PAYOLA RULING FORCES RADIO TO RE-EXAMINE Bram Teitelman – Billboard It might be an overstatement to say the $10 million settlement between Sony BMG and New York Attorney General Eliot Spitzer has caused shock waves to reverberate throughout the industry, but the settlement certainly has made radio and record labels re-examine how they do business.
With the three other major-label groups in Spitzer's sights, and the Federal Communications Commission paying close attention, radio executives are taking a closer look at anything involving labels as they prepare to tackle 2006 budgets.
"We're still coming to terms," says one programmer, who, like most people Billboard Radio Monitor contacted about this topic, preferred not to be named. "I think we're going to figure it out come September when we start working on next year's budget. We did the budget last year before all of this came down, and now we're just trying to get through the year as best we can. A lot of things will be affected."
"From day one, my PDs and MDs have known about the rules of the road," one GM says. "Also, they were required to sign a company statement about . . . payola, and they knew the ramifications for violating [it]. No personal gain in any way in exchange for airplay. Period."
There are some gray areas in the wake of Spitzer's probe. Radio stations have long relied on labels for promotional support, be it CDs to give away on the air or trips for contest winners. And while money exchanging hands for airplay is illegal, independent promoters have acted as middlemen for years. Some radio groups phased out indie promoters several years ago when they came under scrutiny, but other groups and independent stations still use them.
"We did work with an independent promoter for many years and had a great relationship with their office," the same GM says. "I feel very strongly that this issue is a pretty simple one and relates back to what most business practices are: full communication, clear expectations and 'do the right thing.' "
Another PD still uses an independent but is looking at any potential legal issues. "We made sure it's as clean as it could possibly be," he says. "If you think about it in the pure sense of the word, indies are illegal. Record companies are paying some guy to get you to add a record . . . They're paying for information about your playlist so they can call record companies and be knowledgeable. It's a gray area, but it has always been gray." The PD adds that station lawyers have determined the PD's practices with the indie promoter are legal.
At least one programmer welcomes Spitzer's involvement. He says he had already changed how things were done at his station before the attorney general began his investigation. "We're all publicly held companies, and certainly, even before all the scrutiny got to where it is today, I think the line had been blurred between what's ethical and what's not ethical," he says. "We passed way over that line, and now it's snapping us back into the reality of doing business properly."
Many say they have nothing to fear from an investigation. "I read the story in amusement," says Michael Picozzi, OM/PD at Marlin Broadcasting active rock WCCC Hartford, Conn., one of the few programmers to speak on the record. "We're clean and always have been. Nobody offers me anything—not that I would take it if they did. Being independent, we run it differently here. I don't ask for a lot, and I don't give a lot. When a trip's offered for listeners, we'll consider it. Everything is for listeners. We don't go anywhere; we don't do anything. If I can get a trip for listeners, and there's not too much attached to it, then we would like to do it. But we like to arrange our own things and not tie people in."
Picozzi is not the only one doing promotions independent of label involvement. "I can't remember the last time I took anything like a flyaway trip," Clear Channel active rock KBPI Denver PD Willie B. says. "We've never been a big 'flyaway trip from a record company' kind of station."
"We'll find money to do trips and such on our own," the anonymous GM echoes. "And for the idiots that took free laptops to add music, I'm glad they get to keep them, and they'll now have plenty of time to work on their résumés on them."
Some stations have avoided label involvement with their budgets and events. "When I go in to do budgets at my station, the question I ask the most is, 'What f'n' budget?'" Willie B. says. "The only budget I have comes from the NTR events that I create and put toward my bottom line. And they're usually events that don't involve labels. Whether it's golf tournaments or car shows or poker runs, labels usually aren't involved. I don't do anything with the labels anymore other than play their stupid songs."
The GM says the payola probe has not hurt his organization from a financial perspective, either. "We never counted on the money in the first place," he says. "I know my guys would never take personal gain from an add and would only add music that they knew could help the radio station be a better-sounding entity. Adding a crappy song to get a free laptop or something akin [to that] is long-term radio suicide and embarrassing to our industry."
Another programmer says that while flying PDs to concerts or showcases has been a common label practice, he has not accepted a trip from a label "in a few years, nor would I," because of the current climate. "I don't know how different that is from accepting a laptop computer from a label," he says. "Until somebody can define it, I'm not going to go near anything like that. If a flyway is for a listener, as long as there's full disclosure, I think that's still legal. Maybe I'll be proven wrong. The rules are changing on a daily basis. We've only heard from the Sony investigation, and we've got three more to hear about. Whatever I say today might be obsolete in two weeks. At this point, I haven't been told we can't do promotions for bands that we're supporting and do flyaways, but it may come to the point where we can't accept concert tickets to go see a band in our own town."
Caution is key going forward. "Everything that we do now—whether it's CDs or tickets to a show we're giving away—everything has to be signed off on, duly noted, logged and everything," Willie B. says. "It has been that way for a couple of months. Everyone knew this was coming down, so we've been covering our butts."
"Just look at the letters we're having to sign now just to get a box of CDs to give away," says one programmer who wishes to remain anonymous. "I think some record companies are going to require that these are for on-air giveaways only. We won't be able to give them away on-site as promotions. The rules are going to change. We've always used a lot of these CDs to give away at promotions, and now we might not be able to do that."
One anonymous top 40 programmer thinks the Spitzer settlement is a nonstory. "I hate giving the guy press," he says. "This gives him credibility. I don't think we should be paying attention to him. He's picking headline-grabbing cases in an effort to get attention. He's trying to look like he has cleaned up big companies supposedly doing things they shouldn't. This is a man running for office." |