Corporate payola: Is it even possible?
New York Attorney General Eliot Spitzer has accused Entercom and other major radio groups, not yet named, of accepting "corporate payola." Here's how "payola" is explained on the FCC's website:
"Section 507 of the Communications Act, 47 U.S.C. § 508, requires that, when anyone provides or promises to provide money, services or other consideration to someone to include program matter in a broadcast, that fact must be disclosed in advance of the broadcast, ultimately to the station over which the matter is to be aired. Both the person providing or promising to provide the money, services or other consideration and the recipient are obligated to make this disclosure so that the station may broadcast the sponsorship identification announcement required by Section 317 of the Communications Act. Failure to disclose such payment or the providing of services or other consideration, or promise to provide them, is commonly referred to as 'payola' and is punishable by a fine of not more than 10,000 or imprisonment for not more than one year or both. These criminal penalties bring violations within the purview of the Department of Justice."
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That's just a summary, of course, so we checked the actual statute. Sure enough, the "payola" law deals exclusively with an employee taking payments for airplay which are kept secret from the licensee. Since a licensee cannot keep payments secret from itself, it is not possible for a licensee to commit payola. The other issue in play is sponsorship identification. Here's the FCC's explanation:
"Section 317 of the Communications Act of 1934, as amended, 47 U.S.C. § 317, requires broadcasters to disclose to their listeners or viewers if matter has been aired in exchange for money, services or other valuable consideration. The announcement must be aired when the subject matter is broadcast. The Commission has adopted a rule, 47 C.F.R. § 73.1212, which sets forth the broadcasters' responsibilities to make this sponsorship identification."
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Certainly the spin shows which Spitzer claims are "illegal" comply with this law, since the whole point is to sell a sponsorship for each song, which is announced on air. That leaves only his contention that all payments and promotion items transferred from a record label or independent promoter to a radio station are really buying airplay. We haven't seen the Entercom contracts, but from what we know of industry standards, such contracts are supposed to spell out clearly what a label or indie gets for its payments - - generally research data and such - - and they strictly prohibit any link to airplay.
RBR observation: Gee, maybe Entercom should think about suing Spitzer for slander, since he has publicly accused the company of a specific criminal act, payola, which it could not possibly have committed.
Good Morning - Gain a personal edge on today's business day. Are you reading this from a forwarded email?
