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FCC Announces Details of Payola Settlement
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FCC Announces Details of Payola Settlement



This is ALL THINGS CONSIDERED from NPR News. I'm Michele Norris.


And I'm Melissa Block. The Federal Communications Commission is finally ready to announce the details of a settlement with four of the nation's largest radio broadcasters: Clear Channel, CBS Radio, Citadel and Entercom. The agreement concerns the practice of payola, when record companies pay broadcasters to play certain songs without disclosing that arrangement to listeners. As NPR's Neda Ulaby reports, the impending settlement has been rumored for months.

Mr. JONATHAN ADELSTEIN (Commissioner, Federal Communications Commission): Payola deprives the listening public of the country's freshest music. It denies local and independent artists a fair chance to get heard over the public airwaves, and it really saps the vitality of radio.

NEDA ULABY: That's FCC Commissioner Jonathan Adelstein. He took the lead at the commission after it received reams of incriminating documents nearly two years ago from then-New York Attorney General Eliot Spitzer. Spitzer discovered e-mails and other evidence of rampant payola across the record and radio industries.

He settled with the record companies based in New York, but going after national radio corporations needed federal muscle. Enter the FCC. Such details as a $12.5 million voluntary payment by the four broadcasters have trickled out over the past few months, but now Commissioner Adelstein has new details.

Mr. ADELSTEIN: This agreement provides for changes in the business practices of the big radio companies. We require them to establish a database of any gifts over $25 from the record labels. Each company has to establish its own compliance officer and have to have a compliance contact in each of their markets. We also require an annual report to the FCC on how these business reforms are working, and we ensured that we had access to that database.

ULABY: The FCC will also require hotlines for whistle-blowing employees. But the settlement absolves broadcasters of past payola misdeeds, and some critics worry that it lacks enforcement teeth. Eric Klinenberg is a New York University professor, who's book "Fighting for Air" is about consolidation on the part of the major media companies.

Professor ERIC KLINENBERG (New York University; Author, "Fighting for Air"): If they really abide by the agreement, it could mean a dramatic change for broadcasting. The question for everyone is whether there's going to be compliance and whether the FCC has done enough to make sure that radio companies abide by their agreements.

ULABY: The agreement was negotiated over months by the FCC and broadcasters to avoid lengthy litigation. The broadcasters also met with Peter Gordon of the American Association of Independent Music. In a separate agreement, they volunteered to give hundreds of hours of airtime to independent and local musicians, the people who Gordon says have been kept off the air by payola. Although it's just voluntary, Gordon says he's sure the agreement with independent musicians will be honored.

Mr. PETER GORDON (American Association of Independent Music): And if there's not, the public is allowed to have outcry, and that's how we motivate our system, and we would encourage the public. If either you're turning on the radio and it's getting a little better, or it's the same-old, same-old, and speak up.

ULABY: Or turn the dial. Terrestrial radio has taken a hit in listenership for stale, lousy broadcasts, says Gordon, so he says there's a bottom-line motivation for change. In the meantime, the Federal Communications Commission is pursuing settlements with other broadcasters. Neda Ulaby, NPR News, Washington.

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