In a surprise break with what has become the industry norm, radio giant Clear Channel Communications announced Wednesday that it'll stop using independent music promoters to avoid the appearance of "pay for play."
Independent promoters have built a lucrative, $100 million-a-year business over the past three decades by charging record labels on a per-song basis to help gain access to the ever-shrinking playlists of major radio networks. The practice has been referred to as "legal payola," in reference to the outlawed practice of securing airplay through illicit payments to disc jockeys and radio stations.
San Antonio, Texas-based Clear Channel, which owns more than 1,200 stations, will stop using the promoters when existing agreements run out this summer, according to a statement released Wednesday (April 9).
The "pay for play" payments have drawn intense criticism from Senators John McCain, Orrin Hatch and Russ Feingold, who have questioned whether the amount of airplay given to certain songs is affected by the work of independent promoters. In addition to payments from record labels, indie promoters pay radio networks for advance looks at playlists and exclusive access to radio station programmers. In June, Wisconsin’s Feingold drafted the Competition in Radio and Concert Industries Act, which has as one of its provisions the closing of pay-for-play loopholes "to ensure that radio station broadcasts are not improperly influenced by payment, whether directly or indirectly."
In Wednesday’s statement, Clear Channel President and CEO Mark Mays said the company made its decision following the concerns voiced by the senators. "We heard Senator McCain and Senator Hatch loud and clear," Mays said. "And we now recognize that these relationships may appear to be something they’re not. We have zero tolerance for ‘pay for play’ [and] want to avoid even the suggestion that such a practice takes place within our company."
Once the existing contracts with indie promoters lapse this summer, Mays said Clear Channel will work directly with the recording industry on "contesting, promotions and marketing opportunities."
After a series of scandals in the 1950s, federal anti-payola laws were passed that prohibit radio stations from accepting money for playing songs unless they disclose it to listeners. Though Interscope paid a Portland station $5,000 to play the Limp Bikzit song "Counterfeit" 50 times in 1998 along with an announcement about the promotion, labels have avoided such arrangements since the 1970s by paying indie promoters to help place songs.
The move away from paying indies is not surprising, given the intense grilling Clear Channel Chairman Lowry Mays faced in January when he testified in front of a Senate committee about consolidation in the radio industry, according to journalist Eric Boehlert, author of an award-winning, two-year series on Clear Channel and pay for play for Salon.com.
"I think a lot of this has to do with Clear Channel’s concern about how it is perceived in Washington," said Boehlert, whose series documented how Clear Channel’s rapid growth led to, among other things, shrinking playlists at its stations and less opportunities for labels to get songs onto radio. "Word has it that a judiciary committee is planning on holding pay for play hearings this summer, and you don’t want to have to defend pay for play on Capitol Hill, because you’d be laughed out of the room. Try explaining it to anyone outside the industry and it makes no sense. This is a goodwill gesture to say ‘We’re not what our critics say we are’ and an attempt to better their image in Washington."
The move follows the October announcement by 79-station Cox Radio Inc. that it would stop using independent promotion firms. Boehlert said he thinks the move by Clear Channel — which he expects will be quietly followed by other major radio networks — won’t signal the death of independent promoters, because labels will always need access to stations on a regional level.
"But hopefully it will mean less money thrown away, since artists pay for half of that promotion cost," he said. "And maybe it will mean more money for development and signing new bands."