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FCC settles payola probe for a song

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To the tune of just $12.5 million, the Federal Communications Commission on Friday wagged a white-gloved finger at four top radio broadcasters -- Clear Channel Communications Inc. (NYSE: CCU), CBS Radio (NYSE: CBS) (not CBS's best week), Entercom Communications Corp. (NYSE: ETM) and Citadel Broadcasting Corp. (NYSE: CDL) -- resolving a two-year payola investigation. "A breakthrough and a milestone" in the war on payola, FCC Commissioner Jonathan Adelstein called the settlement.

The FCC's longstanding regulations don't actually prohibit the pay-for-play system, they merely require its disclosure at the time of broadcast. Said Adelstein, "These rules are based on the basic principle that listeners and viewers are entitled to know who is seeking to persuade them so they can make up their own minds about the content."

Such a principle is hardly "basic," and ignorance of sponsorship gives no pass to indiscriminating radio listeners. Marketing pays our fare at every turn; we've become resigned to the notion that behind every song we hear, every TV image we view, every word we read (including these), a dollar sign usually lies quietly. The trick to Adelstein's basic principle is not in knowing who's paying the piper -- or who the piper's paying, in this case -- but in quieting one's cynicism enough to hear the music.

Adelstein's remarks turned several times to last month's curious agreement between the broadcasters and the American Association of Independent Music -- a cool table of small, successful record labels -- under which the pay-for-play scofflaws will devote a cumulative 4,200 hours of airtime to local and independent artists.

Why, in the age of podcasting and MySpace, when artists are closer than ever to their audience, is this arrangement necessary now? Perhaps home taping is killing the music industry, both large and small -- perhaps these mid-size labels need the affirmation of radio play to remain viable to emerging artists, when Lily Allen has proved that one can sow one's own success.

I would love to see this take off. In the last decade, I've found commercials and such ever more palatable than days past, as Madison Avenue's music tastes align with mine (i.e. if the Buzzcocks want to loan out singles to the AARP, Godspeed). Shameful that the radio industry hasn't evolved as well.

But the A2IM -- whose announcement of the agreement cited independent labels' 30% market share (impressive when one considers their counterparts' success in, for example, the auto industry) -- seems to put undue faith in this experiment. Clear Channel, for example, owns around 1,200 radio stations nationwide. It's committed just 1,600 hours of programming to this agreement -- in theory it could knock out its commitment in an hour and a half. But even if a local FM station devoted 30 compelled minutes each week to local and small-label artists, the jockeying for a spin could get brutal, particularly if such a show succeeds. Who's to say payola wouldn't still play a role?
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Last updated: July 09, 2009: 04:13 PM

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