to play their most mainstream acts, independent music suffers and radio choice turns into a mind-numbing race to the bottom.
Activists, musicians, students and independent broadcasters are joining with Free Press to stop payola and reclaim the public airwaves for more diverse, independent artists.

The Storm Against Payola

The FCC and New York Attorney General's office are now investigating reported payola deals at large recording labels. Attorney General Eliot Spitzer has also subpoenaed the records of nine of the nation's biggest radio station chains.
In 2005, Sen. Russ Feingold (D-Wis.) introduced legislation, the "Radio and Concert Disclosure and Competition Act," expanding the definition of payola to eliminate the inside dealing and structural abuses in consolidated radio, which have locked local and independent artists off the airwaves for years.

With action in the courts, the FCC and Congress, Americans need to act now to turn the tides against big radio and protect our airwaves from corporate greed.

Urge the FCC to take action against payola.
Learn more about how payola affects you.
Find local stations implicated in payola abuses.

An "Arsenal of Smoking Guns"

Sony BMG and Warner Music Group have already agreed to pay more than $15 million for payola abuses after Attorney General Spitzer found they had funneled millions in money and prizes to radio broadcasters. FCC commissioner Jonathan Adelstein told reporters that Spitzer gave the agency "an arsenal of smoking guns" to ramp up enforcement against payola broadcasters. Several days later, FCC Chairman Kevin Martin pledged to do just that.
"We need to investigate each particular instance that Spitzer has uncovered to see if it is a violation of federal law," Adelstein said. "This is a potentially massive scandal." But Spitzer and the FCC's remedies -- small fines for big radio and record labels -- may not be enough to change the radio landscape.

It has been 40 years since enactment of the payola statutes. It's time the FCC and Congress determined whether the existing rules adequately stop payola in the age of big radio.

Stopping Payola. Reforming Radio.

There's no better time to become involved. While payola has been around since the early days of broadcasting, it takes on a particularly insidious form in an era of massive radio consolidation.
The payola landscape changed after Congress passed the 1996 Telecommunications Act that lifted the national caps on radio ownership. Sony understood that in striking deals with companies that dominated local radio across the country, it could blanket the airwaves with its artists. The success of the campaign to scrub payola from the airwaves hinges on the public's ability to force FCC and Congress to create stronger accountability and enforcement across an industry that has become dominated by a handful of such conglomerates. Here are four steps you can take to support the campaign:

Act locally against the hundreds of conglomerate-owned stations that were implicated in Spitzer's investigation. Use Free Press' interactive map to find implicated stations near you and contact them with your concerns.

Support homegrown acts and independent radio stations by buying CDs from the local bin at your independent music store, going to local performances, and encouraging your favorite local stations to add these artists to their playlists.

Urge the FCC to launch federal investigations, review payola abuses by local broadcasters and impose harsher penalties.

Join the Free Press Action Squad to meet other activists in your community take part in actions to save local radio and support independent artists.

Spitzer Names Nine Radio Firms
From Associated Press, February 9, 2006

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New York Atty. Gen. Eliot Spitzer said Wednesday that he had subpoenaed nine of the nation's largest radio conglomerates in his investigation of claims that some major recording artists got air time because of payoffs by their labels.

"A lot of the major songs have been implicated in this, and it showed how pervasive the payola infrastructure had become," Spitzer said. "Major artists, major songs were sent up the charts through improper payments to buy spins on the air that translated into sales."

Payola is a term used to describe such payments.

The companies that have received subpoenas control thousands of stations nationwide, including Clear Channel Communications Inc., Infinity, which now operates as CBS Radio, Citadel Broadcasting Corp., Cox Radio Inc., Cumulus Broadcasting Inc., Pamal Broadcasting Ltd., Entercom Communications Corp., Emmis Communications Corp. and ABC Inc., according to court filings by Spitzer.

Two major recording companies agreed last year to settle their parts of the investigation. Warner Music Group Corp. agreed to pay $5 million, and Sony BMG Music Entertainment agreed to pay $10 million.

Artists and writers are not targets, Spitzer's office said. In fact, some have supported the probe and provided complaints that assisted investigators.

Station owner representatives who were reached for comment denied that payola had taken place at their companies.

"Cox Radio has cooperated fully with Atty. Gen. Spitzer's investigation," Robert F. Neil, chief executive of Cox Radio, said in a statement. "Years before this investigation began, Cox Radio was the first radio group to terminate all relationships with independent record promoters to avoid any suggestion or appearance of 'pay for play.' "

"We have zero tolerance for pay-for-play," said Andrew W. Levin, executive vice president and chief legal officer of Clear Channel. "Any employee who violates that policy faces disciplinary action up to and including dismissal."

Jason Finkelberg, a general manager at Pamal Broadcasting, based in Albany, N.Y., said he knew of no payola being practiced. Music company representatives take radio personnel to lunch, he said, but no cash or gifts are exchanged at his company or at others he's worked for.

"We never accepted anything in exchange for airplay," he said.

A 1960 federal law and related state laws bar record companies from offering undisclosed financial incentives in exchange for airplay. The practice was called payola, a combination of 'pay' and 'Victrola,' the old windup record player.

Spitzer has relied on civil laws in the payola case because the criminal laws are more specific and less likely to be violated.

The radio probe involves Jennifer Lopez's song "I'm Real" and John Mayer's Daughters. Songs by other artists also are being examined, including ones by Jessica Simpson, Celine Dion, Maroon 5, Good Charlotte, Franz Ferdinand, Switchfoot, Michelle Branch and R.E.M.

Probe into 'Pay-for-Play' Scandal
From Irish Examiner, February 9, 2006

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New York's chief law officer has subpoenaed many of America's largest radio conglomerates in his "payola" investigation of major artists and songs, reported to include Jennifer Lopez, REM and Glasgow band Franz Ferdinand.

New York's chief law officer has subpoenaed many of America's largest radio conglomerates in his "payola" investigation of major artists and songs, reported to include Jennifer Lopez, REM and Glasgow band Franz Ferdinand.

State Attorney General Eliot Spitzer claims some of the songs may have been given air time because of payoffs by recording companies.

Mr Spitzer would not identify the major radio companies that have been subpoenaed nor the artists and songs that he claims benefited from the pay-for-play practice for cash, trips and gifts.

"A lot of the major songs have been implicated in this and it showed how pervasive the payola infrastructure had become," Mr Spitzer said.

"Probably many of the songs that were beneficiaries of the payola scheme would have succeeded without it, but certainly payola became part of the promotional structure and was integral to the game to get songs to the top.

He says the victims of payola are listeners who did not hear music based on objective criteria, including popularity, and artists who cannot get their big break because they had no player in the payola scheme.

Mr Spitzer is investigating the nine largest radio corporations in a scheme that involved Jennifer Lopez's I'm Real record and John Mayer's song Daughters, according to court documents filed by Spitzer's office.

Songs by other artists are also being examined, including recordings by Jessica Simpson, Celine Dion, Maroon 5, Good Charlotte, Franz Ferdinand, Switchfoot, Michelle Branch and REM.

The radio companies that have received subpoenas control thousands of stations in the US, including Clear Channel Communications Inc, Infinity, which now operates as CBS Radio, Citadel Broadcasting, Cox Radio, Cumulus Broadcasting, Pamal Broadcasting, Emmis Communications, Entercom and ABC.

The practice has evolved but appears to be have been under way in its current form since the mid to late 1990s, said Terryl Brown Clemons, assistant deputy attorney general in charge of the payola investigation.

She said the practice was found across the spectrum of music, from top-40 to urban to rock.

Artists and writers were not targets, she said. In fact, they had supported the probe and provided several complaints that assisted investigators.

SONY SETTLES PAYOLA INVESTIGATION
Company Acknowledges Problems; Agrees to Sweeping Reforms
Attorney General Eliot Spitzer today announced an agreement to halt pervasive "pay-for-play" in the music industry.

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Under the agreement, SONY BMG MUSIC ENTERTAINMENT, one of the world's leading record companies and owner of a number of major record labels, has agreed to stop making payments and providing expensive gifts to radio stations and their employees in return for "airplay" for the company's songs.

Such payoffs violate state and federal law.

"Our investigation shows that, contrary to listener expectations that songs are selected for airplay based on artistic merit and popularity, air time is often determined by undisclosed payoffs to radio stations and their employees," Spitzer said. "This agreement is a model for breaking the pervasive influence of bribes in the industry."

After receiving tips from industry insiders, Spitzer's office conducted a year-long investigation and determined that SONY BMG and its record labels had offered a series of inducements to radio stations and their employees to obtain airplay for the recordings by the company's artists.

The inducements for airplay, also known as "payola," took several forms:

" Outright bribes to radio programmers, including expensive vacation packages, electronics and other valuable items;

" Contest giveaways for stations' listening audiences;

" Payments to radio stations to cover operational expenses;

" Retention of middlemen, known as independent promoters, as conduits for illegal payments to radio stations;

" Payments for "spin programs," airplay under the guise of advertising.

E-mail correspondence obtained during the investigation shows that company executives were well aware of the payoffs and made sure that the company got sufficient airplay to justify these expenditures.

In discussing a bribe given to a radio programmer in Buffalo, one promotion executive at SONY BMG's Epic Records wrote to a colleague at Epic:

"Two weeks ago, it cost us over 4000.00 to get Franz [Ferdinand] on WKSE. That is what the four trips to Miami and hotel cost . . . At the end of the day, [David] Universal added GC [Good Charlotte] and Gretchen Wilson and hit Alex up for another grand and they settled for $750.00. So almost $5000.00 in two weeks for overnight airplay. He told me that Tommy really wanted him to do it so he cut the deal."

Another Epic employee who was trying to promote the group Audioslave to a Clear Channel programmer asked in an email:

"WHAT DO I HAVE TO DO TO GET AUDIOSLAVE ON WKSS THIS WEEK?!!? Whatever you can dream up, I can make it happen."

A promotion employee unhappy with the times assigned for spins of the song "I Drove All Night" by Celine Dion wrote this internal email:

"OK, HERE IT IS IN BLACK AND WHITE AND IT'S SERIOUS: IF A RADIO STATION GOT A FLYAWAY TO A CELINE [DION] SHOW IN LAS VEGAS FOR THE ADD, AND THEY'RE PLAYING THE SONG ALL IN OVERNIGHTS, THEY ARE NOT GETTING THE FLYAWAY. PLEASE FIX THE OVERNIGHT ROTATIONS IMMEDIATELY."

The investigation revealed that SONY BMG employees took steps to conceal many of the payments to individuals and radio stations, by using fictitious "contest winners" to document the transactions and make it appear as though the payments and gifts were going to radio listeners instead of station employees.

The Assurance of Discontinuance summarizing the Attorney General's findings alleges that the illegal payoffs for airplay were designed to manipulate record charts, generate consumer interest in records and increase sales.

Spitzer said: "Aggressive promotion of products is one of the hallmarks of our economy. We expect it and respect it when done creatively and legally. But the efforts outlined in the Assurance clearly crossed the line and must be curtailed."

Ann Chaitovitz, Director of Sound Recordings for AFTRA (American Federation of Television and Radio Artists) said: "We would like to thank Attorney General Spitzer for examining this pernicious issue. Pay-for-play hurts both recording artists and the public. We look forward to his continuing investigation of the other record labels and the vertically integrated radio station owners."

Don Henley, a member of the Eagles and founding member of the Recording Artists' Coalition said: "Attorney General Eliot Spitzer should be commended for successfully addressing the pay-for-play problem. There is no question that payola hurts recording artists. RAC is grateful to him and his staff for exposing the magnitude of the payola problem and for getting a major label to agree to change the way it does business. We look forward to other record labels agreeing to similar reforms."

Under the Assurance, SONY BMG, building on guidelines SONY BMG issued earlier this year in response to the AG's investigation, has agreed to stop making payoffs in return for airplay and will fully disclose all items of value provided to radio stations in the future. SONY BMG also has agreed to corporate-wide reforms, including hiring a compliance officer responsible for monitoring promotion practices and developing and implementing an internal accounting system designed to detect future abuses. This is the first time an entertainment company has agreed to such sweeping reforms.

The company has also issued a statement acknowledging the improper conduct and pledging to abide by a higher standard.

In addition, the company has agreed to make a $10 million payment for distribution by the Rockefeller Philanthropy Advisors to New York State not-for-profit entities in a manner that will inure to the benefit of the residents of the State of New York by funding programs aimed at music education and appreciation.

Spitzer said SONY BMG officials cooperated fully with his investigators and promptly agreed to reforms when the problems were identified. He commended the company for taking steps that should serve as a model for the rest of the industry.

Spitzer also noted that his office continues its broad investigation of pay-for-play practices in the recorded music industry.

The investigation and settlement were handled by Assistant Attorney General Kathleen O'Neill of the Telecommunications & Energy Bureau, and Ricardo Velez of the Criminal Prosecutions Bureau, under the direction of Terryl Brown Clemons, Assistant Deputy Attorney General for the Division of Public Advocacy.

Assurance of Discontinuance

Sony Correspondence

Payola Focus Turns to Major Radio Conglomerates
From ABC News, February 8, 2006
By Brian Ross, Richard Esposito and Vic Walter

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Hundreds of radio stations are under investigation by the Federal Communications Commission in the payola scandal rocking the music industry, ABC has learned.

The FCC staff is working with voluminous evidence right now. Its a complicated and wide-ranging investigation. FCC Commissioner Jonathan Adelstein told ABC News in an exclusive interview.

This is potentially the most widespread and flagrant violation of FCC rules in the history of American broadcasting, Adelstein said. Weve never seen evidence of such a systematic betrayal of the responsibility of broadcasters.

Payola  or pay-for-play  is a practice seemingly as old as the recording industry itself. In the past the money went to rogue disc jockeys in exchange for increasing the airplay for individual songs and driving those songs to the top of the charts. In the modern version, the money goes to the bottom line of the radio stations and the conglomerates that own them, according to New York Attorney General Eliot Spitzer.

We have people in suits coming in with documents rather than cash payments under the table to a DJ, Spitzer told ABC News Chief Investigative Correspondent Brian Ross.

Several of the largest radio conglomerates in America  the corporate owners of FM radio stations across the nation  are within the scope of the FCC probe, which was triggered by the two year long pay-for-play investigation by Spitzer and was first reported on by ABC News.

A vigorous investigation by the FCC brings federal regulatory clout, and the specter of criminal prosecution by the Justice Department.

Paid to Play Many Top Artists Songs

In addition to criminal prosecution, any broadcaster in clear violation could face severe sanctions, and in the most blatant cases, the loss of their broadcast licenses, officials involved in the investigation have told ABC.

I cant believe that radio stations are putting their licenses at risk. It seems to me they thought the FCC was asleep and they shot someone in front of the policeman. The policeman is obligated to act when evidence is so clear, Adelstein said.

Spitzer said record company documents obtained in the investigation of Sony BMG and Warner, both of which have settled with the attorney general, revealed payments for songs that became major hits, including Jennifer Lopezs Im Real and John Mayers Daughters.

Other artists whose songs are named in the Spitzer documents include Jessica Simpson, Celine Dion, Maroon 5, Good Charlotte, Franz Ferdinand, Switchfoot, Michelle Branch, and R.E.M. The record companies allegedly paid radio stations to increase airplay of those artists songs.

That money allegedly came in many forms; directly from the record companies, through Indie promoters or in promotional considerations that lowered stations overheads.

Adelstein said that the New York attorney general has shared mountains of information with the FCC and has identified specific documents and e-mails that seem to clearly implicate some of the companies controlling much music radio in the United States.

The FCC has received an unbelievable amount of evidence from Attorney General Eliot Spitzer that there appears to be widespread and flagrant violation of FCC rules regarding payola, (including) undisclosed promotions by radio broadcasters. And we need to find out who did it, basically prosecute any violations to the fullest extent of the law, Adelstein said.

Adelstein spoke to ABC News after reading ABCs disclosure of the shift of Spitzers probe from record companies to broadcasters. He has been in regular contact with Spitzer.

When anything is aired that is paid for without being disclosed to the public it is a clear violation of FCC rules, he said.

We have a responsibility to get to the bottom of this & Its important that the FCC does its job and not let the states do it for us, Adelstein added.

Spitzer has been critical of the FCCs approach to the issue of payola.

I would be the first to acknowledge that I would like to see the FCC more directly involved in addressing what is very clearly a payola scandal that has run rife through the industry. They have failed to do so and we have reached out to them, said Spitzer.

The FCC originally started a probe into the payola scandal in August 2005, after Spitzer disclosed his investigation of record companies including Warner Music Group, Sony BMG, EMI and Universal. At that time, Adelstein called for the FCC to aggressively investigate. By November 2005 he was calling for the FCC to bring the probe to a swift and satisfactory conclusion. Now he admits the FCC needs to devote more resources to the probe. We need to devote significant resources [to investigating this aspect] and Im not sure we are doing that yet, Adelstein added.

Based on the evidence we have seen some of the radio conglomerates clearly are participating and knowledge of this and orchestration of this came from the very top, Spitzer told ABC.

Now since it is up to the FCC  not me  whether or not to strip them of their licenses. I will leave that decision to the FCC. But certainly the behavior has been unethical, improper, illegal, and a sanction of some severity should be imposed, said Spitzer.

Adelstein told ABC News that at this stage in the investigation its not clear what the appropriate sanctions are because were still looking into it, seeing if there are violations and, if there are, if they are systemic and go to the corporate offices.

Adelstein did say that the potential sanctions could be severe.

While its highly unusual for the FCC to pull licenses on first violation, depending on the severity that is one option that is available to us. These are criminal matters as well.

If we do find evidence of criminal violations its incumbent on us to refer this to the Department of Justice for criminal prosecutions.

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