Payola: Another Brick in the Wall

We're living in the era where bands are prepackaged for our convenience, and then the packaging itself is repackaged as a serial documercial and sandwiched between paid ads. The kids whose billions pay for this machine are not only fully aware it's a sham, they embrace the cynicism and still manage to enjoy the show. So I'm guessing nobody will be stunned to learn that, a week ago, the L.A. Times uncovered documents showing that record labels are still buying radio airplay, at some stations, the same quasi-legal way they've been buying it for twenty years. But it's an interesting story, and it's as good a launching point as any for thinking about the next twenty years. ("Payola" is the first of three Slashdot features on music distribution. Parts two and three run tomorrow and Thursday.)

Pink Floyd's The Wall set the standard for amazing stage shows. It was the kind of thing that makes me wish I'd lived in L.A. or New York in 1980 (and been out of grade school, I guess). In February 1980, they played five sold-out L.A. shows, inflatable pig, airplane and all, the epicenter of cool. The double album was number one and would stay there for four months.

But although you can hear "Another Brick in the Wall, Part Two" played on L.A. oldie stations today, at the time, you wouldn't have heard it on any station in the city. Total blackout. The record labels used a network (creatively called The Network) through which they exerted control over which songs got on the air.

But in 1980, The Network was in revolt.

To understand why it even existed, we have to go back to Alan Freed's Rock and Roll Show in 1960. One of the first rock'n'roll DJs, Freed was busted in 1960 for taking $2,500 in bribes to play records. He claimed the money was just a thank-you with no influence, but he still went down. He only paid a small fine, but his career was ruined and he died soon after.

As a result of the scandal, Congress passed a law against "payola" in 1960. We'll get into fine ethical distinctions later, but basically a radio station that secretly takes money to spin a song is guilty of payola.

Note that just coming out and admitting a spin was bought is perfectly legal: if that Limp Bizkit play was paid for, just say so and your station is home-free.

Break the law and you might be fined up to $10,000. Payola is a misdemeanor. Theoretically, someone might spend up to a year in jail, but according to Hit Men , published in 1990, nobody has ever spent a single day behind bars.

There have been convictions, yes. Last year, after the L.A. Times turned up some evidence, Clear Channel Communications paid an $8,000 fine for promoting a Bryan Adams single and billing his label. The bill, by way of comparison, was for $237,000.

Clear Channel did well over $1 billion in revenue last quarter and has almost $50 billion in assets. "During the first quarter of 2001, we acquired 126 radio stations in 36 markets...."

But convictions are few and far between, partly because of the layers created between the labels and the stations. Post-Freed, a niche job was created to, essentially, be the go-between from the labels to the radio stations.

The job title is "independent promoter."

The promoters work for the labels. Each week, they talk to the program directors of radio stations in their region, and try to convince the stations' program directors [PDs] to add the labels' songs to the playlist.

And competition is fierce. There are only about 30 slots that get heavily played on any given station, and most of them carry songs over week-to-week. Ten new songs in a week would be heavy turnover; usually it's much fewer, and all the labels are fighting for those slots.

The question is how the promoters "convince" the program directors. By building a relationship with each PD, based on trust and knowledge of each station's market? Or by bribes, paid in dollars or some other currency?

The Network, a small cabal of promoters working together, became famous in the early 1980s for making or breaking songs, depending on how well they were paid. That's where "Another Brick in the Wall" comes into the story. After years of lean revenue, combined with rising costs in fees paid to the Network, CBS experimented with cutting them off.

And CBS got burned. The hit single from the number-one album in the country, in a market of three million, was blacked out. While the band was playing sold-out shows, not one of the city's four big Top-40 stations would play the 45.

Shortly after Pink Floyd's last show, the promoters were rehired, and within hours the song was back on the radio (top of the charts for weeks). It was pretty clear who owned the air.

How much money was CBS trying to save? Here's a quote from 1983, which I find amusing because the speaker is John Gotti's second-in-command -- a mob underboss who can appreciate a good racket when he sees it:

"That kid in California came in to see me, said ... they give him fifty thousand to a hundred thousand to push a record. The company, they pay you, just to make a record on the air, you know..."

A lot of money. This explains why CBS wanted to try it again, testing the promoters the next year as well. In early 1981, the company's labels boycotted them entirely. In retaliation, The Network targeted "Turn Me Loose," the first single by the new band Loverboy. After breaking into the Billboard charts with a star, it rose quickly, but peaked only at number 37 before falling off the bottom.

The next target was The Who's "You Better You Bet." Its appearance was even more promising, appearing at number 63 with a superstar. But it peaked at 18 and fell off the charts quickly.

CBS was convinced. Its boycott began to crack, and within months it ended.

By 1986 the abuses had grown serious enough to merit an investigative report by NBC. Calling the indie system "The New Payola," they uncovered evidence of The Network bribing DJs with cash and cocaine, and threatening them with violence. Senator Al Gore launched a Senate probe. And the RIAA quickly issued a short statement announcing that they would not tolerate illegal activity, but denying any wrongdoing (and reminding everyone that they had done Live Aid the year before).

In reality, the labels were glad for the coverage. It gave them the chance they needed to take the promoters down a few pegs, saving them all a great deal of money. In a few weeks, all the labels had joined in a boycott. Nobody knows real dollar amounts, but The Network's income, probably measured in the tens of millions, dropped drastically.

And since 1986, things have been different. But are we right back now where we started? The president of RCA Records claimed in 1987 that his industry had paid $50 to $60 million a year to the promoters. Last week's L.A. Times story (go read it) claims it's now a "$100-million-a-year trade."

We've come a long way since Alan Freed and his twenty five hundred bucks.

I talked last week with Woody Houston, a PD for the market leader Top-40 station in my hometown. (Disclosure: the company that owns his station competes with Clear Channel.)

Woody has seen examples of corruption, but nothing like some of the abuses of the 1980s -- maybe because we're not in a big city. He's had promoters offer to pay his way to conferences, but he's turned them down. Company policy is to fire anyone who takes such an offer, even though that's pretty small-time compared to some of what's been documented.

I described the L.A. Times story to him, and asked him to try to clarify where the line gets drawn, ethically:

"If Clear Channel is using those dollars for promotional support -- let's say Interscope wanted to put $2500 behind Smashmouth -- if they're buying T-shirts that have my call letters on the front, I don't see a problem.

"There's a fine line between buying airplay and promotion. If they're taking the thousand dollars that they got for 25 spins and not using it to support the record, that's wrong. If they just give the money away on the air, that's wrong -- that's the ethics of it."

When the system works, it does its job. You may or may not like the results -- Top-40 can't please everybody of course -- but the radio airwaves are a limited public medium that should be accountable to its listeners and advertisers, not the companies that make the product. Radio stations' PDs compete by doing their research, making the judgement calls they get paid to make, and seeing their Arbitron ratings, and advertising rates, rise or fall accordingly.

When it doesn't work, it's -- well -- it's a Wall, a barrier of moneyed inertia between new artists who want to be heard and the audience who wants to hear them.

Music has been an industry for the last hundred years, so we've never known what it might be like to strip out some of those barriers. In the next two installments, I'll throw out some ideas to kick around.

Tomorrow: part two, a look back at music distribution technology of the last 200 years.

(I mentioned Hit Men earlier. Most of my sources for the industry's history come from this 1990 book by Fredric Dannen. Its research is thorough, heavy on names, dates and places; Dannen talked to just about everybody and had a good nose for what was credible. Highly recommended if this subject interests you. He's got another book that looks good, too, with an inside story on the Hong Kong film industry.)

Update, 10:45 AM EDT: Salon ran a story on payola today too, a good one. Deja vu to 1980/81, but this time, Destiny's Child's label is not even trying to boycott the promoters, they're just scaling back how much they're paying them -- even this is considered risky.