The most powerful independent promoter in the music business, Jeff McClusky, pays $1 million a year to Cumulus Broadcasting.
For his money, McClusky says, he gets exclusive access to the radio station chain’s key “decision makers” to pitch new songs from his music company clients so they get played on Cumulus stations in places such as Savannah, Ga.; Kalamazoo, Mich.; and Amarillo, Texas.
But Cumulus says that’s not true. All McClusky gets exclusively, it says, is a few hours’ advance notice of which songs the stations will add to their weekly playlists.
The two diametrically opposed versions offered by McClusky and Cumulus get to the heart of an important question now being asked in the record industry: Does McClusky really have as much power as he’s reputed to have to influence radio programming?
Or, in the case of Cumulus, is he just cashing in on the advance playlist information, using it to show record labels he successfully promoted their songs when the tunes would have ended up on the radio anyway?
Record company executives, a notoriously insecure group, have long operated under the assumption that independent promoters can influence a song’s success, either by getting it added to a station’s playlist or, when companies aren’t clients, keeping songs off the air. Publicly owned music conglomerates fork over tens of millions of dollars annually to independent promoters, radio tip sheets and music-rating competitions with the blind faith that those groups have wide-ranging influence.
But in the murky world of music promotion, no one can say for sure just how effective promoters such as McClusky are, raising questions as to whether the music companies are throwing their shareholders’ money away.
The issue is important because McClusky and other independent promoters charge record companies from $300 to $1,000 for each song they promote if a station ends up adding it to its playlist. McClusky, whose Chicago-based firm has dominated the independent promotion market since 1989, built his business by negotiating a string of smaller but similar promotional pacts with nearly 100 individual radio stations before signing his unprecedented $1-million deal with Cumulus.
The deal with Cumulus raised eyebrows in radio and record industry circles. It also got the attention of Federal Communications Commission officials, who are trying to determine whether such deals skirt federal payola laws that prohibit radio stations from accepting money to play songs without disclosing the payment to listeners. Cumulus and McClusky revised their contract this month after a meeting with FCC officials.
Some record executives privately question whether McClusky has the power to influence which songs Cumulus chooses to add each week to the 35 of its 210 radio stations covered under the agreement. A few labels have even refused to pay McClusky for some songs his firm promoted that ended up being added to playlists at several Cumulus stations, sources said.
These days, radio programmers typically add only those songs to their playlists that they believe will boost ratings and ultimately bolster advertising revenue. Few stations would run the risk of adding a song or keeping it in the playlist rotation if they thought the song would alienate the key demographic group in their audience.
Under Cumulus’ arrangement with McClusky, the Milwaukee-based broadcast group is not obligated to play any record McClusky promotes. In fact, the deal includes a provision specifically stating that Cumulus has its own criteria for determining record selection and additions to its playlists, sources familiar with the contract said.
Nor does the agreement bar Cumulus’ programming chief from accepting airplay advice from McClusky’s competitors.
“According to our contract, Jeff McClusky does not have the exclusive right to pitch us songs,” said John Dickey, vice president and director of programming at Cumulus.
He refused to discuss whether the broadcast group has ever added a specific song at McClusky’s urging. Asked what impact McClusky had on programming decisions at Cumulus, Dickey responded by reading a statement prepared by lawyers representing the broadcast group:
“We are proud to have appointed Jeff McClusky & Associates as our exclusive liaison to the music industry and we rely heavily on his advice,” Dickey said. “We value Jeff’s insights and experience in helping us to consistently provide a superior product for our listeners.”
Because of a confidentiality clause in the contract, McClusky declined comment. Two months ago, the independent promoter explained his promotional activities in this way: “You can call it influence or you can call it perceived influence. Record companies pay me for three things: access, information and the ear of the program director.”
In January, McClusky told The Times that under the deal, Cumulus had agreed to provide him exclusive access to the top brass at the broadcast chain and its Stratford Research arm. While exclusivity may not be spelled out in the contract, industry sources say McClusky’s firm is the only promotion company that meets regularly each week with key executives at Stratford, the consulting firm hired by Cumulus to help compile playlist information.
In The Times article, a Cumulus official said he believed the deal generated a new revenue stream for the corporation without crossing the line into illegality. Critics, however, questioned whether the $1-million pact may have been designed to get around the payola laws.
After publication of the article, Richard Weening, executive chairman of parent Cumulus Media Inc., contacted the FCC’s enforcement division and requested a meeting. Lawyers from Cumulus met with agency officials in February and provided the FCC with a copy of the contract for review.
The FCC raised concerns about an incentive provision in the contract, which said that the more money McClusky was able to bill his clients for songs added to Cumulus stations, the more money he would have to pay Cumulus. Officials suggested that Cumulus modify the provision to resolve “the possibility of potential pay-for-play interpretation,” FCC officials said.
Cumulus and McClusky then instructed their lawyers to revise the language in the contract to state that the broadcast group would be paid more money from McClusky only if new stations were added under the deal, sources said. Cumulus then submitted the altered contract for review to the FCC, which approved it.
Last week, at the urging of Cumulus’ top brass, the FCC released a statement saying the broadcast group was not under investigation for payola. An FCC official said the agency issued the statement to address several erroneous reports published in music industry trade magazines that suggested Cumulus was the target of an FCC probe.
Meanwhile, the FCC continues to look into recent promotional deals created by radio giants Chancellor Media and Emmis Communications. The move follows a series of articles in The Times raising questions about whether broadcast groups may have been trying to use their leverage to extract deals that could affect the airplay of songs at stations owned by the chains.
The FCC is still trying to determine whether the matter merits a formal investigation, sources said.
“The allegations about Chancellor and Emmis are under review,” said Charles Kelly, chief of enforcement in the agency’s mass media bureau.