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Pay the piper 

Chairman Kevin Martin needs to make sure the FCC's payola investigation has teeth

"Now the rage is sponsored and so's the machine

so's everything they cherished in between.

The sweet imaginings

of teenage happenings

keep us switching the station

hungry, but patient."

--"Battleground Park" by Goner, performed by Caitlin Cary on Songs for Sixty Five Roses: Reworking the Carolina Jukebox


The rift keeps widening between what the public wants and what the radio plays, and it's about damn time the Federal Communications Commission did something about it.

While the FCC says it's conducting a thorough investigation into payola, the illegal system whereby record companies hire "independent promoters" to bribe DJs to play certain songs, the man who took payola out behind the woodshed says the FCC is actually undermining his efforts by negotiating cheap settlements with the offending radio chains.

Eliot Spitzer, attorney general of the state of New York, has taken on the system that keeps good music off the airwaves. We wrote about Spitzer's juicy report on radio payola when it came out last summer: www.indyweek.com/gyrobase/Content?oid=oid%3A24892.

Sony BMG eventually settled with Spitzer for $10 million, and Warner Music settled for $5 million Now Spitzer's going beyond the record companies' crimes to get at the other half of the problem: the people taking the bribes. Last month, Spitzer announced a lawsuit against Entercom Communications, in which he's seeking $20 million in damages. Entercom owns more than 70 radio stations nationwide, including six in Greensboro.

On Saturday, The New York Times reported that "officials involved in the talks" said the FCC has been negotiating with Clear Channel, CBS Radio, Entercom and Citadel Broadcasting to settle payola allegations, but that talks have stalled over the price--somewhere between $1.5 and $3 million per company, a fraction of what Spitzer settled for. On Monday, Spitzer told the Associated Press that if the FCC settled now, for that price, "it would be a substantial evisceration of the negotiations we're involved in."

A state attorney general shouldn't have to be the one policing radio. That's the jurisdiction of the FCC, the federal agency that's supposed to keep the airwaves public.

For years, Commissioner Jonathan Adelstein has been calling for the FCC to launch its own payola probe. "The ability to take a great song and get it on the radio could change the fundamental economics of the entire music industry in a way that could give independent musicians a way to find an audience," he said in an interview. The investigation is in its early stages, he explained. "I think we're doing a good job of plowing through mountains of evidence that deserves our careful scrutiny. There is evidence that points to possible violations of federal payola laws. I think we're giving it the careful attention it deserves."

Groups representing the small players in the music industry--independent record labels and musicians--have kept the pressure on. They're afraid the FCC will cut a deal with broadcasters without taking on the underlying problems that shut out indie music.

Adelstein said he's committed to making sure that the FCC's investigation is thorough and the penalties are real. "Any settlement we agree to should include a very strong compliance plan to ensure that there are procedures in place to prevent any kind of activity in the future," he said. "I think we could work out an agreement that has airtight procedures in place."



So if Adelstein gets it, why are the indies worried? Because he's is in the minority. Commissioners Adelstein and Michael Copps have been outspoken in their opposition to further media consolidation and their commitment to keeping the public interest in mind when the FCC makes decisions. They were the ones who came to Duke Law School in 2003 for a public hearing into the proposed loosening of media ownership rules. In the end, the FCC did loosen those restrictions, though a federal appeals court overturned the new rules.

Chairman Martin, who was unavailable for comment for this story, leads a majority of Republicans on the commission who have made it clear they intend to deregulate media ownership.

"We are concerned that the FCC may sweep the whole issue under the rug, with only a slap on the wrist for the radio chains," said Don Rose, president of the American Association of Independent Music, a trade association formed this year to represent more than 100 indie labels. "Moreover," Rose said, "our concern is with the future and to ensure that the cycle is finally broken as a result of regulatory pressure."

Michael Bracy of the Future of Music Coalition, a Washington-based alliance of musicians working to influence policies that affect small players in the industry, thinks action is overdue. "The question of the underlying corruption of how music is selected for play on commercial radio, that question has been out there since at least 2002," Bracy said. "It's been widely reported in the media, and there's been a sense of consensus among artists and retailers that these structures are in place and they have to be dealt with. It's not sustainable for the FCC to do nothing. The big question is will the FCC do something that actually addresses the root issues or will it be window dressing?"

In February, the Future of Music Coalition sent an open letter to Chairman Martin urging that the commission not only hold violators accountable, but that it withhold permission for high definition radio multicasting until concrete public-interest guidelines are established, that the commission not allow further consolidation of the media industry, and that it expand and protect non-commercial radio.

Also in February, the American Association of Independent Music, or A2IM, sent its own letter to Martin. "What we demand is a legitimate opportunity for our members' music to appear on commercial radio playlists--an opportunity that we believe has been denied to our members due to these alleged practices," it said.



Steve Gardner, radio promotions director for Chapel Hill-based Yep Roc records (www.yeproc.com), said radio is still important. But for Yep Roc and other labels that have neither the money nor the stomach to play the payola game, airplay typically comes from non-commercial stations like WXYC, WXDU and WKNC, which in turn means a spike in sales at local independent shops such as Schoolkids, CD Alley and Offbeat Music.

The jackpot for indies is National Public Radio. When NPR programs such as All Things Considered, Morning Edition or Fresh Air feature an artist or review an album, sales skyrocket. "When that happens, we can see our sales go up 400, 500 percent, sometimes even more than that," Gardner said. "I think the reason NPR is important is that a lot of people who grew up with radio have become disenfranchised and have given up on listening to music stations."

You're more likely to hear a good song on T.V. than on the radio. A song by Yep Roc artist Bob Mould was played in an episode of The O.C. on Fox last fall. "They showed the CD cover at the end of the show," Gardner said. "That was a terrific promotion and we were all really happy about that." Not only do the labels not have to pay for that promotion, they get paid thousands of dollars from the network. Gardner wouldn't say exactly how much "Circles" (that's the song) earned, but said, "It's definitely more money than any of our artists would receive from royalties from being played on the radio."



Gardner believes radio has failed its listeners so completely that an entire generation of music fans is growing up without it. He said Congress made a huge mistake when it decided in 1996 to deregulate broadcast media, allowing fewer and fewer companies to buy more and more stations. "They put a lot of power in the hands of one person," he says, "and that leaves them vulnerable to a payola system."

So is Chairman Martin prepared to change that?

Martin's relationship with President Bush goes all the way back to the hanging chad in Florida. But Martin also has local ties. He went to UNC-Chapel Hill as an undergraduate and Duke University for graduate school in public policy, and he practiced law in Charlotte for several years. There has been talk that Martin might come home to seek a U.S. Senate seat some day.

Gardner thinks that in order for the pay-for-play system to change, "it's really going to take someone willing to stand up for the listeners and stand up against these corporations who are raking in millions of dollars. If a politician took that stance, to bring the airwaves back to the people--if it isn't too late--I think a lot of people would stand behind somebody like that."

As he oversees this investigation, we hope he'll remember the dozens of independent record labels and thousands of talented but obscure musicians back home in North Carolina whom he has the very real power to help.In other words: Chairman Martin, don't settle.

FCC Chairman Kevin Martin can be reached by phone at (202) 418-1000 or by e-mail via the FCC's Web site, www.fcc.gov.

  • Chairman Kevin Martin needs to make sure the FCC's payola investigation has teeth

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