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Clear Channel Drops Pay-for-Play Deals

4/13/2003 08:00:00 PM Eastern

The country's largest radio group will drop the longstanding practice of accepting payments for research from independent promoters also seeking airplay for new songs.

The decision followed months of criticism from Capitol Hill, with legislators questioning whether the deals were simply a new take on the old, and illegal, payola schemes of the 1950s. Payola was criticized for making it harder for new artists to win radio play if they lacked the big-bucks backing of major labels. The same criticism has been leveled at the promoter contracts.

Although Clear Channel denied crossing any ethical boundaries, company executives conceded that pressure from lawmakers and public perception persuaded them not to renew promotion contracts. "We now recognize these relationships may appear to be something they're not," said Clear Channel President and COO Mark Mays. "We have zero tolerance for 'pay for play' but want to avoid even the suggestion that such a practice takes place within our company."

Clear Channel is the second major radio group to renounce the payments. Cox Radio stopped accepting them in October.

Independent promoters have been paying some stations hundreds of thousands of dollars a year, often with cash provided by record labels. For major station groups like Clear Channel, the fees added millions to the bottom line, but record companies have begun to resent and resist the practice.

Independent middlemen seem an anachronism in today's increasingly consolidated radio market. With conglomerates moving programming duties to regional offices, promoters are less able to capitalize on personal relationships with station executives. As a consequence, record companies increasingly complain that the practice is a form of extortion that forces them to buy their artists onto the airwaves.

Clear Channel has insisted that promoters were paying for proprietary market research, not to win placement of songs.

Company officials said the decision will impact roughly a third of its 1,200 outlets. Because promoters seek airplay only for new songs, they make payments only to Top 40 and other contemporary-formatted stations rather than talk, classic rock or oldies. At Cox, only 14 of the group's 79 stations held contracts with promoters.

While saying the company was moving in the right direction, Senate Commerce Committee Chairman John McCain (R-Ariz.) said questions regarding other Clear Channel practices remain, such as allegations that the 1,200-station group and concert-promotion company often refuses to air music by artists signed with competing promoters. "While not responsive to all concerns raised about Clear Channel," he said, "[dropping promoter deals] appears to be an important step in addressing artists' concerns about pay for play."

The company's decision "is a step in the right direction," said Sen. Russ Feingold (D-Wis.), who has introduced legislation to ban pay for play. Nevertheless, he said Congress should pass legislation banning pay for play anyway.

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