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Spitzer Takes On Record Industry Payola
flackrum writes "NY Attorney General Spitzer has served subpoenas to four major record labels (UMG, BMG, EMI, WMG) in a continued house-cleaning of corporations employing dirty-tricks. In this particular group of cases, investigations are focusing on the circumvention of the Federal Payola Law, which forbids bribing radio broadcasters in return for airing specific songs. Mmm sweet karma."
At least it is a step up from representing unpaid restaurant bathroom attendants .
r _bathrooms.reut/
http://money.cnn.com/2004/10/08/news/funny/spitze
Broadcasters are prohibited from taking cash or anything of value in exchange for playing a specific song, unless they disclose the transaction to listeners. But in a practice that is common in the industry, independent promoters pay radio stations annual fees - often exceeding $100,000 - not, they say, to play specific songs, but to obtain advance copies of the stations' playlists. The promoters then bill record labels for each new song that is played; the total tab costs the record industry tens of millions of dollars each year.
Why wasn't this loophole simply closed up when it began?
http://www.busyweather.com/
Radio stations would have to play what people wanted to hear.
If guns kill people, then CmdrTaco's keyboard misspells words.
This is good news.. these laws have long been ignored and in the age of consolidated mega media, "pay for play" is just part of the SOP.
They should enforce the law or remove it from the books. But if big media can't get the radio play they want, it really makes it hard for them to produce mega hits "on demand."
http://www.hawknest.com/
Anyone...
Anyone at all...
Buhler? Buhler?
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
I mean, how a mere official dare confront the biggest in the mind-shaping industry???
Expect Orin Hatch to soon introduce legislation to legalize payola...
But government's meddling in what businesses can pay to each other seems wrong to me.
In this case I don't think it's wrong, since the richer companies could use their money to effectively monopolise radio for their artists.
But government's meddling in what businesses can pay to each other seems wrong to me.
The point is supposed to be to prevent large record labels from locking out smaller competitors for air time. Hardly a simple case of the govt "meddling" with business.
Hrmm...
"But government's meddling in what businesses can pay to each other seems wrong to me."
(I'm not American, nor in America, thank goodness) A previous poster stated that the law prevents the station from recieving inducement and _not disclosing it_ to the listeners. The law doesn't preclude the inducement, just the concealment of "sponsored" playlists.
i.e. it prevents corruption.
This is, in general, a good thing. In the UK, this is why extended "infomercials" have to bear a banner telling you that they are an "advertisement feature"; to prevent the credulous masses from thinking they are getting unbiased information, when in fact they are getting neither (not unbiased, probably not information either)
By extension you would be OK with businesses paying news companies to supress news stories. Payola is bribary, just because it's over something as trivial as popular music doesn't make it OK.
init 11 - for when you need that edge.
Mark my words, very soon this guy will either be the successor to Pataki as governor, or Bloomberg as mayor. From there he WILL go national.
I could never sleep my way to the top
'Cause my alarm clock always wakes me right up
And since my options had been whittled away
I struck a bargain with my radio DJ
I said I'd like this song to be number one
He said "I'd really really like to help you my son"
And then I knew that I would have him to thank
Because he asked me how much I had in the bank
He said to think long term investment and
That all the others had forgiven themselves
He said the net reward would justify
The colossal mess they'd made of their lives
He said the record wouldn't have to be hot
And no one ever seemed to care if it's not
It would depend on something else that I've got
And that the other ones who'd given it a shot
Had seen a modest sum grow geometrically
And then they had forgiven themselves
Because the net reward had justified
The colossal mess they'd made of their lives*
Hey Mr. DJ, I thought you said we had a deal
I thought you said, "You scratch my back and I'll scratch your record"
And I thought you said we had a deal
Well, I told you about the world (its address)
I wonder when they're gonna clean up the mess
You know the rabid child is still tuning in
Chess piece face's patience must be wearing thin
Because they haven't played this song on the air
Not that anyone but me even cared
And the Disk Jockey has moved out of town
The district courthouse says he's nowhere to be found
He said to think long term investment and
That all the others had forgiven themselves
He said the net reward would justify
The colossal mess they'd made of their lives
Hey Mr. DJ, I thought you said we had a deal
I thought you said, "You scratch my back and I'll scratch your record"
And I thought you said we had a deal
Maybe like the guys down at the NYPD, the US Attorney's office are fans too?
As we all know, the record industry are bastions of honesty and fair play, and the sole crusaders against evil terrorist pirates who steal music, and therefore murder the poor artists who create the songs.
Given their record of fair play, being law abiding citizens, and their respect for the laws of this country - so great that they even write the laws - it is quite clear that they have not done anything wrong, and should not be investigated at all.
Music is not a manufactured commodity. It doesn't have feature sets, like computer software. Taste in music is subjective.
Aren't you in the least bit frustrated to tune through the FM dial and find the same artists on 3/4 of the stations?
Do you really believe that the reason independent artists are never played on the radio is that none of them are as good as commercial artists? The reason they get no airplay is because they can't afford to stuff the pockets of radio programmers. This system keeps the big labels happy, because they essentially own the FM radio band, and they use it as one big commercial for all their latest crappy music.
I doubt anyone will want to hear this, but I fail to see why more traditional advertisers can pay-per-play to get their message out, but the RIAA (which has music as its product, thus radio play seems comparable to giving out free samples of product) cannot?
Don't get me wrong, it actually does please me to hear about the government finally cracking down on payola, and I hate the RIAA as much as any self-respecting geek. But in this case... I wouldn't necessarily call it black-and-white. Perhaps a matter of monopolistic control of a market, but beyond that?
As an aside... This addresses labels trying to do an end-run around the payola laws... But a much more obvious way to comply in letter if not in spirit exists. Payola laws forbid paying for songs without admitting it. Who sees the next big thing in radio as "and now, BoiBand9000's latest hit, brought to you by the kind, friendly, law-abiding, just-shy-of-saintly folks at Sony"?
Think about it, who benefits from payola, the bribers or the bribees (don't know if that is a real word, but lets pretend it is)? The record labels are forced to pay just to get their music on the air, while radio stations get to cash in on the label's desperation. Pretty much any competent record company exec would prefer to get that promotion for free, and in fact that have written complaints over the practice in the past (just the people who would normally be on their side in such a case are convinced in their close minded world that everything a record company does must be evil).
Mathematics is made of 50 percent formulas, 50 percent proofs, and 50 percent imagination.
Ardente veritate incendite tenebras mundi
I don't know if attorney general is an elected position, but that doesn't matter. We need to send the message to people in our government that the more they do stuff like this the more likely they are to get our vote. The two presidential candidates have not even said a word about taking out evil corporations. And the third party candidates might say something about it, but have no track record of actually doing so. I want the people who represent me to know that if they do things that hurt record companies, the MPAA, media companies, etc. That I will proudly vote for them regardless of political affiliation.
Did you hear that?
The GeekNights podcast is going strong. Listen!
That dude is a libertarian. He thinks the marketplace belongs to the people with the most capital, and worthless consumers should enjoy their shit sandwiches at 300% markup.
Mmm sweet karma.
What's this? I clicked on the word "karma" and got some damn wiccan page talking about some religious concept they stole from the Hindus. I always thought "karma" was what I'll lose by posting this message.
I am Sartre of the Borg. Existence is futile.
I would be surprised if the licensing process alone costs less than $100K, unless you're planning to have a coverage area of about five blocks.
You tell me that some of these news stories aren't bought and paid for? And these news stories are driving our politics and our society in general, so that is much more important than what songs are playing.
eat shiat and bark at the moon
Governments meddle all the time. These laws are the result of some scandals that occured in the 1950's. One discussion is at http://www.history-of-rock.com/payola.htm/
The point of anti-payola laws were an attempt to kill rock and roll.
The music industry has always paid to get air play. The states and the feds thought that if rock and roll radio stations were forbidden to take payola, through laws selectively enforced against those stations, they'd be forced to stop playing rock and roll. It didn't work.
Why those laws are still on the books are beyond me.
If someone says he and his monkey have nothing to hide, they almost certainly do.
Just legalize payola, with full disclosure. That way all broadcasters, web-casters, satellite, TV, etc. big and small can compete fairly for promotional money from the industry. With a ban, only the major radio players can use the loophole to collect there money while the smaller players are locked out. Closing the loopholes would only drive the big players to find new loopholes. Now would be a good time to deregulate music promotion.
Legalizing payola would create a shock to the industry's business models. Any shock can only have positive results given the state of current business models.
... of a business model becoming extinct. People can make their own radio stations now from online jukeboxes. If they really like it, they can pay for it and take it with them, so the distribution method is also going the way of the dinosaur.
How about we re-regulate radio? I'm tired of 10 song play lists being recycled 24 hours a day. God damn clear channel.
Listen, I don't like the RIAA more than anyone else here, but there's criticism, and then there's demonization. They have done plenty of other stuff to deserve derision, but this particular issue isn't about the RIAA.
If this rule were applied to Internet or Cable radio stations, I'd agree with you. But this isn't a free market, there's only a certain amount of spectrum available, and if someone wants to use it, they need to be reasonable.
Besides which, the payola rule is nothing more than a full disclosure law. If a radio station informs its listeners that they were paid to play a particular song, what they're doing isn't covered by the payola laws. This isn't about one company paying another for services, it's just regular regulation of advertising.
You are not alone. This is not normal. None of this is normal.
What you are saying, is legal. The Payola allows actually allows for Pay for Play IF and ONLY IF they say something like, "Mega corp has paid us to play this song for you..."
The issue is, esp., when DJ's used to pick the songs they played, that the public would believe it was picked because they liked it... not because of payola.
http://www.hawknest.com/
excerpted from http://www.fcc.gov/eb/broadcast/sponsid.html
Section 507 of the Communications Act, as amended, 47 U.S.C. 508 requires that when anyone pays someone to include program matter in a broadcast, the fact of payment must be disclosed in advance of the broadcast to the station over which the mater is to be carried. Both the person making the payment and the recipient are obligated to disclose the payment so that the station may make the sponsorship identification announcement required by Section 317 of the Act. Failure to disclose such payments 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.
Busy aligning my non-linear thoughts.
[Please sign here]
Spitzer's an effective Attorney General who, politically, has realized that the best way to get a favorable opinion of himself is to do his job.
This doesn't work for every position -- most governors and the President, of course, have to mix so many different sides with no clear winner that they inevitably have to spend at least some time politicking.
OTOH, being honest, doing your job, and erring on the side of the little guy is a good enough forumla to win popular acclaim.
Anyway, I don't see, how bribery should concern anyone other than the bribe-taker's employer and -- in an enlightened society -- the bribe-giver's employer too.
Because most people have an innate feel that there is more to right and wrong than might and weakness. You would have felt bad if a big kid beat you up and took your new skateboard. You would have called on some authority to stop this unfair behaviour.
Modern society recognises that money is power today, and that someone has to stop the big companies from bullying the small ones. Hence, "unfair dealing" is usually illegal. Its part of why people have governments in the first place.
Languages aren't inherently fast -- implementations are efficient
Problem is, it's very hard to fight it. The record companies use middle men, independent record promoters, to do the dirty-work (as indicated in the article).
When I was far younger, I used to work in the radio broadcasting industry and the stories of what the indie-promoters do is shameful.
The program director, a few of his lackies, some of the higher-profile talent and an independent promoter all went out to dinner in Windsor. Not only did the promoter spring for dinner, but then he hands everyone in the group three crisp $100 bills and tells them to have fun in the Windsor Casino.
Or perhaps the station is out of money for promotions and can't buy bumper stickers or on-air give-aways. The indie will line up all sorts of cool goods to give away like video games, cell phones and lots and lots of record product and concert tickets. Funny thing is, the listeners get the record product and the concert tickets, but the video games and cell phones are traded to vendors to print bumper stickers. Or, they simply go into the pocket of the general manager and program director.
Another disturbing thing that happens now is ClearChannel has a concert promotion business too. So when their show comes into town, the playlist is modified so heavily on all their radio stations that you can't get away from the featured act. Imagine a weekend of nearly nothing but Journey!
Radio is pretty much a license to print money. It is not a surprise that it's rampant with abuse and corruption.
We need to stop talking about free markets in markets that the government inherently regulates or influences from the get go.
These include:
1. radio and tv broadcasts - no possibility of free markets here as the government licences "public" spectrum to the entities in the first place. and afaik the government will police your spectrum for you. so to talk about a free market here we would first have to let anyone who wanted broadcast on any frequency he wanted. if we do this, perhaps it will be ok to talk about a free market in this area.
2. any copyrighted work - how can you have a free market in a good that is by its very nature a government granted monopoly?
3. any patented work - see reasoning for item 2.
4. perhaps any regulated and/or licenced profession? perhaps only some of them? thoughts please.
A Nony Mouse
You are wrong. Ted Turner (founder of CNN) who should know what he is talking about, is against the current situation where a few dominating media giants dominate the market. Yes, he is/was a media mogul himself, but he sees the problem nevertheless.
He writes:
"At this late stage, media companies have grown so large and powerful, and their dominance has become so detrimental to the survival of small, emerging companies, that there remains only one alternative: bust up the big conglomerates."
The whole article is
here
Arguably he discusses television, not radio but many of the companies involved are the same, the "product" sold to advertisers (John Q. Public) is the same, and a part of what is aired (music, news) is the same too.
Maybe you could start your own radio station, but who will listen to it and why would anyone advertise with you, with your tiny marketshare? The other companies are just too big, so they will very easily undercut you while you are trying to build your business.
Drug advertising contributes to the cost of the medication, on the order of 10%. Ironically, the 'bribery' has gone down as the TV advertising has gone up. This is OT, I know, but I think the drug advertising on TV is ridiculous. Really, they should be allowed to talk about a disease rather than the drug that treats the disease. After all, if they say, for example, 'Talk to your doc about cholesterol' they will still sell more cholesterol lowering drugs.
If the market was truely libertarian, then demand would cause new ventures to popup to undercut the markup thus putting the overpriced ones out of business.
It's a myth that an unregulated market is good for the small guy trying to break in. The reason this is not the case is the concept of scale effects. When you sell 100 items of a product your fixed costs per product are a lot higher than when you sell 100.000 items, and your variable costs tend to be higher as well (due to the inefficiencies of low volume production). Because your cost per product as a small guy is higher, it is hard to compete against the bigger businesses, who can maintain lower prices and still be profitable. Over time, this effect causes the market to merge in a number of big behemoths (the larger you are the more profit you make per product), and once you reach that point usually they will form cartels, where they use various kinds of underhanded tactics, like predatory pricing, coupled sales, government bribing and so on to keep out new market entrants and maintain higher prices than market forces would dictate. Examples of this are the music industry (the big five), microsoft's windows and office empire, the telecom industry on the local level, and on and on.
Cartels or monopolies have been demonstrated to tend towards having low market efficiency, due to the profit maximalization imperative and their ability to maintain non-market-optimal pricing models at greater profit to the business.
The only way to avoid this is to limit the ability of market players to form cartels or monopolies, and then abuse their power. Retroactively, that means antitrust law. So antitrust is a necessary part of maintaining a healthy free market. Proactively it means making sure that new market players can enter without high entrance costs (like allowing small telecom companies to use existing networks for a fair price, so they don't have to build up their own network at extreme cost), so raising prices by the big players would cause new players to enter at lower price points.
So, in conclusion, to have a truly free market (meaning with near non-existant barrier to entry), you must regulate it so no market player can become too powerful. A correctly regulated market is a healthy market, an unregulated market is a diseased or soon-to-be-diseased market.
Ofcourse, big business has been very successful at spreading the meme that market regulation is bad for the market. The reality is that it's good for the market (if done correctly), but it's bad for the behemoth.
Slate (has a nice piece on how the NY Attorney General is the most powerful person outside DC. Here's the money quote: The short form is that thanks to the 1921 Martin Act Spitzer can "subpoena any document he wants from anyone doing business in the state," make investigations secret or public as his whim, and "choose between filing civil or criminal charges whenever he wants." Extraordinarily, Thompson notes, "people called in for questioning during Martin Act investigations do not have a right to counsel or a right against self-incrimination. Combined, the act's powers exceed those given any regulator in any other state."
I dont do meaning of life questions.
The problem w/ payola is that it has a MAJOR adverse affect for people who don't participate. It ruins the free market, turning it into an oligopoly.
To see what the power of payola was, one record company decided to NOT participate when Pink Floyd was on their The Wall tour in Los Angeles, one of the biggest music events of the time. The song (I forgot which) was a hit across the country, but was not played by a single radio station in Los Angeles in the week before the concert.
There's a book about this called "Hit Men" or something like that. It's pretty interesting stuff. A basic overview is at:
http://www.antimusic.com/rants/2003/march.shtml
As far as Spitzer goes, he seems to be doing a great job battling corruption throughout NY. I've been impressed with how much he is accomplishing.
Engineering and the Ultimate
"Ofcourse, big business has been very successful at spreading the meme that market regulation is bad for the market."
I think you're mixing concepts here. Market regulation _is_ generally bad for the market. Antitrust regulation is good for the market.
Big companies really welcome true market regulation, because it prevents smaller players from entering the field. For example, the reasons drug prices are so high is because regulation makes it virtually impossible for small companies to compete. Therefore, the only people willing to lose money for 5-10 years before becoming profitable are those whose only goal is to become absurdly profitable.
Engineering and the Ultimate
"What businesses can pay to each other" IS the government's business. It prevents things such as price fixing and other forms of collusion. Regulating these transactions curbs corruption. In this case, it's meant to prevent the tight oligopoly made up by the large recording companies from monopolizing the airwaves and effectively barring the competitive fringe from getting some airplay. Now, I'm not an idiot, I realize the smaller labels get little time on the air, but it might have something to do with the circumvention of this law. I say they're right to finally enforce it.
I'm curious, you mentioned your native country. What country is that? I'm not going to use it to slam you or say something derogatory. I've just dome a few corruption studies on the national level, and we've found that cultural acceptance (basically saying "its a part of doing business here") is generally present in countries with high levels. I'm just trying to get an educated handle on your point of view, I dont mean to be insulting in any way.
However, at some point you have to ask yourself if having some state AG go after them is the right way. Isn't that the whole point of electing a legislature? Should the regulatory policies of an industry be decided by one all-powerful unelected state official?
I'm sure this will go over the heads of the slashdot faithful until some state AG decides to take on something we like. At that point slashdot will roundly criticize them for being undemocratic, while failing to appreciate the irony.
Just remember -- for everything you like done without legislative approval (like going after the record industry) there's going to be something you don't like (like some judge deciding we should have software patents). The best way is to do things the right way or don't do them at all.
Jack Valenti and the MPAA are to technology as the Boston strangler is to the woman home alone
Radio spectrum is a limited resource. There are only so many frequencies available in any given area, and where major urban centres are adjacent to one another complex agreements exist to protect one station's air rights against others. In my area, where FMs normally dump 20,000 watts into the antenna, new license applicants are struggling, with much testing and expense, to find frequencies suitable for operation at 400 watts. Limited spectrum is why the airwaves are tightly regulated. It doesn't matter how much money you have if all available frequencies are gone. It's also why radio stations typically sell in the range of ten, maybe twenty by now, times annual earnings when their physical assets might be worth 50% of one year's earnings. The buyer is paying for the license and little else.
He also supported a flat tax, no exceptions. Of course, that meant he would lose a lot of money. His response: "Of course I'm going to take advantage of it, I'd be an idiot not too. But that doesn't mean I don't think there isn't a better system out there." The true idiot is one who can't see past his immediate gain to recognize a better overall system.
Ted made his own fortune. He was in no way dependent on "media conglomerates". All he's lobbying for is the ability for other guys like him to create their own new media empires.
A Pirate and a Puritan look the same on a balance sheet.
You don't prove your point at all. Economies of scale occur whether or not the market is regulated. A better argument would be to note that regulation can reduce barriers to entry just as they can raise barriers to entry.
But try this exercise. Name a regulation that doesn't exaggerate the effects of economy of scale or increase barriers to entry. You can find them, but not easily.
I understand what you're saying about subjectivity. But you're acting like it's an absolute; that all bands are equally good since objective measurement is difficult or irrational. But that's not true. Subjective quality is not uniformly.
You might have a real point if airplay correlated with album sales. But there are glaring exceptions. Look at Radiohead. Look at Steely Dan. Look at the Grateful Dead or Phish. There are lots of bands who aren't on the radio, yet have huge album sales. The issue is not radio reflecting the taste of phillistines; it's radio reflecting its own corporate ambitions, and intentionally shaping the preferences of the casual listener.
As a person's devotion to music increases -- i.e., more time is paid to the hobby -- the overwhelming majority turns away from what's on the radio. They may turn to obscure country, or blues, or indie rock, or jazz -- whatever. But very few people who spend a lot of time listening to and reading about music find their love of Britney Spears' artistry deepening.
Is this just en-masse elitism? I'm sure to some extent it is. But I find it hard to believe that solo artists locked into multi-album deals -- the kind of artists that are most profitable to the record companies -- are the "naturally best" solution to serving casual listeners (at least from the listeners' perspective).
You're right that the subjectivity of art means we can argue forever about what ought to be on the radio, but one thing should be clear: whatever it is, it isn't what's on the radio now.
the major advances in civilization are processes which all but wreck the societies in which they occur - A.N. White
You don't prove your point at all. Economies of scale occur whether or not the market is regulated. A better argument would be to note that regulation can reduce barriers to entry just as they can raise barriers to entry.
Economies of scale are the explanation of why a totally unregulated market over time turns into a few large behemoths, unless the product doesn't afford barriers to entry or economies of scale (very few products are like that). I think I made that point, you may want to refute it.
But try this exercise. Name a regulation that doesn't exaggerate the effects of economy of scale or increase barriers to entry. You can find them, but not easily.
You can find anecdotal evidence to bolster any argument, I could easily come back and cite countless examples of just such regulation, but it wouldn't support my case. My case is that an unregulated market is inherently a sick market because it will grow steadily more inefficient. Regulation is the fix for this problem, not the cause, even though regulation, if done poorly (most often the case), can increase market inefficiency even more than monopolization will.
So, yes, you're right that regulation can be very bad for the market. I'm not arguing that it's not. I'm arguing that you need regulation to keep a free market free.
How about this exercise: take a look at markets in zones of lawlessness, like warzones, and see how efficiently they function, how "healthy" they are.
Infomercials would be illegal too without the "The following is a paid advertisement for Ronco. The views expressed in this program do not... (etc, etc)" notices.
It's about disclosure.
You are not alone. This is not normal. None of this is normal.
If you're talking about a commercial radio station which has a chance of actually giving you a return on your investment, then you're going to need at least a million for:
Engineering studies
Transmitter
A building from which to operate
A position on someone's tower, unless you want to build your own site
A plethora of fairly expensive equipment, including on-air and production studio consoles, some sort of digital audio playback system, CD players, audio processing gear, an STL link to get the signal from the studio to the tower, broadcast quality microphones, a number of personal computers and all the software that goes with them, a network and a few hundred other pieces of gear -- descriptions of which I can't think at the moment
Salaries for airstaff, newspeople, programming staff, producer(s), traffic department staff, creative department staff and sales staff
Various licensing fees
Subscriptions to record labels so that they'll send music to you
A promotion budget large enough to enable you to compete with the other stations in your market
You'll also have to spend a significant amount of money preparing a good case to the regulating authorities regarding exactly why they should give a license to YOU and not one of the other applicants.
Oh, and this is all based on Canuck Bucks. Adjust accordingly for US based operations.