A Pinch of Payback

Another payola settlement promises us better, braver radio. Let's not get too excited just yet.

Do you want to see what's in the box or what's behind door number three? The latest episode in the radio payola version of Let's Make a Deal is looking like a zonk. The heroic crusade of then-New York Attorney General (now Governor) Eliot Spitzer against payola — netting more than $35 million in settlements from the four major record labels and two broadcasters, spread piecemeal over the past three years — may still produce the change it initially promised, and clean up a perpetually dirty business. But the institutionalized practice of trading radio airplay for money and favors from record labels has proved stubbornly resistant to eradication since the first scandals in the late '50s.

Spitzer's investigation uncovered a flood of incriminating e-mails between major labels, independent promoters, and radio stations in which the stations were promised ticket giveaways, free concerts, airline tickets, and personal booty in exchange for airplay. His tenacious pursuit not only netted a lot of money and pledges of reform, but it forced the federal government to stop looking the other way.

Unfortunately, there's only so much Spitzer — or anyone else — can do about the Federal Communications Commission's lack of regulatory will. Rumors of a settlement with the radio giants implicated by Spitzer (including Clear Channel, Citadel, Entercom, and CBS Radio, representing 1500 stations) first surfaced in January and cropped up in greater detail last week.

According to reports, the broadcasters have signed a consent decree with the FCC, agreeing to pay a fine totaling $12.5 million and to accept a variety of measures aimed at increased transparency. The settlement would require the stations to keep a database of any items of value they received and to adhere to a gift limit. It also mentions independent compliance officers and a "whistleblower hotline." A separate side agreement the broadcasters negotiated with the American Association of Independent Music (A2IM) involves "Rules of Engagement," which seek to boost support for local and independent music.

In the end, though, it may all be a drop in an empty bucket of promises. Since consolidation consumed the industry in the wake of the Telecommunications Act of 1996, localism and adventurousness have been sucked out and replaced with risk-averse homogeneity. Like Wendy's and McDonald's, most markets are chain-dominated — Clear Channel remains the poster child, having grown from 40 stations to more than 1200, more than four times as many as its nearest competitor. With DJs recording their between-song patter hundreds of miles away and with canned listener requests, it's questionable whether you can even call them "local" stations anymore.

An even bigger problem is the refusal to play independent music; Norah Jones sold millions of records before radio ever caught on. From commercials to late-night talk shows, television has embraced hundreds of artists who apparently aren't "commercial" enough for radio. How is that? "Why is it that only 10 percent of the spins at radio are from the independents, whereas 30 percent of the sales are from independents?" asks Tommy Silverman, founder and CEO of Tommy Boy Records. "It's obvious enough — it's because of payola."

As a sop, the broadcasters have offered a half-hour radio show of "indie" music chain-wide once a week as part of the A2IM side agreement. The free airtime would be granted to companies not owned or controlled by the majors — Sony BMG Music Entertainment, Warner Music Group, Universal Music Group, and EMI Group. The beneficiaries also can't have a market share larger than 5 percent and must be represented as "independent" through a sales tracking firm.

As recently as three weeks ago, that show was 90 minutes long. But now it has slid back to a mere half-hour — maybe 20 minutes of actual music (around six songs), once you account for commercials, station IDs, and DJ blather — without a guarantee it will even be locally produced. The decree comes with a rule prohibiting stations from broadcasting the show within the 12-to-6 a.m. dead zone, but don't be surprised to hear it early Sunday morning or at 11:30 on a weeknight.

Even this concession (which hasn't officially been mandated or approved by anyone yet) was a struggle, as the Recording Industry Association of America, playing the civil liberties card, balked at the plan. "We communicated our concerns about the constitutionality of content regulations," explains Jonathan Lamy, RIAA senior vice president of communications.

Longtime observers are skeptical about how all of this will pan out. "For your ills, we're going to smack you on the wrist and make you do what you should've been doing in the first place," gibes USC professor and former radio programmer Jerry Del Calliano. Radio is now an unadventurous wasteland that refuses to acknowledge changing times and new innovations. How else do you explain iTunes beating the labels to marketing digital downloads, or the still-lagging promise of HD radio? Even now, radio complains about the potential monopoly of satellite radio on one hand, while the other supports higher webcasting royalties in an attempt to protect an industry that will disappear the moment Wi-Fi is available in your car.

"Innovation is missing because even a declining radio industry has too much to protect," Calliano says. "And then there's the declining record industry, with these CDs they feel they must protect. We're obsessed with the delivery system — we are not obsessed with the content. And therein lies the problem."

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