Payola is dead! Now what will we listen to?

The bizarre, sleazy system of independent radio promotion may finally have bitten the dust. But believe it or not, pop radio may get even worse.

By Eric Boehlert

Jan 5, 2005 | The new year brings some good news for artists, record companies and music fans. Independent promotion, the entrenched system by which record companies pay middlemen to get songs played on FM stations, has finally been reined in. It's the practice that's sucked hundreds of millions of dollars from the pockets of labels and artists, been tagged by critics as nothing more than legalized bribery, while helping dumb down radio playlists.

"Ding-dong the witch is dead," crows one record company executive, who, like most people contacted for this article, agreed to talk only on the condition of anonymity. (The indie system may be going down but the topic remains sensitive inside record companies, where neither executives nor artists want to jeopardize potential radio airplay because of public statements.)

Under pressure from New York's nosy attorney general, who has already posted an impressive track record weeding out corporate fraud in other major industries, the system is finally collapsing -- or at least contracting -- from its own weight. In recent months, chain after chain of radio stations has announced it's cutting official ties with the middlemen or indies, who are now struggling to come to grips with the radically changed landscape around them. "We're not becoming millionaires anymore," says one longtime indie promoter for top 40 radio. "We're just paying our bills. I'm hoping I'll still be in business next year." They shouldn't bother looking to the record company counterparts for any sympathy, though. "Let's face it," says a label source, "the system was a scam."

The bad news for musicians and radio fans, though, is that even in the wake of the indies' demise -- a remarkable industry milestone considering how far back the look-the-other-way practice dates, and how many times labels and artists vowed, unsuccessfully, to do away with the system -- tight radio playlists are unlikely to improve anytime soon. While indie promoters are often seen as dubious, they did have a knack for getting new acts their break on FM radio. That's why some industry insiders worry that station programmers may soon become even less adventurous in choosing which songs get tapped for rotation on FM stations' heavily guarded playlists.

The indie promotion fallout could be especially tough on smaller, independently owned record labels, the very outlets many assumed would benefit if the costly radio promotion system ever collapsed. "It seems counterintuitive, but the weakening of indie promotion is not a good thing," says the owner of a small, successful label. "It further cements the hegemony of the major labels and will definitely narrow what's heard on the radio. The short-term effect is not good for independent music."

The issue of pay-for-play radio promotion has been a flashpoint for years as rumors of bribery, kickback and even ties to organized crime have attracted periodic press attention as well as a handful of mostly futile criminal investigations. In 2001, Salon helped pull the curtain back further with a series of articles detailing how indie promoters had transformed themselves into extraordinarily powerful and lucrative gatekeepers, paid outlandish fees for services that were often dubious at best and whose results -- radio airplay -- were almost always impossible to quantify.

As one major-label V.P. told Salon at the time, "It's nothing but bullshit and operators and wasted money. But it's very intricate, and the system has been laid down for years."

From a business standpoint, it never made much sense: Why vest so much power and pay so much money to outside sources who did so little work? But for decades, indie promotion thrived in the smoke-and-mirrors economics of the music industry. Radio station owners liked it because indies were paying them annual fees up to $400,000 to work with that station exclusively. Indies loved it because once they aligned themselves with specific stations they could turn around and bill record companies every time a new song was added to that station's playlist. And labels, while cringing at the indie fees, felt a certain sense of security knowing they'd paid all the top indies, hoping that would translate into hit records. "The system was driven out of fear," says one regional record company radio promoter. "It was used as an insurance policy." Like an insurance policy, you might never need it but it's nice to know it's there. The same went for indies and the possible strings they could pull at radio.

"Everyone tolerated payola when you were getting something in return," notes Jenny Toomey, executive director of the Future of Music Coalition, a musician advocacy group. "The problem with indie promotion, combined with increased ownership consolidation and fewer slots on the radio playlists, was labels were paying more and more money and not getting anything in return. It became untenable."

Next Page: The money connected to indie promotion in recent years is staggering

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