Monday, December 13, 2004
Payola is Not a Thing of the Past
It's still the soundtrack to greed in the radio business
by John Gorman
Want to get your music in regular rotation on the radio? How much you got? It costs record labels between $150 million and $300 million annually to expose new music on U.S. radio stations. It works like this: To circumvent allegations of collusion, labels employ third-party independent record promoters to influence and control radio playlists. The labels deduct this cost of doing business from artist royalties. An artist's management has the right to veto what is now known as legal payola, which is why only a select few releases are worked at radio.
A convenient loophole in the 1996 Telecommunications Bill made payola payments to radio stations legal. To avoid accusations of collusion, labels have to stay clean from direct pay-for-play negotiations with radio. By employing independently contracted music promoters to influence radio station playlists, the labels are off the hook but firmly in control.
The conglomerate radio chains fell in love with legal payola, too. They viewed it as a new source of revenue, and radio station heads were convinced that their stations would get paid to play the music they would've played anyway. What's there not to like about this scheme?
Try everything. The label payouts to independent promoters meant no guarantee for automatic airplay. When the “indies,” as they're known, set up their exclusive deals with radio stations, it was cash upfront for radio. For a major market, a $400,000 annual payment was the norm.The “indies” charge labels a retainer fee to work their product. If they get a radio add, that carries a bonus, a low of $1,000 and a high of $10,000 or more per song, priced
by supply-and-demand conditions. Considering that most stations add only two or three new songs to their playlist each week, the retainer fee doesn't guarantee airplay but if you don't go the pay-for-play route, you have virtually no chance of being considered for a station's playlist. Independent promoters collectively bill an alleged minimum $3 million worth to labels each week .
Payola is no longer about getting your music played on the radio. It's about keeping the other labels' music off. With these prices, small labels and local artists are shut out of the radio airplay route.
Payola is showing some wear-and-tear. The scheme could collapse under its own weight once the bean- counters assess label damage. The problem? Radio airplay no longer converts to retail sales, while virtual unknowns, who receive no radio airplay, are showing up top twenty in retail sales.
Radio used to provide the soundtrack to popular culture. Now it presents the soundtrack to legal bribery and greed.
When German-based conglomerate BMG decided not to pay independent promoters for the release of American Idol winner Kelly Clarkson's first single, top 40 and adult contemporary radio boycotted the song. The album debuted at number one in sales with no radio airplay.
More music is broken and sold from movie soundtracks, TV shows and Mitsubishi ads. Those deals were set up by the artists' management as an alternative to shelling out legal payola elephant bucks. This has labels reassessing the significance of radio airplay to retail sales.
Artists signed to smaller labels and those releasing their own product are receiving encouraging response from active music consumers who are hearing their new music on Internet radio, college radio and through file- sharing. Satellite radio? Maybe, maybe not. There's increased concern that politics, though for now falling short of payola, are being played to secure airplay on that medium.
In its attempt to buy and sell popular culture, the medium is failing and speeding up its eventual demise.
excerpted from:
http://www.freetimes.com/modules.php?op=modload&name=News&file=article&sid=585
by John Gorman
Want to get your music in regular rotation on the radio? How much you got? It costs record labels between $150 million and $300 million annually to expose new music on U.S. radio stations. It works like this: To circumvent allegations of collusion, labels employ third-party independent record promoters to influence and control radio playlists. The labels deduct this cost of doing business from artist royalties. An artist's management has the right to veto what is now known as legal payola, which is why only a select few releases are worked at radio.
A convenient loophole in the 1996 Telecommunications Bill made payola payments to radio stations legal. To avoid accusations of collusion, labels have to stay clean from direct pay-for-play negotiations with radio. By employing independently contracted music promoters to influence radio station playlists, the labels are off the hook but firmly in control.
The conglomerate radio chains fell in love with legal payola, too. They viewed it as a new source of revenue, and radio station heads were convinced that their stations would get paid to play the music they would've played anyway. What's there not to like about this scheme?
Try everything. The label payouts to independent promoters meant no guarantee for automatic airplay. When the “indies,” as they're known, set up their exclusive deals with radio stations, it was cash upfront for radio. For a major market, a $400,000 annual payment was the norm.The “indies” charge labels a retainer fee to work their product. If they get a radio add, that carries a bonus, a low of $1,000 and a high of $10,000 or more per song, priced
by supply-and-demand conditions. Considering that most stations add only two or three new songs to their playlist each week, the retainer fee doesn't guarantee airplay but if you don't go the pay-for-play route, you have virtually no chance of being considered for a station's playlist. Independent promoters collectively bill an alleged minimum $3 million worth to labels each week .
Payola is no longer about getting your music played on the radio. It's about keeping the other labels' music off. With these prices, small labels and local artists are shut out of the radio airplay route.
Payola is showing some wear-and-tear. The scheme could collapse under its own weight once the bean- counters assess label damage. The problem? Radio airplay no longer converts to retail sales, while virtual unknowns, who receive no radio airplay, are showing up top twenty in retail sales.
Radio used to provide the soundtrack to popular culture. Now it presents the soundtrack to legal bribery and greed.
When German-based conglomerate BMG decided not to pay independent promoters for the release of American Idol winner Kelly Clarkson's first single, top 40 and adult contemporary radio boycotted the song. The album debuted at number one in sales with no radio airplay.
More music is broken and sold from movie soundtracks, TV shows and Mitsubishi ads. Those deals were set up by the artists' management as an alternative to shelling out legal payola elephant bucks. This has labels reassessing the significance of radio airplay to retail sales.
Artists signed to smaller labels and those releasing their own product are receiving encouraging response from active music consumers who are hearing their new music on Internet radio, college radio and through file- sharing. Satellite radio? Maybe, maybe not. There's increased concern that politics, though for now falling short of payola, are being played to secure airplay on that medium.
In its attempt to buy and sell popular culture, the medium is failing and speeding up its eventual demise.
excerpted from:
http://www.freetimes.com/modules.php?op=modload&name=News&file=article&sid=585
