Pay-for-play goes away

On April 9, Clear Channel Communications announced, with great fanfare, that they would end their association with independent promoters this summer when contracts run out, echoing a decision made by Cox Radio in October. Lauded by the Wall Street Journal as a move that could "reshape longstanding relationships in the music industry," the announcement makes for great political theater, coming as it does on the heels of recent congressional scrutiny of the radio business. But many within the industry question whether anything will change.

Record labels pay indie promoters to pitch songs to the promoter's affiliated stations, and in turn, promoters pay the stations to be affiliated with them. Each song added to a Clear Channel playlist means a check from the record company to the promoter.

Clear Channel argues that the exclusivity of contracts between stations and promoters is about access, not a backdoor version of payola. The money buys independent promoters an opportunity to offer advice, not peddle influence, says the radio group.

That's why this decision shouldn't affect the kind of music you hear on the seven area Clear Channel stations -- WMGF-FM (107.7), WTKS-FM (104.1), WXXL-FM (106.7), WSHE-FM (100.3), WJRR-FM (101.1), WFLA-AM (540) and WQTM-AM (740) -- according to Chris Kampmeier, Clear Channel's director of programming for Orlando.

"Record labels are the people who will be most impacted. It will cause the labels to change the way they promote their bands, but it won't change our relationships," says Kampmeier. "The only thing that the exclusives allowed the indies to do was report `playlist` adds to the labels."

Kampmeier says labels have always been able to bypass independent promotion and pitch him songs directly. This calls into question indie promotion's promise of access, for if a label doesn't have to pay to get the programmer's ear, and the playlist information indie promoters offer is available from the companies that monitor airplay, what are the labels getting for their money?

"Labels don't want to pay for the level of staffing that allows them to individually promote artists in our area," Kampmeier explains.

Indeed, this was the promise of a consolidated radio market -- the chance to pitch songs to a radio group's whole stable of similarly formatted stations. When radio groups began consolidating, they started forming exclusive relationships with independent promoters to push label artists to their stations as a sort of one-stop shopping.

For the labels it simply institutionalized a relationship that existed for years. Unable to afford staff to promote their record in every market, they paid a patchwork of promoters to work individual areas. They were paying bigger promoters to reach more stations.

But as time went on, promotion companies raised the rates they charged the labels for getting adds, trying to recoup the large investments they'd made in their guaranteed contracts with station groups. In 2002, in the midst of the second straight year of decreased record sales, the record industry started to squawk more publicly about the issue of payola, or pay-for-play as it's known in the industry. Allegations of influence-peddling are as old as the industry. But, aware of the power of airplay to drive record sales, labels have been loath to mess with the golden goose.

Clear Channel in particular has been accused of wielding its size and market power like John Belushi's samurai sword. Across the country, the Dallas-based company owns over 1,200 stations -- almost four times that of its nearest competitor -- and books more than 25 percent of the industry's revenues; more than $3 billion. The money it receives from independent promoters is a drop in the bucket.

Clear Channel, owner of the country's largest concert promotion company and many of the best venues, faces an antitrust suit filed in U.S. District Court by a Denver-based concert promoter. The suit charges Clear Channel with threatening to reduce radio airplay and not promote concerts on-air by acts not booked through their promotion company. In October 2000, the FCC fined Clear Channel for giving Bryan Adams increased airplay at two of their stations in return for money and a guarantee that Adams would perform free at station concert events. Such anecdotes are legion, according to RIAA president Jay Sherman.

"The radio station says, 'Gee, you gave the concert -- or the artist gave the concert -- to our sister company's competitor, so we don't feel much of a desire to promote that particular artist's music anymore,'" says Sherman.

Such allegations, as well as concerns about how radio consolidation has affected the music and radio industries, prompted Congress to take note. U.S. Senator Russ Feingold (D-Wis.) introduced legislation aimed at closing loopholes in the payola laws last June, and U.S. Senator John McCain (R-Ariz.) held hearings in January to examine the effects of 1996's deregulation of the industry. Apparently, Clear Channel got the message.

"Eliminating these relationships with middlemen should alleviate legislators' concerns and provide opportunities for us to create better ways to market and promote music for all concerned," says Clear Channel Radio CEO John Hogan. But others aren't so sure.

"It's funny to me that these radio stations are using payola as an excuse to get rid of indie promoters," says Tony Kiewel, director of radio promotion at Sub Pop records. "`They` were only there in the first place to rid the impropriety of payola. Now they're gone, so the record companies can pay them directly. The labels started this trend last year when Universal announced it was `cutting its radio promotion budget`. Seeing there was only so much blood to be squeezed from the rock, Clear Channel decided to cut out the middleman."

Kiewel thinks Clear Channel will start offering services similar to those offered by the indies, such as a program it inaugurated last year providing labels with exclusive advice from their programmers.

Only the name on the check will change, according to Kiewel. That's Feingold's worry as well. "It is still essential that we pass legislation to ensure that a replacement 'pay-for-play' system does not emerge," Feingold wrote in a statement regarding the announcement. "`This` underscores the need for the FCC to assemble a more complete record and conduct a thorough public examination of the radio industry before moving forward on proposals to allow further concentration in the industry."

What Feingold is referring to is an FCC meeting planned for June, which FCC Chairman Michael Powell (Colin's son) has hinted will include abolishing ownership restrictions on television and newspapers. Critics fear that will result in even greater media concentration.

It's this potentially far darker purpose behind cutting out the indie promoters that has Michael Bracy of radio-advocacy group Future of Music spooked.

"For the largest radio broadcaster to publicly disavow the dominant structure to get music on the radio six weeks before the FCC rewrites every single media ownership rule is quite remarkable," says Bracy, whose group has lobbied extensively on behalf of artists and independent labels. "The consolidated radio marketplace is rife with corruption and `this` serves as a cautionary tale for what will happen if they choose to lift media ownership restrictions as Powell has said he plans to do."

Is Clear Channel going to the same corrupt system minus the middleman? Or will it, as CEO Hogan avers, "mean a better listening experience for the American public"? Stay tuned.