Radio Exec’s Claims of Payola Draw Fire

A top executive of Radio One Inc., the nation’s largest broadcaster of black music, is roiling the industry with allegations of corruption in the music promotion business while generating criticisms of her own company’s conduct.

Chief Operating Officer Mary Catherine Sneed said the music business is rife with payoffs to radio stations to guarantee airplay of songs. She alleged that some money is illegally being kicked back to record label executives.

“The way it works now at urban radio is that [middlemen] give cash under the table to the program director at the station and then kick back money to the vice president of promotion at the record label,” Sneed said. “It’s not legal. We can’t operate like that. Radio One intends to clean up this mess.”

Her comments are the first from a ranking radio executive alleging widespread payola in the urban, or black, radio world. But her proposed solution is drawing fire.

She is being accused by critics of setting up a system that requires record labels to pay someone else--a newly created company that Sneed has hired as the gatekeeper for songs played on Radio One’s two dozen stations, including KKBT-FM (100.3) “The Beat” in Los Angeles.

Rival radio chains Clear Channel Communications Inc. and Cumulus Media Group have been criticized for similar arrangements that allow the companies to tap into millions of dollars of record-label promotional funds.

The record companies deny any knowledge of illegal payments to stations or kickbacks to their employees.

“These are false, trumped-up charges,” said Hilary Rosen, chief executive of the Recording Industry Assn. of America, which represents the nation’s five largest music corporations.

“Radio One is trying to use its leverage to get additional money from the record companies to put to their bottom line. We intend to

Already, some in government are primed for action.

“No matter how it is accomplished, payola is illegal,” said Rep. John Conyers Jr. (D-Mich.), who is pushing for House Judiciary Committee hearings on improper station practices. “When radio stations, so-called independent promoters, or their employees demand money from record companies and recording artists for airplay, the payments are illegal unless disclosed, no matter how the transactions are structured.”

Rep. Howard L. Berman (D-Mission Hills) said he is adding Radio One to the list of radio conglomerates, including Clear Channel, that he wants investigated by the FCC and the Justice Department.

“The problem is that it’s not about what songs listeners want to hear any more. It’s about who is willing to pay us [the radio conglomerates] and help our bottom line,” Berman said.

Federal law prohibits radio stations from accepting money for playing songs without disclosing that information to listeners.

During the last three years, the Justice Department has reviewed complaints about cash payments at urban radio stations as part of a lengthy probe into corruption in the radio business.

That probe resulted in payola-related tax convictions against several label and radio executives in the Latin-music field, but none were brought in the urban-music field.

Richard Robinson, the assistant U.S. attorney in Los Angeles who ran the federal payola probe, refused to comment on charges raised this week by Sneed or on whether the government intended to investigate Radio One.

“Our office has successfully prosecuted charges involving secret cash payments made to Latin-music program directors in the past, and we continue to be interested in investigating any such illegal payments in other music markets as well,” Robinson said.

Sneed, a lawyer who has been with Radio One for nearly a decade, said she has no specific proof of illegalities at her own company, although she acknowledged that such practices are endemic to urban radio stations across the nation.

“Everybody thinks there is no paper trail to prove this stuff, but there is,” Sneed said.

In the urban-music world, Sneed and other industry sources said, record labels have long attempted to insulate themselves from allegations of payola by hiring independent contractors, called quarterbacks.

To further protect themselves, record labels require the quarterbacks to sign declarations vowing that their operations do not violate payola laws.

Unlike independent consultants who provide annual promotion budgets to pop and rock stations, several urban-music quarterbacks are believed to make direct cash payments to radio programmers to play specific songs, say Sneed and other sources.

Some quarterbacks kick back a slice of that money to the lower-level record-label employees who hire them, Sneed and others allege.

None of that money--ranging from $60,000 to $200,000--goes into the station’s corporate coffers, a situation Sneed is trying to change.

On Feb. 7, Radio One notified record labels that it signed a pact with Ventura Media Group, granting the newly launched New Jersey firm the exclusive right to pitch songs to program directors at its top 25 urban stations.

Under the arrangement, Ventura pays a fixed annual fee to each Radio One station. Ventura gets its money by charging labels an estimated $2,500 every time a programmer adds a song to a station playlist.

“I’ve spent my whole life staying away from independent promoters, but at this point what we are doing is like standard operating procedure approved by the FCC,” Sneed said.

“We’ve had our attorneys and FCC attorneys look the contracts over. For us, this is just another revenue stream. We’re a big public company and we owe it to our stockholders,” she said. “We’d be crazy not to try to tap into this. Everybody’s doing it: Cumulus, Clear Channel, all the big groups.”

The arrangements being pioneered by Radio One and other giant broadcast chains reflect a fundamental shift of control 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.

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.

Music executives privately allege that Radio One has threatened to withhold airplay from labels that do not pay Ventura Media Group, its new agent. Statistics compiled by Broadcast Data Systems indicate that playlists at several Radio One stations appear to have been frozen after the broadcaster issued its decree on Feb. 7.

Sneed denied that Radio One had refused to add songs to playlists but acknowledged that the company had “backed off playing some new music” because of the reorganization of an in-house research department. Sneed’s explanation of why some songs were not being aired was first reported in Friday’s edition of R&B; Airplay Monitor magazine.

“We’ve been having a terrible time trying to get the record labels to accept the fact that we’re finally going to change all this at urban radio,” Sneed told The Times. “Somebody at some label is going to get cut out of some secret transaction when Radio One starts doing things the right way.”

Sneed, scheduled to meet today with several New York label executives, rejected suggestions that Ventura Media Group was a front to funnel record-label payments to her broadcast chain.

Sneed said Radio One had no hidden connection to Ventura and insisted that the broadcaster plays no role in dictating what Ventura charges labels. She said the broadcaster had picked the company because its founder, former record-label promoter Jodi Williams, seemed ethical and made a good pitch--even though she has no independent promotion experience.

Williams declined repeated requests to be interviewed.

According to Sneed, Radio One would rather ride out the controversy surrounding its new venture than cave in to the alternative: “An illegal quarterbacking system” that she says has plagued urban radio for decades.

“The quarterback system is certainly not one that the FCC has sanctioned,” Sneed said. “It’s full of hidden payments. And there are other things involved too. The basic old payola stuff: sex, drugs, etc. But primarily what we’re talking about here is cash under the table.”