Is CCU fudging on payola agreement?

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In the consent decrees between the FCC and four broadcast companies active in the state of New York – Clear Channel, CBS Radio, Entercom and Citadel – agreed to "rules of engagement" under which they pledged to find air time for independent musicians. Sen. Russ Feingold (D-WI) says Clear Channel "may already be violating" this tenet. In a release, he said that "…recent reports indicate that some stations owned by one of the companies, Clear Channel, are requiring local, unsigned and independent musicians to grant a royalty-free right and license to the music upon submission to the radio programmers, which would appear to violate the voluntary agreement they entered into following the settlement."


Although Clear Channel is the only company said to be suspected of having a problem, Feingold is seeking information not just from Clear Channel but from all four companies. Michael Bracy of the Future of Music Coalition said, "Radio consolidation and payola have long kept deserving local and independent artists off the nation's airwaves. Earlier this year, Clear Channel agreed to address the problem of payola, but its latest actions show it wasn't sincere. Clear Channel has substituted one brand of payola for another type of pay-to-play. This is just payola under a different name." Clear channel did not respond to a request from RBR for comment.

SmartMedia observation: It's good that the practice which kicked off the entire dubious payola escapade, the use of independent promoters to encourage airplay for various tunes, is not in question here. What does seem to be in question is an alleged practice of providing one type of airplay consideration for established acts and another type for not-so-established acts. While the not-so-established musicians may well benefit from additional airplay, it nevertheless appears that is Clear Channel is implementing a discriminatory policy. And anything that smacks of discrimination is almost guaranteed to cause a ruckus on Capitol Hill. But to us this looks like a fringe issue, not a rehashing of the core payola controversy.

Feingold's letter

July 11, 2007
Dan Mason
President and Chief Executive Officer
CBS RADIO, Inc.
1515 Broadway
New York, NY 10036

Farid Suleman
Chairman of the Board and CEO
Citadel Broadcasting Corporation
7201 W. Lake Mead Blvd., Suite 400
Las Vegas, NV 89128

L. Lowry Mays
Chairman of the Board
Clear Channel Communications, Inc.
200 East Basse Road
San Antonio, TX 78209

David J. Field
President and Chief Executive Officer
Entercom Communications Corp.
401 City Avenue, Suite 809
Bala Cynwyd, Pa 19004

Dear Mr. Mason, Mr. Suleman, Mr. Mays, and Mr. Field:

As you probably are aware, I have been concerned about payola and other anti-competitive practices in the radio industry for some time. While I believe that FCC oversight and enforcement could have been stronger, I was encouraged by your willingness to work with the small and independent labels to come to a voluntary side agreement that went along with the consent decree announced in April. I continue to hope that this agreement will help the public have greater access to local, unsigned and independent musicians, whose voices have unfortunately been missing more often than not from our public airwaves over the past decade or more.

I was pleased that the side agreement included eight "Rules of Engagement," which laid out how your companies intended to ensure fair interactions with labels, artists and their representatives. These rules echo requirements from my previous payola legislation and address the core problem of payola by trying to remove coercion, payments or other quid pro quo in exchange for airplay or access to music programmers. While I continue to have some concern that the enforcement of these rules is voluntary, if they were to be followed industry-wide it would go a long way toward eliminating pay-for-play.

I would like to ask for more information about a couple of these rules that your radio station groups have committed to follow. The first rule of engagement provides that "Radio should establish, and appropriately publicize, clear and non-discriminatory procedures for music submissions and access to radio station music programmers (to the extent any such access is provided)." Now that you have had a couple months to put this rule into place, I'd like to request more information on what access you have provided and how it has been publicized. Have you taken any efforts to increase the amount of access provided and to facilitate submissions? I'd also be interested in knowing whether this access is through each individual station, to the corporate playlists and testing pools, if applicable, or both.

Related to this first rule of engagement is the second rule, which states "Radio should not be allowed to sell or barter access to its music programmers." I am concerned by recent reports that some Clear Channel stations are requiring the grant of a royalty-free right and license to the music upon submission. As the debate surrounding the recent Copyright Royalty Board decision to increase the royalty rate for digital performances indicates, these rights clearly have value. Moreover, the submission form used by these stations apparently indicates that the music and other material will be provided to the music programmers for airplay consideration. The required royalty waiver seems to violate the April commitment not to barter access to music programmers. I encourage you all, and Clear Channel in particular, to clarify this issue.

I have held off on reintroduction of my legislation this Congress because I was hopeful that the voluntary rules of engagement combined with the consent decree could be effective in eliminating payola and related abuses. But it is very troubling that the voluntary rules seem to have been violated after just a few months. When the agreement was announced in April, I expressed concern that the consent decrees and side agreement depended so heavily on continued good faith instead of strong enforceable standards. The weakness of the voluntary reforms is that there is no impartial arbiter like the FCC to determine the meaning of the rules, so they can be parsed or ignored with only public opinion as a partial check.

I hope that your commitment to meaningful rules of engagement and efforts to eliminate the pervasive payola documented by then-New York Attorney General Spitzer remains strong and look forward to your response.

Sincerely,

Russell D. Feingold
United States Senator