IE 11 is not supported. For an optimal experience visit our site on another browser.

U.S., radio broadcasters in ‘payola’ settlement

/ Source: The Associated Press

Exasperated listeners weary of hearing the same songs over and over on the radio may have something to cheer about: a pair of innovative deals that could shake up the music playlists of some of the largest U.S. radio-station chains.

Four major radio broadcast companies have tentatively agreed to pay the government $12.5 million and provide 8,400 half-hour segments of free airtime for independent record labels and local artists in separate settlements aimed at curbing the persistent practice known as "payola," according to sources.

Payola — generally defined as radio stations accepting cash or other consideration from record companies in exchange for airplay — has been around as long as the radio industry and was made illegal following a series of scandals in the late 1950s.

Two Federal Communications Commission officials, who spoke on condition of anonymity because final language has not been approved by the full commission, said the monetary settlement is part of a consent decree between the FCC and Clear Channel Communications Inc., CBS Radio, Entercom Communications Corp. and Citadel Broadcasting Corp.

The settlement between the government and the four broadcasters was reached in conjunction with a separate deal designed to lead to more airtime for smaller record companies and their lesser-known artists as well as local musicians.

Payola is the term coined in the 1950s when early rock music was hit with scandal. It is a combination of the words "pay" and "Victrola," the old wind-up record player.

The American Association of Independent Music, a group of independent record labels, has received a commitment from the same four broadcasters for the free airtime, the sources said.

In addition to airplay, the broadcasters and the independent labels have also negotiated a set of "rules of engagement" that will guide how record company representatives and radio programmers interact.

The free airtime would be granted to companies not owned or controlled by one of the nation's four dominant music labels — Sony BMG Music Entertainment, Warner Music Group, Universal Music Group and EMI Group.

The practice of payola, or "pay-for-play," has evolved over the years and become more difficult to track.

In recent years, "independent record promoters" have acted as middlemen to deliver payments to radio stations in exchange for airplay. Other forms of inducement include lavish prizes meant for listeners that wind up going to station employees; promises by record companies of concerts by well-known artists in exchange for airplay; and payments for promotional expenses and station equipment.

Under the FCC consent decree, broadcasters would agree to closer scrutiny in their dealings with record companies, including limits on gifts, a promise to keep a database of all items of value supplied by those companies, the employment of independent compliance officers to make sure stations are following the rules and even a new "payola hotline" for employees to report infractions.

Broadcasters admit to no wrongdoing under the three-year settlement, which has not yet been made public.