Payola curbed; or, the big guys always win
Salon's Eric Boelehrt has written an incisive article about the strange economics of the recording industry and the subject of payola. As he has pointed out before and we have noted, that practice is continued by a group of so-called "indies" that form the middleman between the record labels and the radio companies, influencing the radio execs (through various legal and illegal means) to play the songs of one record label or another.
With the tightening of the radio oligopoly and the emergence of centralized programming at such companies as Infinity (Viacom) and Clear Channel, the racket got even more profitable. The big companies have only dealt with selected indies, and those few could command big prices. More than ever, getting air time (shelf space) for this or that record was critical, and there were few and fewer slots available.
The record companies did not like it (another reason they were losing hundreds of millions) but they didn't dare stop paying the fees as long as the competition was. As Boehlert points out ("Payola is dead! Now what will we listen to?", 1/5/2005): "The money connected to indie promotion in recent years was staggering, costing labels $250,000 just to pitch a song, and much more if the song became a hit. was paying." And the added fees eventually came out of the royalties for the companies.
Over the last year the payola game has fallen apart. That's partly due to the subpoena by New York Attorney General of financial records regarding payments to indies from the recording industry. Boehlert speculates that at least Infinity was scared straight by the prospect of a Spitzer investigation and dropped dealing with indies. Beyond that, there were political pressures on Clear Channel and Viacom from their oppressive wielding of their oligopoly power. Suddenly, the decades-old payola system, frequently attacked, was in retreat.
So, good for the small guy and for the listener? Not so fast, as Boehlert writes:
Even in the wake of the indies' demise …tight radio playlists are unlikely to improve anytime soon. 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.'
In other words, with the payola system it was possible, if difficult, for a small record label that is not one of the Big Four record companies, to manage to get a some songs on the FM airwaves, where they had a chance to become a hit. Now the small labels have to deal directly with the national programmers at the big chains, something those programmers are not interested in wasting their rime on. Without even the little leveling of the fields from the indies, the programmers will play it even safer, pushing name acts from the major labels only. For new acts, as well, it's going to get harder and harder to break through at all.
As we've noted before, only the big can serve the big, and the little pups can't run with the wolves. In this case, what looks like a defeat of the middleman may even further enrich the oligopolies.
