Record Promoters Staging a Comeback : Entertainment: The independents were nearly put out of business by a payola probe in the ‘80s. But major labels are quietly rehiring them.

Independent record promoters, although they remain a controversial and cloistered group, are staging a slow comeback after years of government investigations into their business practices made them outcasts in the $6.5-billion music industry.

Independent promoters, who try to secure radio airplay for new songs on behalf of their record company clients, nearly vanished in 1986 after news reports that the government was investigating organized crime involvement in the record industry and alleged payola arising out of some music promotion practices.

But the major labels, after briefly imposing an informal ban on independent promoters in 1986, resumed doing business with them more openly in 1989. The change occurred after it became clear that major record labels would not be the central focus of the federal government’s five-year music industry investigation.

“We use independent promotion as part of our marketing mix,” said Daniel Glass, general manager of SBK Records. “Independent promoters are not the be-all and end-all of our business.” Glass added that SBK’s chart-topping success with artists such as rapper Vanilla Ice and singer Wilson Philips “would have been a lot harder” without the help of independent record promoters.

Peggy Moizel, a senior manager with the accounting firm Deloitte & Touche, said recently that she examined record company financial statements showing labels spending as much as $70,000 per album on independent promotion. She said independent promotion is used by virtually all major record labels today.

The Justice Department’s long-running investigation of the music industry and independent promotion practices derailed Sept. 4, when a U.S. District Court judge in Los Angeles--citing “outrageous government misconduct” in prosecuting the case--abruptly dismissed payola and racketeering charges against record promoter Joseph Isgro, former CBS Records executive Raymond Anderson and Jeffrey S. Monka.

Isgro remains among the nation’s best-known independent record promoters. But sources say the field is increasingly dominated by a group of lesser-known entrepreneurs, some of whom have set up unusual arrangements to maintain arm’s-length relationships with stations.

In an apparently new promotional practice, one independent promoter in the Midwest allegedly has approached several radio stations offering to underwrite the cost of tickets, merchandise and other prizes offered to listeners during special radio station promotional contests, sources say.

The arrangement is mutually beneficial, according to these sources: The stations are spared the cost of furnishing the prize; meanwhile, the promoter believes that he doesn’t run the risk of being accused of payola because he isn’t paying the radio station to play any particular music.

Since 1960, it has been a federal crime to offer money or other inducements in exchange for broadcasting a specific record, if the payment is not disclosed. So-called payola is punishable by a maximum fine of $10,000 and one year in prison.

The chief of the enforcement division at the Federal Communications Commission, which regulates broadcasters, said he has not heard about anyone offering to underwrite the cost of a radio station contest. But the official, Charles W. Kelley, said the practice is “in a gray area . . . (and) could pose a problem.”

“Assuming that there’s no quid pro quo-- assuming that the station is not obligated to do something” for having prizes paid for by a promoter--”the station doesn’t have to mention” who paid for them and the practice poses no legal problem, Kelley said. “Then again,” he added rhetorically, “why would they provide a prize unless there was a quid pro quo? “

The opportunity to strike such arrangements with stations has broadened in recent months because radio stations, like record companies, have also begun warming to independent promoters.

“Two or three years ago there was a chill period where people were legitimately concerned about independent promotion,” said Thomas Hart Jr., a Washington lawyer who represents several East Coast pop and black music stations. “But relationships have improved as far as Washington, D.C., and other East Coast stations are concerned.”

Hart said most independent record promoters are now valued by radio station managers for their knowledge of music, although their influence has “diminished somewhat because of MTV” and other competing forms of music promotion.

The FCC’s Kelley said his agency has received few complaints about payola or other illegal practices related to record promotion in recent years. “We get maybe two or three complaints, which we pass on to the Justice Department,” he said.

Despite the improved climate for record promotion, however, some record companies and radio stations still maintain their distance from practitioners. Even promoters have remained low-key out of concern that their work remains controversial and could potentially draw scrutiny from authorities concerned about payola and other illegal business practices.

Of several major independent promoters contacted by The Times--Los Angeles-based Platinum Music, Jeff McClusky & Associates of Chicago and Jerry Brenner Promotions in Woburn, Mass.--none would talk on the record about their activities. Most record executives also declined to comment.

One executive, Marko Babineau, general manager of DGC Records, was reportedly even chastised for speaking about independent promoters at a public panel last September.

Babineau told a gathering of the National Assn. of Broadcasters in Boston: “The Isgro thing was a dark cloud over our industry. I think the one good thing that came out of all these trials and investigations was (that they) put a clamp on the business, and we came back to reality and said, ‘What are we doing here?’ ”

“Do we use independents?” Babineau asked. “Sure we use independents. Do they help us? Sure they help us. When they become a problem, I don’t use them.”

When contacted by The Times, Babineau declined to comment or elaborate on the panel discussion in Boston. “Just keep me out of it,” he said.

Babineau’s skittishness reflects the cautious mood in the industry regarding the recent invigoration of independent record promotion.

Annual expenditures to independent promoters have fallen to an estimated $15 million from the $40 million to $50 million that record companies were estimated to have spent in the mid-1980s, during the promoters’ heyday.

What’s more, sources say much of the record company promotion money is going though many more middlemen before it reaches the hands of independent promoters.

Ralph Tashjian, an independent record promoter who served a 60-day sentence in a government-run halfway house after pleading guilty to payola-related charges in May, 1989, has acknowledged that he is “indirectly paid” by nearly all of the major record labels to secure radio airplay for their music.

Tashjian would not disclose how the record label money reaches his hands.

But in sworn court testimony he has admitted to receiving money from CBS, Polygram and MCA records, among others.

Other independent promoters also allegedly receive indirect compensation from major record labels. Billboard magazine reported recently that a Detroit-based business executive oversees some independent record promoters on behalf of Warner Bros. Records.

The executive could not be reached, and Warner Bros. Records spokesman Bob Merlis declined to comment.

Although many record executives and promoters shun publicly discussing the revival of a business that only a few years ago was nearly moribund, they apparently share Tashjian’s view of how practitioners in the tarnished field should be treated.

When asked why record companies would hire a man like himself, who has admitted abusing alcohol and illegal drugs, and who has been convicted of payola, Tashjian said: “Everyone deserves a second chance.”