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The FCC's new 'payola' rules

Four radio giants have agreed to pay the United States government a total $12.5 million dollars to settle an Federal Communications Commission investigation into their “payola” practices—the undisclosed play of music in exchange for cash, gifts, or favors.

The FCC says that CBS radio, Entercom Communications, Clear Channel Communications, and Citadel Broadcasting will agree to:

  • prohibit airplay for cash and goods “except under specified conditions”
  • put limits on gifts from big broadcasters to company stations
  • appoint officers who will monitor compliance with the agreement
  • train personnel on how to avoid violations of the new rules

The Consent Agreement, announced on Friday, April 13th, does allow the companies the following leeway:

  • Stations may ask for and receive a wide variety of on air giveaway items of value, such as CDs or airplane tickets, as long as they broadcast the value of the prizes and their donor.
  • Station personnel can solicit and receive up to 20 copies of a CD “to familiarize Company employees with recordings,” as well as various kinds of swag—from T-shirts to coffee mugs—as long as the value of each item does not go above $25 and the materials are used at company parties.
  • Companies can ask for a receive up to 20 tickets for a single day concert or industry event “to be used by Company employees to familiarize them with the performing Artists.”
  • Station personnel can receive “modest personal gifts for life event, professional achievement and holidays, or gifts commemorating achievement by Company or a Record Label,” as long as the value of the gift does not exceed $150, as far as the employee can tell.
  • Station employees can receive meals and entertainment at a single event up to $150 in value “provided that the event is attended by a Record Label employee and has a legitimate business purpose, and any payment is consistent with the value of the meal or entertainment.”
  • Company stations can receive up to 20 stipends for “reasonable travel and lodging expenses” to industry events, as long as the compliance officer approves of the gift.
  • Companies must maintain a database of gifts and favors received by its stations.

FCC Chair Kevin Martin praised the agreement with CBS, Entercom, Clear Channel, and Citadel.

“Through this strong enforcement action that we take today, the Commission has provided clear guidance to licensees and sent a strong message that the practice of payola must stop for good,” Martin said in a public statement.

Martin’s fellow Commissioner Michael Copps, a Democrat, blamed media consolidation for the recent rise in payola practices.

“The top ten radio conglomerates now control 2/3 of the total U.S. radio audience,” Copps stated. “As a result, the payola kingmakers must grease only a relative handful of palms in order to get their anointed commercial artists on the air. This makes an ugly situation uglier.”


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