Major Broadcasters Hit With $12M Payola Fine

Gr8Apes writes with a just-breaking AP story reporting that the FCC is wrapping up a settlement in which four major broadcast companies would pay the government $12.5 million and provide 8,400 half-hour segments of free airtime for independent record labels and local artists. The finish line is near after a 3-year investigation. An indie promoter is quoted: "It's absolutely the most historic agreement that the independent community has had with radio. Without a doubt, nothing else comes close."

They've already paid their settlement, unknowingly

[Radon360]

Large broadcast companies probably have paid a higher price in loss of listenership, as their tired, weary, and limited playlists have driven more and more people to alternatives such as iPods, MP3 players and satellite radio.

Sure, go ahead, fine them, order them to allocate time to new acts, that's a small loss they can see on their balance sheets in comparison to the difficult to calculate loss of listenership.

They pay the radio stations?

[phorm]

generally defined as radio stations accepting cash or other consideration from record companies in exchange for airplay.

I thought that radio stations paid the record companies a license fee in order to broadcast their music? Can somebody in the industry (or with knowhow) clarify how this works?

Re:"pay the governemnt"?

[MindStalker]

Yes... 3 year investigation.
10 employees who get paid 100K each
is 3 million dollars over 3 years.

Plus air travel and other crap. Government spends a million just wiping its butt, thats just what happens with large entities that have no direct income for their actions.

They can pay, but they can't lie about paying

[paladinwannabe2]

Me paying you to play my song is advertising. Me handing you money under the table to play the song, then you claiming that you're picking the songs 'you like best' or that 'the audience demands' is fraud, deceptive advertising, and probably tax evasion.

No one's saying they can't pay to have their songs played. We're just saying they can't lie about doing so.

Music is a farm system

[cheezit]

Ever notice how many acts start on smaller labels, prove their value, then get snapped up by the majors? This deal will undoubtedly result in the big companies adopting independent labels as de facto "minor league" holding areas. The focus for Sony et al will be on how to manipulate the allocation of the time reserved for independent labels to favor the "independent" labels that feed Sony.

I wouldn't be surprised to see artist contracts for the independent labels that designate a favored path for contract buyout---"sign with Sony Junior (an independent label) and if your contract is bought out by Sony, you'll get an additional 5% of T-shirt sales!"

Re:How is this "news for nerds"?

[Gr8Apes]

I too believe that the majority of people don't care about their music. The reason "oldies" stations work? Most people appear to get "stuck" in their listening habits somewhere between 16 and 25, and then only listen to their "comfort music". Rarely are new tracks, much less actual new types of acts, added to their repertoire.

It's why there's so much trash on the radio now (besides payola, etc). The marketers have figured out that spoon feeding the same tripe to the young immature and uncritical listening audience allows them to churn "new" artists as needed maximizing their profits.

Indie Music Jackpot Offer! (LTO)

[RogueSeven]

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Since I've been a member of the site, I've been able to eliminate 95% of my listening to RIAA-represented label material... and stop my monetary support for anything of that sort altogether. I'm not suggesting this will happen for everyone, but honestly, there is enough good independent stuff out there to render mainstream stuff a thing of the past. Unite!