FEINGOLD SEEKS RESPONSE FROM GROUP HEADS ON PAYOLA

Jeffrey Yorke – Radio and Records

Sen. Russ Feingold is growing concerned about radio’s enforcement of anti-payola policies agreed to in the FCC consent decree in April, and he wants to know what the four biggest broadcast groups are doing to ensure that there will be no more funny business.

In a particularly pointed, two-page letter sent Wednesday (July 11) to CBS Radio’s Dan Mason, Citadel’s Farid Suleman, Clear Channel’s Lowry Mays and Entercom’s David Field, the Wisconsin Democrat wrote that he as been “concerned about payola and other anti-competitive practices in the radio industry for some time.” He added that while he believes “that FCC oversight and enforcement could have been stronger,” he was “encouraged” by the industry’s “willingness to work with the small and independent labels to come to a voluntary side agreement” that went along with the consent decree announced in April. The Senator noted that the side agreement included eight "Rules of Engagement" which laid out how the companies intended to ensure fair interactions with labels, artists and their representatives. Feingold now wants the companies to show him evidence that they’ve kept up their end of the bargain.

“Now that you have had a couple months to put this rule into place, I'd like to request more information on what access you have provided and how it has been publicized.  Have you taken any efforts to increase the amount of access provided and to facilitate submissions?” Feingold writes. “I'd also be interested in knowing whether this access is through each individual station, to the corporate playlists and testing pools, if applicable, or both.”

Feingold reminds the group executives that the second rule of engagement states: "Radio should not be allowed to sell or barter access to its music programmers" and that he is “concerned by recent reports that some Clear Channel stations are requiring the grant of a royalty-free right and license to the music upon submission. As the debate surrounding the recent Copyright Royalty Board decision to increase the royalty rate for digital performances indicates, these rights clearly have value.” He says the required royalty waiver seems to violate the April commitment not to barter access to music programmers. “I encourage you all, and Clear Channel in particular, to clarify this issue.”

In what is clearly a threat to introduce tough legislation on payola if he doesn’t get a satisfactory response from broadcasters, Feingold says, “It is very troubling that the voluntary rules seem to have been violated after just a few months.… I hope that your commitment to meaningful rules of engagement and efforts to eliminate the pervasive payola documented by then-New York Attorney General Spitzer remains strong and look forward to your response.”

Radio & Records reached out to all four companies involved and provided them a copy of Feingold’s letter. CBS Radio said it had not yet received Sen. Feingold's letter directly from his office, but that it will respond appropriately when it does. A CBS spokeswoman also pointed out that since it agreed to recognize the Rules of Engagement, its stations have presented music in the manner contemplated by the airtime commitment, featuring independent artists and specialty programs in major markets across the country.

A lawyer for Citadel tells R&R that it appears the letter was sent to Citadel's Las Vegas office and likely has not been seen by executives there, but she expects that Citadel will respond in due course.

Clear Channel and Entercom did not respond to R&R's query.

The letter reads:

Dear Mr. Mason, Mr. Suleman, Mr. Mays, and Mr. Field,

 

As you probably are aware, I have been concerned about payola and other anti-competitive practices in the radio industry for some time. While I believe that FCC oversight and enforcement could have been stronger, I was encouraged by your willingness to work with the small and independent labels to come to a voluntary side agreement that went along with the consent decree announced in April. I continue to hope that this agreement will help the public have greater access to local, unsigned and independent musicians, whose voices have unfortunately been missing more often than not from our public airwaves over the past decade or more.

 

I was pleased that the side agreement included eight "Rules of Engagement," which laid out how your companies intended to ensure fair interactions with labels, artists and their representatives. These rules echo requirements from my previous payola legislation and address the core problem of payola by trying to remove coercion, payments or other quid pro quo in exchange for airplay or access to music programmers. While I continue to have some concern that the enforcement of these rules is voluntary, if they were to be followed industry-wide it would go a long way toward eliminating pay-for-play.

 

I would like to ask for more information about a couple of these rules that your radio station groups have committed to follow. The first rule of engagement provides that "Radio should establish, and appropriately publicize, clear and non-discriminatory procedures for music submissions and access to radio station music programmers (to the extent any such access is provided)." Now that you have had a couple months to put this rule into place, I'd like to request more information on what access you have provided and how it has been publicized. Have you taken any efforts to increase the amount of access provided and to facilitate submissions? I'd also be interested in knowing whether this access is through each individual station, to the corporate playlists and testing pools, if applicable, or both.

 

Related to this first rule of engagement is the second rule, which states "Radio should not be allowed to sell or barter access to its music programmers." I am concerned by recent reports that some Clear Channel stations are requiring the grant of a royalty-free right and license to the music upon submission. As the debate surrounding the recent Copyright Royalty Board decision to increase the royalty rate for digital performances indicates, these rights clearly have value. Moreover, the submission form used by these stations apparently indicates that the music and other material will be provided to the music programmers for airplay consideration. The required royalty waiver seems to violate the April commitment not to barter access to music programmers. I encourage you all, and Clear Channel in particular, to clarify this issue.

 

I have held off on reintroduction of my legislation this Congress because I was hopeful that the voluntary rules of engagement combined with the consent decree could be effective in eliminating payola and related abuses. But it is very troubling that the voluntary rules seem to have been violated after just a few months. When the agreement was announced in April, I expressed concern that the consent decrees and side agreement depended so heavily on continued good faith instead of strong enforceable standards. The weakness of the voluntary reforms is that there is no impartial arbiter like the FCC to determine the meaning of the rules, so they can be parsed or ignored with only public opinion as a partial check.

 

I hope that your commitment to meaningful rules of engagement and efforts to eliminate the pervasive payola documented by then-New York Attorney General Spitzer remains strong and look forward to your response.

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