December 1, 2015

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First Mediaworks

04/26/99 Pay-For-Play Is NOT Payola
During the years Seinfeld was on TV, manufacturers were offered paid exposure for their products within each episode. Would there be Fritos corn chips or Rold Gold Pretzels lying on the table in Jerry's apartment? Would Kramer toss down M&Ms or Junior Mints? What brand of bicycle would hang from the ceiling in Jerry1s hallway?
The selling of such product exposure has long been an above-board source of supplemental revenue for the producers of TV programs. But, if Radio programmers were to do it, the world would shout, "Payola!"
Prevalent in the 1950s, payola was the illegal acceptance of money by prominent DJs in exchange for playing certain records. It was illegal only because the DJs were selling airtime they didn't own, weren't announcing the paid arrangement and weren't declaring the income. Basically, payola was tax evasion.
Seven years ago, I wrote my first editorial on pay-for-play before it ever took place. I stated that legal pay-for-play could take place and should be considered a viable financial relationship between labels and stations.
I've consulted with legal counsel on numerous occasions and been told that pay-for-play contractual agreements are legal, although they've not yet been tested in court. (Don't take my advice -- check with your own attorney.)
Pay-for-play is intrinsically self-regulatory because the value of a song's exposure on a station is relative to the size of that station's audience. Any station that allows too many "loser" songs to be played on its air will lose audience share and ad revenues.
Just three years ago, I encouraged a cartel of music labels to get together, purchase FM signals and create their own pay-for-play, "new releases" stations in each major market. The stumbling block was that most labels are foreign-owned. Consequently, they cannot invest in American broadcast signals.
I even went so far as to offer to purchase the stations and lease the airtime back to them. So far, no takers.
Those who know me best know that I would never promote any activity that was illegal or immoral. Undisclosed payola is wrong, but disclosed pay-for-play is no different than selling :30s and :60s. It's a solid, respectable way for Radio to have a relationship with a major customer.
Radio stations and music labels are linked by their joint needs. Why not strengthen the bond officially and sanction pay-for-play?
Pay-for-play is not payola. It's the selling of exposure by people who are in the business of selling exposure. The fact that the Department of Justice feels the need to investigate pay-for-play is simply stupid.

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