Radio Conglomerates Skirt Payola Laws, Critics Say

Pop singer Bryan Adams’ new song, “On a Day Like Today,” hit the charts quickly this fall and disappeared almost as fast--except at four big-city radio stations.

All four happen to be owned by the same broadcast group, Chancellor Media, which sold Adams’ label, A&M; Records, a $237,000 marketing campaign built around a series of commercials and contests. All four also happen to be sponsoring charity concerts this week at which Adams has agreed to perform without pay.

The arrangement between A&M; and Chancellor, one of the nation’s largest broadcasting chains, is raising new questions within the radio and recording industries over whether what A&M; really got for its money is airplay. That’s important because such an arrangement would be illegal.

“It’s payola under another name,” said Ralph Nader, a critic of consolidation in the broadcast industry, referring to illicit payments to radio stations for airplay. “The Federal Communications Commission should investigate what’s going on here.”

Chancellor, which has created similar marketing campaigns this year for other recording artists, says it charges music companies to air commercials on its radio stations--not songs.

“This is not pay for play. This is pay for marketing,” said John Madison, senior vice president of operations at Chancellor Media. “We do not guarantee airplay for a record.”

The arrangement reflects a fundamental shift of power in the music business. In the past, powerful record companies were accused of bribing deejays operating at small, independent radio stations to influence what songs were played. Payola was outlawed in the 1960s.

Industry mergers have moved the balance of power to radio groups, which today have the clout to launch a song simultaneously in scores of markets across the country--or consign it to oblivion.

New Leverage for Radio Groups

Some conglomerates are using their newfound leverage to extract deals from record companies and artists that appear to skirt payola laws.

In one case, a document obtained by The Times shows that Chicago radio station Q101, owned by Emmis Communications Corp., explicitly promises radio airplay as part of a promotional package. “For $3,500 (to Q101) you will receive: 30 guaranteed spins the first week . . . 20 guaranteed spins the second week . . . .”

Emmis Chairman Jeff Smulyan said the campaign--which includes a mention of a local retail outlet where the record can be purchased--applies only to songs already added to the station’s playlist.

“What we’re saying is look, if we are going to add a record anyway then, sure, the station can go to the record company and approach the label to participate in the program,” said Smulyan, whose Indianapolis-based radio group has 16 stations. “I don’t want to mislead anybody that we are only going to play that record if you give us money. That is absolutely, fanatically not the case.”

The radio groups recognize that airplay is record companies’ most powerful promotional tool. Many people buy records based solely on what they hear on the radio.

Federal law prohibits radio stations from taking money or anything of value in exchange for playing songs without disclosing the payment to listeners.

“It is certainly problematic if the station took money or something valuable--like an artist’s performance--in exchange for airplay and didn’t disclose that fact to their audience,” said Charles Kelly, chief of enforcement in the mass media bureau of the Federal Communications Commission. “If a station is caught violating the law, they could be hit with significant fines.”

Adams, who has sold more than 50 million albums and typically earns about $100,000 to appear in concert, is not the first act to be asked to perform for free at a radio charity concert. Dozens of acts are being pressured by radio stations across the nation to perform without pay at hundreds of benefit shows, which, while providing income for local charities, also bolster ratings and advertising revenue for broadcasters.

Artist managers say the concert events are turning into instruments of coercion used by radio broadcasters against musicians. They say many stations refuse to air bands’ latest releases unless they agree to perform in concert. If a band does consent to play at one station’s event, they face retaliation from competing broadcasters, who often pull the act’s song from their own playlists, sources say.

Such arrangements are likely to become even more common as radio industry mergers force record companies and marketers to deal with fewer, more powerful radio groups. The joint marketing of airplay, promotions and concerts is an outgrowth of a relentless consolidation in the radio industry since 1996.

In its omnibus telecommunications act that year, Congress eliminated most restrictions on broadcast mergers. Over the next 12 months more than 4,000 of the country’s 11,000 radio stations changed hands and more than 1,000 corporate mergers were proposed in broadcasting.

This produced such corporate behemoths as Dallas-based Chancellor Media, with 463 stations, and Clear Channel Communications of San Antonio, which will have more than 450 stations next year, following its proposed merger with Jacor Communications.

By acquiring several stations in numerous local markets, the leading groups are able to combine local marketing dominance with nationwide reach. That gives them a powerful position from which to negotiate promotional deals with even the most successful record labels.

“What we offer record companies is the chance to create partnerships that allow them to roll out a record across the entire nation, instead of trying to work a song station by station,” said Chancellor’s Madison. “Consolidation has opened up the door on tremendous opportunities at a national level, allowing a group like ours to tap into a number of new revenue streams.”

Indeed, the huge conglomerates created by the merger wave have voracious appetites--in part because merging is an expensive process that often leaves the surviving company saddled with debt. So it is not surprising that the big players are exploring the money-raising potential of live concerts and other promotional events.

Jeff Cohen, founder of the New York-based media watchdog FAIR, contends that consolidation is bad for music fans. “The real victim in all of this is the listener--because they haven’t got a clue as to how the airwaves, which they own and license to these conglomerates, are being manipulated to increase revenue,” he said. “Until recently, there were lots of independent gatekeepers out there, which helped keep the market open to new music. But now there are only a few gatekeepers, and they stand outside the gate with a tin cup.”

Executives at Chancellor--which this year has cut deals to promote such acts as Shania Twain, Billy Ray Cyrus, Third Eye Blind and Busta Rhymes--insist that their “nontraditional packaging” does not cross the line into illegality. They say they particularly avoid taking money directly for airplay, or “spins.”

Yet Chancellor’s arrangement with Adams’ label illustrates the difficulty of telling when the line has been crossed.

Chancellor charged A&M; a total of $237,000 for a marketing campaign to promote Adams’ single on 10 of its stations in six major markets, sources said. The campaign included contest giveaways and a commitment from each station to air a 60-second commercial 96 times over a two-week period, as well as a series of “teaser’ announcements to promote the singer’s appearance at the four Chancellor charity concerts.

As part of the deal, Adams was required to record a voice-over for the commercials at a Chancellor studio, sit for promotional interviews on several Chancellor stations and perform for free at the radio benefits. In addition, A&M; committed to spend an estimated $250,000 to transport Adams, his band and road crew to the charity events, sources said.

Adams could not be reached for comment, but the pop star apparently was not entirely happy with the arrangement. Some observers noted that the number of “spins” his record received from the four stations, while significant, was well below the level necessary to generate a hit-making buzz.

At one point, Adams flatly refused to appear in concert but finally agreed to perform this week at the four charity events, Madison said, in Detroit, Orlando, Fla., Philadelphia and Boston--where he is scheduled to perform tonight at WXKS-FM’s Jingle Ball benefit.

Both Chancellor and A&M; say the contract included no guarantee of airplay. But by agreeing to perform at the concerts, which benefit Chancellor, Adams effectively assured airplay.

A review of reports by Broadcast Data Systems, a firm that electronically samples airplay from hundreds of the top radio stations across the nation, indicates that the Chancellor stations where Adams is scheduled to perform this week were the only ones that continued to give “On a Day Like Today” substantial airplay after stations in the rest of the country dropped it.

Adams’ song received substantial airplay on more than four dozen mainstream and adult Top 40 stations following its release in late September, but within six weeks most broadcasters had stopped playing the song.

Expanding Presence in Concert Business

“It appears now that the only stations across the United States still playing the Bryan Adams song in significant rotation are Chancellor-owned stations,” said Jon Guynn, publisher of Airplay Monitor, a weekly trade publication that interprets statistics gathered by Broadcast Data Systems.

The four stations are WXYR-FM in Philadelphia, which gave the song 20 plays in the seven days starting Dec. 3; WKQI-FM in Detroit, 23 plays; WXXL-FM in Orlando, 15 plays; and WXKS-FM in Boston, 10 plays.

The song was played a total of 13 times on the other 182 stations surveyed during the period.

Chancellor’s Madison denies that airplay of Adams’ song at the stations was tied to its $237,000 marketing campaign with A&M.;

“Every station that participated in this program would have played the song anyway,” he said. “They made the Bryan Adams promotion the thrust of their fall book campaign, which is the big sweeps period in radio. These stations continue to support the song as part of the marketing campaign and because they are promoting Bryan’s performance at their concerts. It’s as simple as that.”

One way Chancellor intends to generate more income, Madison says, is by expanding its presence in the concert business.

Until now, Chancellor stations have donated proceeds from their concerts to charity, relying on the events only to bolster ratings, which in turn helps generate additional advertising income. But Madison says the radio group is considering putting on a series of for-profit radio shows. Chancellor will also soon launch its own record label and sell music on the Internet, Madison says.

“We intend to turn radio show concerts into a profit center and we also plan to release our own compilation records,” Madison said. “In the next year or so, there is a very good chance that we will begin signing artists to our own record label.

“We have this giant distribution system in place. It only makes sense that we would consider expanding into the record business. Having our own record label would give us more control over the content we pump through the distribution channel.”

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Pay for Play?

Bryan Adams’ “On a Day Like Today” got substantial airplay following its release in late September, but within six weeks most stations had stopped playing the song--except four Chancellor stations sponsoring charity concerts this week where the singer agreed to perform without pay:

Plays per week by other major pop stations

Plays by 4 Chancellor stations

Source: Broadcast Data Systems