Middlemen Put Price on Airplay

Los Angeles rock band Smackradio hasn’t attracted much interest from major record labels or big-city radio stations. So why did KMBY-FM, a Monterey, Calif., rock station, play the group’s song this fall more than hits by such popular acts as Staind and Sum 41?

The band and the station share a common link: Joe Grossman.

Grossman is an independent record promoter who spends most of his time trying to get songs played on certain radio stations for major record labels. Grossman has a pact with the radio station under which he pays KMBY an estimated $200,000 in annual fees in exchange for advance notice of songs added to the station’s weekly playlist.

But Grossman also is developing his own music acts. He owns a stake in Smackradio’s album, released by tiny All Night Bakery Records.

From Aug. 30 to Oct. 23, Mapleton Communications’ KMBY was the only station among 1,100 monitored by industry tracking service Broadcast Data Systems to play the band’s single “Rise.” Even after Smackradio was touted in an industry trade magazine Oct. 5, only one other station in the national sample played the song. And that Anaheim station also receives payments from Grossman.

Terry Gillingham, KMBY’s general manager, said the station’s financial ties to Grossman did not induce it to play the Smackradio song.

“The record was played on its own merit,” Gillingham said.

It is not illegal for a radio station to take money in exchange for playing a specific song as long as the payment is disclosed to the public. But record companies want listeners to believe stations play their tunes because the songs are hip, not because they are paid ads, so the companies go to great lengths to avoid having to use such on-air sponsorship tags.

And this is where Grossman and other independent consultants fit in. Each year, thousands of new songs are released by record labels, but only 250 or so tunes are added per station.

Promoters sign deals with radio stations enabling them to pitch songs to programmers, then bill record labels up to $4,000 a song when it is added to a station’s playlist. In all, these promotions cost the music industry an estimated $100 million a year. Promoters sidestep the federal anti-payola law by paying broadcasters annual fees they say are not tied to airplay of specific songs.

The promotion business has gotten even tougher since the mid-’90s, when President Clinton signed legislation to deregulate the radio industry. With only a handful of major radio companies left, it is even harder to gain access and get air time for new music acts.

To survive, some promoters, including Grossman, have been generating additional revenue by branching into the record labels’ territory.

Others take on individual acts as management clients, which allows them to collect up to 20% of the band’s revenue.

Breaking into the label business is simple: A promoter identifies a young band and signs it to a contract. If the band gets some airplay or sells a smattering of records, the promoter can sell his stake to a bigger record label for a fee or a percentage of the act’s future sales.

Grossman cut such a deal this fall with Universal Records, a division of Vivendi Universal’s Universal Music Group. Universal signed pop singer Amanda Perez, formerly with Grossman’s label, to a development deal after noticing that certain radio stations, including Stockton station KWIN-FM, began playing her music this summer, according to label executives.

KWIN is another station Grossman pays for playlist information. In August, KWIN was the first radio station to play Perez’s song “Never” and during the next five weeks played the tune 138 times before it was picked up by any other station tracked by Mediabase, which monitors 1,100 broadcasters nationwide. A spokeswoman said the station played the song on its merits.

Grossman is not the only independent music promoter working both for record labels and his own acts.

Bill McGathy, one of a handful of promoters to work with the nation’s biggest broadcaster, Clear Channel Communications Inc., is in talks to create a multimillion-dollar joint venture label deal with Universal Music Group’s Island Def Jam division.

McGathy also manages such rising rock acts as 3 Doors Down and Puddle of Mudd.

McGathy declined to comment.

Some record executives say that paying independent promoters who also are pushing their own acts is a waste of money.

“The record labels are giving clout to the people who are now setting up to compete with them,” said music attorney Doug Mark, who represents pop singer Christina Aguilera and independent label Epitaph Records.

Grossman disagreed.

“I don’t believe there’s a conflict that everybody doesn’t already know about,” he said. “Many times, acts are broken on the local level by people like me. If a record being developed by me or an independent label proves itself to be one of hit potential, we look for the major labels to climb aboard” and buy the rights to distribute that record nationally. “I’m not trying to compete with the majors.”

Grossman broke into the promotion field at Mercury Records in the late 1970s. He left to work for an independent consultant for two years before setting up his own shop.

With big radio broadcasters such as Clear Channel locked up by other promoters, Grossman specializes in pitching songs to mom-and-pop stations in mid-size to small markets, from Salt Lake City to Johnson City, Tenn.

His small firm operates across from a yoga studio on the second floor of an Encino shopping center. The office walls are decorated with gold and platinum records, but a threadbare carpet and cramped cubicles give his outfit a shoestring feel. Still, the business has paid off for Grossman, who lives in a pricey Agoura Hills home.

Grossman and his staff work the phones incessantly, hawking as many as eight new songs a week per station.

Record labels often offer Grossman bonuses for getting a specific song added to a certain number of stations’ playlists.

His firm offers radio stations annual fees as high as $200,000--for a small station, that may account for its entire annual promotion budget--to pay for giveaway contests, vacations, concerts and other promotions.

In some cases, Grossman structures his payments to stations based on how they add songs to their playlists.

For example, Grossman has a deal with four radio stations owned by Princeton, N.J.-based Nassau Broadcasting Partners. The Nassau stations will receive 75% of the sum Grossman bills his record-company clients when these stations add songs, with a guaranteed annual minimum of about $200,000, according to a copy of the contract obtained by The Times. In exchange for the fee, the stations give Grossman a few hours’ advance notice of which songs they plan to add to their weekly rotation.

Peter Hart, an analyst with media watchdog group Fairness and Accuracy in Reporting, said the rise of the independent promoter created “a way for labels and stations to deny the traditional payola relationship.”

When promoters own labels or manage artists, “it might make that relationship more clear. This [payment] is essentially [from] label to station, without a middleman,” Hart said. “You would never want to say unknown acts shouldn’t have access to the airwaves. But the reason why they’re elevated to major airplay will strike listeners as peculiar.”

Proponents say any conflicts of interest involving promoters marketing their own labels will be negated because ratings dictate what songs receive airplay.

“The radio station ultimately wins not by the amount of money they take from the indies [promoters] but from their ratings. The station’s job is to play the hits,” said Island Def Jam President Lyor Cohen.

According to airplay records, KMBY began playing Smackradio’s song Aug. 30. During the next eight weeks, the station played the song 156 times, more than hits by such acts as rock bands Staind and Sum 41 that were dominating alternative-rock stations elsewhere. At its peak, Smackradio’s song was played about 25 times a week, among the top 20 at the station.

Gillingham, the station’s general manager, said the song generated a good response from listeners, but KMBY dropped the song Oct. 23 after “it sort of lived out its life.”

Smackradio was grateful to get its music on the air.

“I know we’ve been accepted by the radio audience and by [radio] guys that hear a thousand different new songs a year,” said musician Chris Nash, who with Jon Hayes are the key members of the band. “For one of them to say, ‘I love this album,’ that’s exciting to me.”

Nash said Grossman played slide guitar on some of Smackradio’s tracks. Grossman will get a “deferred payment” for his Smackradio promotion services by taking a percentage of the album’s earnings, Nash said, adding, “It shows me he really believes in it.”

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To hear a snippet of “Rise” by L.A. rock band Smackradio, go to www.latimes.com/smackradio.