Marketplace: Payout Aimed to Curb Radio Payola

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Four major radio broadcast companies have tentatively agreed to pay the government more than $12 million and provide thousands of hours of free airtime for independents and local artists. This is an effort to curb "payola," the practice of radio stations taking cash in exchange for airplay.


From NPR News, this is DAY TO DAY.

Click over to commercial radio and sometimes it seems like the same two songs are playing over and over again. I'm talking to you, "Hollaback Girl," and you, "Sexy Back." Well, now there may be some diversity in sight. Four big radio companies have reportedly agreed to offer more than 4,000 hours of free airtime for independent record labels and local artists who rarely get played on commercial radio.

Joining us is John Dimsdale from MARKETPLACE. Hi, John. And why are the radio stations doing this?

JOHN DIMSDALE: Well, they're not admitting any wrongdoing, but we can interpret a little here and say that they're essentially trying to avoid a heavy government crackdown on payola. Now payola is a term for money and gifts that record companies give radio stations to play their records. It used to be really prevalent and above board even, but was banned in the 1950s supposedly.

But government regulators say it never really went away, and now the pay-offs are hidden through middlemen who are so-called independent record promoters who give radio stations prizes that are meant for listeners. They can be cash or concert tickets or exclusive meetings with band members that really end up going to station employees. These more complicated transactions make it more difficult for the government to follow.

But the Federal Communications Commission is still trying to keep a lid on payola, which is probably why, in addition to the free airtime, these networks are reportedly agreeing to pay the government $12 million.

BRAND: So this free airtime, that sounds like exciting days for independent musicians. How would it work?

DIMSDALE: Well, the details are still sketchy. This is coming out from anonymous sources at the FCC, which has been in talks with the big radio networks. A group of independent record labels under the auspices of the American Association of Independent Music will supposedly choose which new artists will get access to the free airtime.

Government regulators want assurances that, you know, the big four dominant music producers like Sony and Warner and Universal won't have any say in this free airtime.

If a consent decree is reached with the government, the radio stations will also agree to closer scrutiny of their dealings with record companies in the future.

BRAND: And John, I understand this tenet of agreement comes just as big media companies are trying to head off some government efforts to limit their size, right?

DIMSDALE: Yeah, that's right. The FCC's in the middle of a series of public hearings this year. And after they collect all the public comment, the commission is going to decide how many TV, radio stations, cable networks, newspapers a single company can own in a given area of the country.

Consumer groups complain that media companies are getting too big and have too much control over the news and information and music we all hear. And these critics point to radio as an example of what can happen when too few companies own too many media outlets.

Big radio networks own a big chunk of all the commercial radio stations, and critics say they're all beginning to sound alike. So by agreeing to a little free access, these big companies are hoping to head off a government break-up of their size and clout.

BRAND: Thank you, John. That's John Dimsdale of Public Radio's daily business show, MARKETPLACE. It's produced by American Public Media, which sounds nothing like National Public Radio.

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