Payola! To Be or Not To Be?

By George Howard

Why is it that even with all of the changes that have occurred of late in the music business — changes that have altered the face of nearly everything — commercial radio today is still not that different than it was ten, twenty, or even fifty years ago?

As Jeff Price rightly points out in his article “The Hidden Money In Radio,” commercial radio is the last stronghold of the majors.  They lost control of perpetual copyrights when artists could fund their own recordings via the advent of ProTools.  They lost control of distribution once Apple and TuneCore got in the game.  And, arguably, they lost control of publicity once artists began using social media to connect directly with their constituent group.

So…why not radio?  Why has radio remained in tact when all the other elements in the industry have changed?

To answer that question, it’s first important to understand how a song gets played on “Big Time” radio.  By “Big Time” radio, I’m referring to formats like Adult Contemporary (AC), Hot Adult Contemporary (Hot AC), Contemporary Hits Radio (CHR), Active Rock, Pop, and Urban.  There are other formats — college, Adult Album Alternative (AAA) — but, because their impact is smaller (read: less money can be made from them), they operate more in line with the way one would think radio operates: program directors try to pick music that the listeners of their stations will like, and if the listeners respond (calling in to request the song; calling in to ask what the song was, etc.), the song gets played more and more.  If there’s little or no response, the song doesn’t get played for very long.

“Big Time” radio doesn’t typically operate that way.  For an artist to even be considered by a Program Director at one of these stations, a tremendous amount of other activity must be going on.  For instance, the artist may have had tremendous (and I do mean tremendous) success at one of those lower formats (AAA or College); or the artist might have had their music used in a TV commercial or film; or (and this is rare) the artist could be blowing up (selling out live shows, etc.) in a local market, and one of these Big Time stations “tests” their music during one of their “specialty” shows (i.e. shows that feature local music, which are typically aired on weekends or late at night — when few people are listening), and it goes so well, that other stations pick up on it.

All of the above seems (and is) fair and reasonable.  Unfortunately, this type of organic, merit-based radio play usually does not end with an artist’s song actually being programmed and played.  Instead, there is another, less reasonable way artists find their music being played on Big Time radio.

This other way involves most everything you’ve ever thought it involves – primarily money (lots of it) and the old boys club of relationships.  A major label (and that’s an important distinction) signs an artist, spends a bunch of money to make a record, and then must get that artist’s music on the radio in order to have any chance of success.

When you’re faced with a “must do” scenario, you do what you must.  In this case, the labels first try to find some early supporters: program directors willing to “test” the song — give it limited play, and see if there’s a response from the stations’ listeners.  If there is, great. If there isn’t…well, great.  In either case, if the label decides they have to get the song on the radio, whether the “test” went well or not, they’re going to do what they have to do.  And for what it’s worth, getting a “test” spin is no easy task in and of itself.  Favors are given to those who have greased palms for years to provide the three and a half minutes of airtime at 2:30 AM on a Thursday night to test a song.

Getting a song “added” to a station’s playlist to get a certain number of plays per week involves a rather byzantine process that brings in various parties, called independent promoters (“indies”).  These “indies” are first paid by the label.  It’s important to note that the money the indies receive isn’t necessarily compensation paid directly to them for getting Program Directors to get a song played.  Rather, they work more like an intermediary to pass the label’s money to the radio station. These indies, with the money paid to them from the labels, pay the radio station money for various listener give-aways, bumper stickers and so on. To top it off,  these very same indies are often also paid a second time by the stations themselves as a consultant to advise the stations on what songs they should play. Top indie promoters make a lot of money.

Confused?

You’re meant to be.

Smell fishy?

That’s because it is.

It’s all obfuscation.  It’s all a way for the labels to avoid being seen as engaging in direct payment to a radio station in exchange for the radio station playing the label’s song. In other words: Payola.

Payola emerged pretty much alongside radio.  However, it wasn’t until the 1950s that anybody paid it much mind. At this point, payola was criminalized, and it’s been illegal to induce a station to play a song in exchange for money, without disclosing that money has changed hands, ever since.

The methods change; the labels always trying to stay one-step ahead of the government, and obfuscate just enough to keep the system churning along as it always has.

The reason the majors are willing to take these risks, and bear these costs — and the costs associated with breaking a record on Big Time radio can easily reach the seven figures — is because when a record breaks — even today — the returns are massive.  One could argue, in fact, that due to the ineffectiveness of other means of promotion, Payola has become even more frenzied and high-stakes.

You may ask, at this point, “well, fine, I get it…the majors pay a bunch of money, and they get their records played, but why couldn’t some non-major (indie label or investor) do the same — pay a bunch of money and get a hit record?”  The answer ties us back to Jeff’s article, and explains why Big Time radio is still the purview of the majors.  Assuming you had a million bucks or so, you very well could hire yourself some of these indies to “work” your record to Big Time radio, and, believe me, they’d take your money.  Your record even might get a few spins (though likely only during times when prisoners, insomniacs, and long-haul truckers are listening), but those spins would peter out pretty fast.  The indies would come back and say something along the lines of, “We’ve got our toe in the door with station KCUF, and if you can just give it a bit more juice, they’ll move it from overnights to drive-time.”  And you may give them that juice, and it may get a few spins during drive-time.  And then you’ll be told that you need to “juice” some other stations.  You can juice until your money runs out, but the chances of the record ever really breaking is almost zero.

Here’s why: You’ve come to these indies, and they’ve gone to the labels, and they’ve taken your money, and they know that you’re probably not coming back any time soon. On the other hand, the majors are coming every week with money and new artists.  Who would you prioritize if you were in the indie/radio station’s shoes?

So, the majors have a lock on this.  Every once in a blue moon a song will be so powerful that it can’t not be played, and it doesn’t matter if it’s on a major or not.  But this is so rare as to be almost non-existent.  The reality is the songs you hear on Big Time radio all got their the same way, and if you look at the label who released these songs, 99% of the time, they’ll be on a major.

It’s not all doom and gloom however.  Any time a system exists that is as corrupt as what I’ve outlined, it eventually falls under its own weight.  Customers who have been fed a steady diet of music that is not being played because it impacts the market, but rather because it was the highest bidder, eventually lose interest and look for alternatives.  Up until recently, there weren’t alternatives, but now with internet radio, satellite radio, subscription services, and your own playlists on your iPod/iPhone, the alternatives abound.

Our challenge and opportunity is to not allow these alternatives to follow the same path that traditional radio went down.

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George Howard is the former president of Rykodisc. He currently advises numerous entertainment and non-entertainment firms and individuals. Additionally, he is the Executive Editor of Artists House Music and is an Associate Professor of Music Business/Management at Berklee. 

DISCLAIMER. The views expressed in this publication do not necessarily reflect the views of it's clients and/or affiliates. The  opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect that of Big G Artists Agency, LLC.