July 29, 2005
Payola Hurts the Music Industry and the Consumer
Payola is back if indeed it ever left. The recent SONY/BMG payola scandal generated little interest outside of music industry circles. It is not likely that many in the public sector, the listening audience and music-consumers, either know or care much about the implications and results of payola. This is a shame. Payola, or the act of bribing radio stations and/or individual DJs for the purpose buying spins (airplay) to promote artists or songs is wrong. It stacks the deck so that payola-spun tracks gain undeserved rankings and appear to be more popular than deserved. Payola also limits the field by denying rightful access to airtime that more deserving music would have received. Make no mistake, Payola is not a victimless crime. Airplay translates into raw sales in a significant manner and careers are made or broken on units sold.
While it is true that the face of radio is changing with the advent of the new subscription services such as XM and Sirius satellite radio services, traditional outlets build their playlists on perceived popularity and listener feedback. Artist's offerings rise of fall in the charts on their own merit. At least, that is how is is supposed to work when payola is not involved.
SONY SETTLES PAYOLA INVESTIGATION
Company Acknowledges Problems; Agrees to Sweeping Reforms
Attorney General Eliot Spitzer today announced an agreement to halt pervasive "pay-for-play" in the music industry.
Under the agreement, SONY BMG MUSIC ENTERTAINMENT, one of the world's leading record companies and owner of a number of major record labels, has agreed to stop making payments and providing expensive gifts to radio stations and their employees in return for "airplay" for the company's songs.
Such payoffs violate state and federal law.
"Our investigation shows that, contrary to listener expectations that songs are selected for airplay based on artistic merit and popularity, air time is often determined by undisclosed payoffs to radio stations and their employees," Spitzer said. "This agreement is a model for breaking the pervasive influence of bribes in the industry."
After receiving tips from industry insiders, Spitzer's office conducted a year-long investigation and determined that SONY BMG and its record labels had offered a series of inducements to radio stations and their employees to obtain airplay for the recordings by the company's artists.
The inducements for airplay, also known as "payola," took several forms:
• Outright bribes to radio programmers, including expensive vacation packages, electronics and other valuable items;
• Contest giveaways for stations' listening audiences;
• Payments to radio stations to cover operational expenses;
• Retention of middlemen, known as independent promoters, as conduits for illegal payments to radio stations;
• Payments for "spin programs," airplay under the guise of advertising.
E-mail correspondence obtained during the investigation shows that company executives were well aware of the payoffs and made sure that the company got sufficient airplay to justify these expenditures.
In discussing a bribe given to a radio programmer in Buffalo, one promotion executive at SONY BMG's Epic Records wrote to a colleague at Epic:
"Two weeks ago, it cost us over 4000.00 to get Franz [Ferdinand] on WKSE. That is what the four trips to Miami and hotel cost . . . At the end of the day, [David] Universal added GC [Good Charlotte] and Gretchen Wilson and hit Alex up for another grand and they settled for $750.00. So almost $5000.00 in two weeks for overnight airplay. He told me that Tommy really wanted him to do it so he cut the deal."
Another Epic employee who was trying to promote the group Audioslave to a Clear Channel programmer asked in an email:
"WHAT DO I HAVE TO DO TO GET AUDIOSLAVE ON WKSS THIS WEEK?!!? Whatever you can dream up, I can make it happen."
A promotion employee unhappy with the times assigned for spins of the song "I Drove All Night" by Celine Dion wrote this internal email:
"OK, HERE IT IS IN BLACK AND WHITE AND IT'S SERIOUS: IF A RADIO STATION GOT A FLYAWAY TO A CELINE [DION] SHOW IN LAS VEGAS FOR THE ADD, AND THEY'RE PLAYING THE SONG ALL IN OVERNIGHTS, THEY ARE NOT GETTING THE FLYAWAY. PLEASE FIX THE OVERNIGHT ROTATIONS IMMEDIATELY."
The investigation revealed that SONY BMG employees took steps to conceal many of the payments to individuals and radio stations, by using fictitious "contest winners" to document the transactions and make it appear as though the payments and gifts were going to radio listeners instead of station employees.
The Assurance of Discontinuance summarizing the Attorney General's findings alleges that the illegal payoffs for airplay were designed to manipulate record charts, generate consumer interest in records and increase sales.
Spitzer said: "Aggressive promotion of products is one of the hallmarks of our economy. We expect it and respect it when done creatively and legally. But the efforts outlined in the Assurance clearly crossed the line and must be curtailed."
Ann Chaitovitz, Director of Sound Recordings for AFTRA (American Federation of Television and Radio Artists) said: "We would like to thank Attorney General Spitzer for examining this pernicious issue. Pay-for-play hurts both recording artists and the public. We look forward to his continuing investigation of the other record labels and the vertically integrated radio station owners."
Don Henley, a member of the Eagles and founding member of the Recording Artists’ Coalition said: "Attorney General Eliot Spitzer should be commended for successfully addressing the pay-for-play problem. There is no question that payola hurts recording artists. RAC is grateful to him and his staff for exposing the magnitude of the payola problem and for getting a major label to agree to change the way it does business. We look forward to other record labels agreeing to similar reforms."
Under the Assurance, SONY BMG, building on guidelines SONY BMG issued earlier this year in response to the AG's investigation, has agreed to stop making payoffs in return for airplay and will fully disclose all items of value provided to radio stations in the future. SONY BMG also has agreed to corporate-wide reforms, including hiring a compliance officer responsible for monitoring promotion practices and developing and implementing an internal accounting system designed to detect future abuses. This is the first time an entertainment company has agreed to such sweeping reforms.
The company has also issued a statement acknowledging the improper conduct and pledging to abide by a higher standard.
In addition, the company has agreed to make a $10 million payment for distribution by the Rockefeller Philanthropy Advisors to New York State not-for-profit entities in a manner that will inure to the benefit of the residents of the State of New York by funding programs aimed at music education and appreciation.
Spitzer said SONY BMG officials cooperated fully with his investigators and promptly agreed to reforms when the problems were identified. He commended the company for taking steps that should serve as a model for the rest of the industry.
Spitzer also noted that his office continues its broad investigation of pay-for-play practices in the recorded music industry.
The investigation and settlement were handled by Assistant Attorney General Kathleen O'Neill of the Telecommunications & Energy Bureau, and Ricardo Velez of the Criminal Prosecutions Bureau, under the direction of Terryl Brown Clemons, Assistant Deputy Attorney General for the Division of Public Advocacy.
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February 11, 2005
By the People, For the People: The Washington Area Music Association (WAMA)
In years past, artists, musicians and songwriters looked to the major labels with an uncontainable sense of awe and respect and yes, perhaps even a little fear. Certainly there was a sense of an "unspoken truth," a music-business gospel that implied if an artist, musician, or band did not have the support of a major record label and its network of distribution and marketing, there would be little hope for success. Fame and fortune could not even be considered.
That was before the Internet, and certainly before grassroots organizations such as the Washington Area Music Association (WAMA) began to pursue avenues of music marketing and promotion that broke free of perceived prior constraints.
Raising the Curtain on Washington, DC Music! WAMA
From the WAMA Web site: "WAMA is an umbrella organization of Washington area musicians, concert promoters, lawyers, recording engineers, managers, graphic artists, and related businesses working together to address areas of common concern."
Just to be certain that you absorb the implications of the WAMA self-description, read it again. Note that it is not just musicians, not just concert promoters, nor only lawyers or recording engineers, but the WAMA is comprised of a full range of music industry individuals and organizations. And, note the money-line: "working together to address areas of common concern." Exactly! Working together.
No doubt "major labels" will retain the lion's share of the music industry's annual sales and related revenues, but as self-determined individuals pursue alternate tracks whether through grassroots movements, Internet promotions or mutually supportive organizations, the music industry revenue pie is likely to be sliced in an ever increasingly fair fashion. There are no limits to self-promotion. Power to the people!
RELATED: JENNIFER CUTTING WINS FIVE WAMMY AWARDS FOR OCEAN CD | The Washington Area Music Association (WAMA)
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February 09, 2005
Keeping the Future of CD Sales in the Digital Age in Proper Perspective
US sees growth in CD sales market
US CD sales rose by 2.3% in 2004 - the first rise in four years - despite the growing popularity of legal digital music downloads.
The CD format still accounts for 98% of the 666 million albums sold, according to research company Nielsen Soundscan. A total of 140 million digital tracks were legally downloaded last year, equivalent to 14 million albums.
R&B star Usher was the biggest-selling artist with his album Confessions selling eight million copies alone. Other top sellers of the year were Norah Jones, Eminem and country stars Kenny Chesney and Gretchen Wilson.
The US recording industry has attempted to tackle music piracy by suing those it believes are the worst offenders and closing down websites which offer music without permission. Although it was slow to react to the problem the launch of services such as iTunes and the relaunched Napster has persuaded many to use the legal sites.
The end of the year saw downloads reach a weekly high of 6.7 million tracks, up from 300,000 in mid-2003. [FULL ARTICLE]
All is not grim. Read the entire BBC article for a glimmer of hope and this bit of editorial dressing-down Pressing Issues in the Music Industry Today (or How I Learned to Adapt and Make Lots of Money!) for a call to a fresh perspective.
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February 08, 2005
Anti-Indecency Czar for the FCC?
In a letter delivered to the White House, President Bush is being urged by more than thirty House Republicans to appoint a new FCC chairman who will take a tough stance on indecent material they feel is permeating the American airwaves. Additionlly, Pro-family and media watchdog organizations are urging President Bush to appoint a new chairman to the Federal Communications Commission who "is committed to enforcing indecency laws."
Can you say "repercussions?" [Op-Ed]
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November 01, 2004
Rise of the Independents [part 2]
Rise of the Independents Part 2 (soon)
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October 31, 2004
The Rise of the Independents
Big Labels, small thinking; Small Labels, thinking big! Developing...
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October 25, 2004
Song Swapping Still Strong - What's an Industry to Do?
Song swapping has been viewed as the scourge of the music industry though in reality it's been the music industry's inability to build a viable business model to take advantage of peer-to-peer (P2P) fileswapping. Revenues are lost and boardrooms are gloomy. The RIAA has sued but has not been able to stem the tide. Read more... Song-Swap Networks Still Humming
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October 24, 2004
Industry > Music > Business
Welcome to the Machine! Well, it's not a machine really, but I always did like the lyrical expression of Pink Floyd — Careful With That Axe Eugene was pretty cool too, but I digress. Welcome to Industry > Music > Business — the new segment on BIGBAER Urban Alternative Music Magazine devoted entirely to the music industry and all related business. Everything from indie to big labels, to management, promotions & manufacturing will be discussed, referenced, made public. It all begins here. And we've got a lot of work to do! - jack "papa" baer 2004/10/24
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