Payola Inquiry Includes Clear Channel, CBS The FCC wants to know if radio programmers at Clear Channel Communications Inc., CBS Radio Inc., Entercom Communications Corp. and Citadel Broadcasting Corp. received cash or gifts in exchange for playing songs without disclosing such a deal.
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Payola Inquiry Includes Clear Channel, CBS

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Payola Inquiry Includes Clear Channel, CBS

Payola Inquiry Includes Clear Channel, CBS

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Payola is actually the surviving half of a phrase that was coined a few decades ago. It used to be payola plugola. Somebody, typically a record label or a record promoter, pays a radio station and the station plugs a particular song. Airplay for a song can sell records or CDs or sound files, whatever the medium of the day may be. Last year, the attorney general of New York State, Eliot Spitzer, settled payola charges with Sony BMG and Warner Music Group. Those settlements were big, $10 million, $5 million, so we're not talking about the odd rotten apple in a squeaky clean barrel.

Now, the Federal Communications Commission is stepping up its investigation into payola, sending formal letters to four big radio station chains. Jonathan Adelstein is an FCC commissioner and joins us now. Mr. Adelstein, isn't the FCC a little slow here on the draw, after what the New York State attorney general did last year?

Mr. JONATHAN ADELSTEIN (Commissioner, Federal Communications Commission): We've been spending quite a bit of time going through the material that was provided by the New York Attorney General's Office as well as additional material that we've compiled, and it is a slow and laborious process. But I'm pleased that we've launched this formal phase of the payola investigation, where we're now trying to get additional information as well as asking for the response of those who are alleged to have violated our rules as to whether or not they, in fact, did violate the law.

SIEGEL: If you find that radio stations were in fact receiving money and playing records for that reason, is it possible that they could lose their licenses?

Mr. ADELSTEIN: Well that is one of the sanctions available to us. In addition, there are fines that are available, and these offenses also carry criminal penalties that can be punishable by up to a year in jail.

SIEGEL: But in the past we've seen fines or punishments, years ago some careers ended for disc jockeys, perhaps executives, but big companies, being said, you can't operate a license anymore because this was the practice at your station. Possible or extremely unlikely?

Mr. ADELSTEIN: Well it's unlikely in the first offense like this that we would do that. Generally speaking, we would want to see a pattern, and if there are additional problems that come up after this investigation is completed and we do whatever sanctions are appropriate if they are appropriate, that subsequent violations of our rules would be taken even more gravely.

SIEGEL: I've heard people over the years make various arguments about the relationship between either FCC scrutiny or record company influence, and the indisputable fact of very short play lists at commercial radio stations. Do you see any relationship? And what would be a healthy situation in terms of how much music people hear on commercial radio?

Mr. ADELSTEIN: Well, it is a real problem that these play lists are so short. I think that the vitality of radio gets sapped when music gets on the air because somebody paid for it and not because the song itself won on the merits because it was good music. I mean, may the best song win should be the motto, and, unfortunately, it's the one with the most money behind it that wins. And that's why you're seeing people vote with their feet. They're moving to satellite radio, they're moving to their iPods. Radio has got this real connection with an audience, though, still. And that connection's the local basis. And if the local artists can't get heard because they can't afford to pay payola, then everybody gets deprived.

SIEGEL: Well, is the FCC prepared to go from exhorting local radio stations to put local artists on the air to saying it's a requirement?

Mr. ADELSTEIN: Well, you'd think as part of their public interest obligations that they would make an effort to put local artists on to the degree that they're playing new and original music.

SIEGEL: But nobody remotely familiar with commercial radio would think that they actually see that as an obligation.

Mr. ADELSTEIN: Well, we had actually launched what we called our localism proceeding at the FCC, where we were looking into whether or not stations are playing local artists, and to the degree that payola separates that radio station from its own local community, it's a real problem for the long-term vitality of the radio industry itself.

SIEGEL: But isn't the recent history, and indeed isn't almost the entire history of broadcast regulation, that if you get one of those sacred places, you're home free? You'll be re-licensed unless you commit some terrible felony, probably on the air.

Mr. ADELSTEIN: Well, I think we've gotten away from being as vigorous as we needed to be on license renewal process, certainly. I mean, if, for example, stations are repeatedly violating the FCC rules on payola practices, it really raises a question about their renewal, and we should be looking more carefully at whether or not they're serving the public interest.

SIEGEL: Well, thank you very much for talking with us.

Mr. ADELSTEIN: Thanks for having me.

SIEGEL: That's Jonathan Adelstein, who is a commissioner of the Federal Communications Commission, speaking to us from New York City.

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