When Bob Donnelly entered the music business as a lawyer in 1976, payola, or pay-for-play, was standard in the radio industry.
“When I first started, it was hookers and blow [to help get songs on the air],” Donnelly says. “Then that disappeared and it became sports tickets, trips, sneakers and the like. It changed over time so that it became much more sophisticated. At the end of the day, the labels still wanted hit records and the radio stations wanted cash.”
While some radio promoters today liken those days to the Wild West — a distant past — conversations with more than 30 people in the music industry familiar with the modern radio business indicate that payments to influence airplay are still a significant feature of the radio landscape. “It never went away,” says Paul Porter, a veteran of “urban” radio who discusses his experiences with payola in his 2017 book, Blackout: My 40 Years in the Record Business. “The old days of coming in [to a radio station] with a 12-inch [record] full of money [and offering] trips and cocaine are all gone. Now everything goes to LLCs and cash apps.”
“Everyone knows it’s there,” adds Allen Kovac, CEO of the rock-focused Eleven Seven Label Group. “It’s a game that should’ve gone away a long time ago. [But] it’s prevalent enough that you’re not gonna get into the Top 15 without playing that game.”
Pay-for-play is at least as old as rock itself. The first congressional hearings on payola in the radio industry were held in 1960, resulting in the prohibition of undisclosed pay-for-play. But pay-for-play did not end. Donnelly heard so many stories from fed-up artist clients about payments to DJs and radio stations that he decided to alert Eliot Spitzer, then New York’s attorney general, to the state of the industry in 2004.
Spitzer’s investigations revealed that payola was rampant in radio. To influence airplay, money and other “valuable considerations” moved among labels or middlemen known as “indie promoters” and radio stations. “It was the early stage of people using email, so [labels and radio programmers] were pretty straightforward in terms of what the deals were and the transactions that were being cut,” Spitzer tells Rolling Stone. In 2003, for example, one program director asked Columbia Records, “Do you need help on Jessica [Simpson] this week? $1,250? If you don’t need help, I certainly don’t need to play it.”
“When I first started, it was hookers and blow [to help get songs on the air],” says one music business lawyer
As a result of the New York investigation, each of the major labels agreed to pay multimillion-dollar settlements. Radio chains like CBS and Entercom also paid financial penalties. In addition, the major labels committed to significant “business reforms” in the ensuing deal with the New York attorney general’s office. The most important of these was a promise to “not use … [contests or giveaways, commercial transactions, advertising, artist appearances and performances] in an explicit or implicit exchange, agreement or understanding to obtain airplay or increase airplay.”
Despite these agreements, pay-for-play transactions persist in the industry. One manager, who spoke on the condition of anonymity, recently spent approximately $10,000 through a third party directly paying radio DJs in the “urban” and rhythmic formats to play a single. The payments were strategically employed to boost the singer’s spins. When a label signed the artist, the manager was able to earn his money back.
That was a relatively cheap investment. Another music-industry veteran who requested anonymity claims that he spent five times as much to try to break a record in the rhythmic format. “I bought all my spins at the right places,” he says. “We spent about $50,000.” He got around 800 plays, mostly in mix shows.
Eliot Spitzer investigated pay-for-play practices as New York’s attorney general.
Four radio insiders say there are small-market stations in the Top 40 and “urban” formats that appear so susceptible to influence that their playlists cannot be trusted when trying to gauge the success of a single. (Program directors often consult their colleagues’ playlists when making decisions about whether or not to play a song; few want to step out on a record without seeing it working elsewhere first.)
Stations like this exist “in every format,” says “Tom,” a label promoter with cross-genre experience whose name has been changed to protect his anonymity. “Say a song is Number 20 on the Top 40 chart [ranked by spins], but it’s Number 40 in audience [reached],” Tom continues. “You’ll probably see stations pop up with a high concentration of the spins overnight [when barely anyone is listening]. They’re getting something in return. They’re not doing it every single time just to help somebody out.”
“Take a look at the Mediabase chart and look at how many people got one, two, or three spins [a week],” adds the veteran who spent $50,000 buying spins. Songs become radio hits only if they get played in bulk; a couple of spins a week is not enough for a track to become familiar to casual listeners. “How do you break a record spinning it once a week?” the veteran asks. “For $300.” A rep for Mediabase declined to comment for this article.
In addition to direct payments to people in programming positions, industry veterans say that money passing from record labels or artists to radio stations for the purpose of influencing playlists often takes a subtler, more circuitous route. Payments are fuzzily described as promotional, and funneled through independent promoters who are frequently compared to “consultants” or “lobbyists” for hire.
In radio, this form of lobbying is reminiscent of behavior that was explicitly prohibited in the Spitzer settlements. In 2006, the New York attorney general’s office wrote that “in an effort to dodge the payola laws, record labels and radio stations have also enlisted the services of so-called independent promoters … middlemen who act as conduits for delivery of the labels’ ‘promotional support’ to the stations and help perpetuate the fiction that this support is not actually being delivered by the labels in exchange for airplay and therefore does not violate payola statutes. Many independent promoters receive compensation from the labels for each ‘add’ they obtain.”
Today, some indie promoters establish special rapport with specific stations. Then, thanks to their exclusive relationships, these promoters develop a certain amount of clout — they serve as gatekeepers to the stations in their flock. In the Top 40 space, two promoters are known for allegedly having a number of stations under their influence.
“Jane,” a former major-label promotions executive whose name has been changed, explains that “some independent promoters claim to record labels, ‘You won’t get access to certain radio programmers because there are too few hours in the day and they’re not going to take calls from every single label out there. If you pay me to promote your record, yours can be one of the eight tracks that I’m working. These programmers return my phone calls.’”
To promote a single in the Top 40 format, “you’re probably gonna hire 10 different indies on every record,” Tom says. “There could be one guy who has one station you want, another guy who has 12 stations that you want. I don’t think there’s any way somebody could have a hit at radio without having to do that.”
“It’s a game that should’ve gone away a long time ago,” says one label CEO
In the case of one prominent radio network that allegedly has an exclusive relationship with a single promoter, “he gets the adds, and then you pay him 3,500 bucks,” says “James” (not his real name), a second promotions executive with extensive major-label experience. “We call it the toll — everybody has to pay it.”
Unlike the old days, when a programmer might take home $1,250 for spinning Jessica Simpson, “the toll” doesn’t always go into the programmer’s pocket today. Instead, “what [the stations] need the money for is to go toward marketing, quote-unquote,” James says. That might include buying advertising time on the airwaves or billboards in the market, or putting money toward products like T-shirts and bumper stickers that publicize both the radio station and the record label.
Again, this behavior was uncovered — and prohibited — in the New York attorney general’s investigation more than a decade ago. “In addition to employing the traditional device of delivering bribes to radio programmers … record labels endeavor to gain airplay for their songs by providing such inducements to the radio stations as ‘promotional support,’ ” the attorney general’s office wrote.
To the extent that program directors even acknowledge the existence of seamy promotional behavior — which they rarely do — they hasten to say it’s concentrated in formats that are not their own. Multiple people working in the pop space pointed fingers at “urban” or Latin radio. Another program director who spoke on the condition of anonymity singled out country music for “get[ting] away with fricking murder.” “Everyone thinks they’re sweet boys because they got missed on the big sweep that happened with Spitzer,” the program director adds. “All the pop stations got their hands slapped, and everyone looked at us like we were a bunch of pigs. Country just skated right on by.”
Insiders claim there are notable differences between radio’s behavior today and the disguised payments that were uncovered in the Spitzer investigation.
Two people working in promotion point out that major radio chains like iHeartMedia and Cumulus have tried to distance themselves from pay-for-play, mostly by refusing to work with indie promoters. Since those two chains control many of the stations that make up the radio charts, this distancing limits the impact of any payola-type activity. A spokesperson for Cumulus said that the company has “a strict ‘no independent record promoters’ policy dating back to the 2005 Eliot Spitzer investigations”; iHeart noted that “we don’t typically work with indie promoters because we have so many other opportunities to work directly with labels and independent artists.”
Promoters also note that there are times when spending money on “promotional support” can be entirely above-board, especially if a singer in the station’s rotation is planning an upcoming show in the area. “One legitimate reason for a record label to advertise on a radio station is if they’re doing tour support,” says Jane, the former major-label promoter.
“We call it the toll — everybody has to pay it,” says one promotions executive
In addition, several radio and label officials argue that most promoters’ influence is indirect or advisory. “There really are people who just call people and have good relationships and can cite good facts [about songs they are hired to advance],” Tom says. “There are people where there is no quid pro quo.”
“There is still a way to structure this so it works,” adds a lawyer in the communications industry. “What the indie is obtaining from a station is the right to meet with the music director every so often and tell them about the latest records he’s promoting. One other right he’s allowed to have: When they do add one of his songs, [the station] tells him first. For these agreements to be legal, that’s all the [rights the] indie has. In return, he can give promo items to the station because he’s only getting the right to meet with them.”
Multiple people note that promoters with exclusive relationships work carefully with attorneys to make sure they are “buttoned up” — secure in the eyes of the FCC. “My sense is it’s extremely common for there to be some kind of financial transaction taking place between the station and the label,” says one FCC source. “But they just package it in a way that passes muster under our rules. The way they do it is basically exploiting loopholes in the law.” That makes radio “a very tricky area to take enforcement in.”
“On the surface, it looks sleazy and cheesy, and at times it is,” sums up James, the promotions veteran. “But it’s also on the up-and-up.” Recently, however, he says he refused to pay “the toll” to a station that had a relationship with one of the prominent independent promoters working in pop. As a result, James claims the station refused to put his song into rotation until it already went Number One.
The last line of defense against improper radio promotion behavior is major-label compliance departments, which were set up after the Spitzer lawsuits to “monitor promotion practices and develop and implement an internal accounting system designed to detect future abuses.”
Many of the people who spoke for this story pointed to the paperwork they have to sign — forms that declare that no money was exchanged for airplay — and the compliance training sessions they attend, suggesting these measures serve to curb any inappropriate behavior.
Representatives from two major-label compliance departments said the indie promoters are required to certify that they adhere to the rules laid out in the settlements with the New York Attorney General’s office every year. But “we don’t get involved in whatever relationship the promoter has with the station,” one major-label compliance officer says. “There’s nothing in the agreement that prevents us from working with independent promoters who have exclusive relationships.”
That suggests that majors may not have enough information to ensure that the indie promoters are acting in the correct manner: How can a compliance officer determine if an indie is using improper methods to influence a station without knowing the relationship between the two parties?
“My sense is it’s extremely common for there to be some kind of financial transaction taking place between the station and the label,” says one FCC source
And even if compliance officers do have the correct information, they don’t seem able to do much about it. “The tools we have are the certifications from the independent promoters, educating them about their obligations and any information I get [about improper behavior],” says one major-label compliance officer. The annual compliance certification for one major label, reviewed by Rolling Stone, is relatively toothless: If an indie promoter violates his or her agreement with that label, it “could lead to disciplinary action up to and including termination of employment.”
“Clark,” a second former major-label promotions executive whose name has been changed, described the compliance agreements as “some bullshit, but you keep it moving.”
“Who’s regulating this, and who’s going to enforce it?” he asks.
The labels aren’t going to police themselves?
“Fuck, no,” Clark responds. “Why would we do that?”
It’s hard to find anyone in the radio ecosystem with good things to say about any of the variants of payola. “Labels don’t generally want to pay money for airplay; they’d rather get their airplay strictly on the basis of merit,” Jane says. “To the extent that payola has been a recurring form of corruption, it has been a cost of doing business competitively that most labels would prefer not to have to pay.”
Kovac, the indie label head, throws the blame back on the major labels for perpetuating “an old system that shouldn’t even be around anymore.” “If you’re a promo guy, and you’re bonused on charts, what’s the problem with incentives?” he continues. “They work. If you’re [Universal Music Group CEO] Lucian Grainge and you said to all the presidents of all your labels, ‘Tell your head of promotion from now on they only get paid on consumption [rather than spin-based charts],’ all of a sudden you’ve changed the incentive.”
Many in radio claim not to be fond of the current system either. “We hate it on our end,” James says. “But again, they sign documentation saying that there’s no money being exchanged for airplay. I guess there is money being exchanged for airplay, because you have to pay it. [Radio stations] have a choice of so many different records that they can play [instead of yours]. You’re either in or you’re out.”
“On the surface, it looks sleazy and cheesy, and at times it is,” says one promotions veteran
Promoters and programmers say radio stations with exclusive promotion arrangements do stand to benefit from them. Phil Becker, EVP of programming for Alpha Media, says these exclusive relationships help streamline a hectic process for overworked program directors. And someone who worked at a group of radio stations notes that exclusive arrangements also drive revenue and promotional benefits for stations — especially valuable in smaller markets.
“In effect, radio stations are selling airplay to record labels,” says Gabriel Rossman, an associate professor of sociology at UCLA and the author of Climbing the Charts: What Radio Airplay Tells Us About the Diffusion of Innovation. “A lot of it is for promotional support: If the 10th caller gets concert tickets, that sort of thing. It’s a transfer from the labels and the artists to the stations.”
Artists can benefit from this transfer, since power is hyperconcentrated in the music industry. Say an artist doesn’t have a major-label deal, and his team does not have a longstanding relationship with Spotify and Apple Music’s small number of very-hard-to-reach playlist “curators.” In that case, lobbying radio might still allow this artist to get his music in front of a wide audience. That was the case for the industry players who directed strategic payments to DJs.
But even if radio serves to bring attention to unknown artists, it’s a tough game to get involved in without deep pockets — or, more likely, major-label support. To have real success promoting a song to “urban” radio, experts say you have to be able to put up at least $100,000 to $125,000. Pop radio has many more stations, so promotion there is more expensive.
One interpretation of the modern radio system suggests that the high price for airplay is the whole point: It creates a barrier to entry that favors major labels. In 1990’s Hit Men: Power Brokers and Fast Money Inside the Music Business, Fredric Dannen’s detailed history of radio promotion at its most corrupt, the author wrote that “the large record companies understood on some level that if radio airplay were not free, it would mean a major competitive edge.”
Rossman sees it differently. In 1960, he says, “the pre-rock labels were convinced that the only reason rock was played was the indie labels bribed all the DJs. By the 1980s, the dominant narrative was that the major labels compete unfairly through payola. I think it’s just [that] this is how labels compete. There’s a valuable resource, and they bid up the price.”
“[Radio stations] have a choice of so many different records that they can play [instead of yours],” says one promotions executive. “You’re either in or you’re out.”
This is a game primarily for the rich, but playing it still has risks. For one thing, it’s streaming, not radio play, that drives monetization today, so labels largely don’t expect a direct return on their investment. Instead, they hope that the radio exposure they are shelling out for at high prices will boost clicks on Spotify or Apple Music.
But the math might not work that way. A song that is played heavily at radio but not consumed otherwise is known as a “turntable hit.” If an artist has to pay $3,500 for an add in one market, radio play needs to create roughly a million streams in that market to break even. “You’re spending a lot of money in tertiary markets that are playing songs in overnights,” Kovac says. At the same time, “the revenue that would come out of broadcast radio airplay has been reduced by three-quarters, two-thirds, due to the evaporation of CD sales and ever-declining digital sales,” according to a third promoter who spoke on the condition of anonymity. “You’re not seeing the same revenue return from radio airplay because the amount of streams you have to get to make back your investment in radio promotion spending is greater than the short-term return.”
Payola may also complicate marketing strategies. If radio play causes streams to jump, it isn’t easy to determine why they increased. “Is it for the right reasons [e.g. people like the song] or the wrong reasons [e.g. anything else]?” Jane wonders. Plotting the correct next step — the follow-up single, the tour routing — depends on understanding the initial source of success. Pay-for-play practices obscure that.
“It’s not a good thing for the artist,” says one longtime East Coast DJ. “It’s not a good thing for the labels. It’s not a good thing for the integrity of our radio stations.”
But the fate of pay-for-pay-like practices may ultimately be tied to the health of radio itself. “As long as [radio] maintains that hold on breaking new artists [and] new music, there’s always going to be a competition for those limited number of spots on their airplay list,” says Donnelly.
“People are just going to do whatever they have to do to get a play.”
Source: Read Full Article