July 31, 2005

More on the NYC Payola Settlement [9:33 pm]

How Payola Went Corporate

And so goes the latest version of payola, the illegal trading of secret payments in exchange for airplay. 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 latest scandal to hit the music business shows that just as the industry has turned corporate in recent decades, so too has its underbelly. Documents ferreted out by investigators for Attorney General Eliot Spitzer of New York show that executives at Sony BMG Music Entertainment’s labels (including Epic) concocted their deals with some of the biggest commercial radio chains in the country. Last week, the company acknowledged its improper promotional practices and agreed to pay a $10 million fine.

The scandal also offers a reminder that, in important ways, little in the business has changed. The record labels still try to curry favor with station programmers, even though traditional radio is less powerful than it has been for decades, as satellite and Internet radio, as well as devices like iPods, give music lovers more control over what they listen to.

But commercial radio still dwarfs its competitors and retains its singular ability to mint hit records. And the record business is hit-driven.

Later: related F.C.C. to Scrutinize ‘Pay to Play’ in Radio

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