Warner Payola: Be Warned

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Here's some free advice for big media companies: Don't routinely break the rules in your search for ever bigger profits.

The search is OK. But casually thumbing your nose at the law is not the way to show that you deserve the deregulation you have been given or the new freedoms you seek. And that's a message for everyone, not just the companies that have been caught.

Sadly, routinely breaking—make that smashing and trashing—the rules is what Warner Music has conceded was standard operating procedure in the music-promotion business.

“Payola” is a word redolent of another era, but clearly, it is very much still at work in the modern media world. Radio airplay can still be bought, and apparently TV is ripe for sleaze, too: Warner Music swore off payola in both media, according to the agreement the company signed last week in settling with New York State Attorney General Eliot Spitzer. That is the same guy who settled similar charges with music giant BMG in July.

While Warner did not have to concede any of the ugly details of the cases against it (ditto for BMG), it might as well have. The case is damning.

And the fault is not simply with Warner and the cash and goodies it ponied up to secure sufficient spins of its CDs, or the attempts to boost playlists by faking listener requests. The radio stations that started treating payola as an entitlement—and began asking the company to pay off some bills or cover personal travel—are equally blameworthy. Warner employees expected to do whatever it took to meet their “spin” quotas; station employees grew used to their free TVs and iPods and front-row tickets.

The FCC is conducting its own investigation into the muck that Warner and BMG got to avoid revealing via their consent decrees, so the companies—and the stations and executives named in the document—are far from out of the woods.

Other companies could come under the government microscope, too, for a host of questionable practices, from video news releases to subtle on-air TV plugs to who knows what else, if the FCC expands its investigation into all forms of pay for play. Certainly, FCC Commissioner Jonathan Adelstein will continue to push the issue.

Those who forget history, or were never taught it, are destined to repeat it. As the resident institutional memory of the industry, B&C would like to offer this public-service announcement: Careers and lives were ruined by radio and TV payola and plugola scandals in the 1950s, either by prosecutions or by companies cleaning house to avoid them.

Warner pledged itself last week to “defining a new, higher standard in radio promotion.” The standard could not have gotten much lower.

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