Payola pays!

Lorne Manly in the New York Times' Week in Review section writes about the latest version of Payola - the practice of record companies paying money for the broadcast of records on music - infecting the music industry. This is a topic that has finally received renewed attention in the wake of Sony's admission of wrongdoing, which includes a $10 million fine levied by New York Attorney General Eliot Spitzer. "How Payola Went Corporate". I like the opening:

In the fall of 2002, Celine Dion fans who listened to radio stations owned by Infinity Broadcasting, the country's second largest chain, were offered a chance to meet the object of their adoration. The promotion, dreamed up by Epic Records, promised to fly contest winners to Las Vegas to hear Ms. Dion perform at Caesars Palace and even to give one lucky soul a chance for some time alone with her. What listeners were not told was the price the stations paid for the honor of offering up an evening with Ms. Dion. As a promotion executive at Epic wrote in an e-mail message, Infinity had agreed to add Ms. Dion's newest single, "Goodbye's (The Saddest Word)," to the playlists of 13 stations.

And so goes the latest version of payola, the illegal trading of secret payments in exchange for airplay.

Then there's a useful mini-history lesson:

Attempts to game the system are nearly as old as the industry itself. "Song pluggers" urged certain songs on big band leaders in the 1930's and 40's, accompanied by bundles of cash to make the musical choice easier. Disc jockeys in the 1950's were handed cash bribes or fur coats for their wives. The independent promoters of the late 1970's and 1980's plied station directors with drugs and prostitutes.

The term payola - a contraction of pay and Victrola, a record player - entered the national lexicon more than 45 years ago, when a group of disc jockeys, including Alan Freed, were charged with taking bribes to play certain records. There were Congressional hearings, with lots of grandstanding over the terrible temptations such music held for the country's youth. A racial undercurrent coursed through the controversy, as the music in question often was rhythm and blues, considered to be black music.

Congress tried to legislate the practice out of existence, but, as with campaign finance, it's very difficult to switch off the flow of dodgy money. As Wikipedia reminds us, "Currently a different form of payola is used by the record industry through the loophole of being able to pay a third party or independent record promoters . . .Because of this, a very large majority of DJs are cut out of the song-picking decisions and are instead told what to play and when (for the most part) by music directors and/or "higher ups" at their radio stations."

This new type of payola sidesteps current FCC regulations requiring that, if a song is paid for by the record company, the radio station must state that it was paid for. Using indies allows for the record company to not directly pay the radio station, thus the radio station doesn't have to report it as the FCC regulations mandate.

And, as Manly concludes, as long as commercial radio retains by far the biggest audience, this money will not easily be stemmed.

Mr. Spitzer's pressure is just the latest indignity visited upon an industry that has slumped for most of this decade. But oddly, that decline may make commercial radio - despite its troubles from sluggish ratings and advertising - even more important. While satellite radio is expected to near 10 million subscribers by the end of the year, that figure pales in comparison to commercial radio's 230 million listeners.

"Radio is still the biggest single factor to get something going," said Howie Klein, a former president of Reprise Records.

Videos and club promotions can help create interest in a song. But commercial radio reaches more people in a shorter period of time, and that is the recipe for a hit. "The record companies still haven't found a way to get that word of mouth as quick," Mr. Klein added.