The office of NY Attorney General Eliot Spitzer has served subpoenas to four of RIAA's major record labels, (UMG, BMG, EMI, and WMG) focusing on their circumvention of the Federal Payola Law.
Broadcasters are prohibited from taking cash or anything of value in exchange for playing a specific song, unless they disclose the transaction to listeners. But in a practice that is common in the industry, independent promoters pay radio stations annual fees - often exceeding $100,000 - not, they say, to play specific songs, but to obtain advance copies of the stations' playlists. The promoters then bill record labels for each new song that is played; the total tab costs the record industry tens of millions of dollars each year. The major record labels have paid middlemen in this way for decades, and this laundering of the funds known as Payola has effectively hidden them.
This seems like timely justice, given the slew of lawsuits the RIAA has brought against their customers. I understand the law, but what do you do in a situation where the law and justice are mutually exclusive? Is this justice?
My hopes aren't high, but if Payola is stopped, we're likely to see hear a greater variety on the radio as well as more independent artists. I went on about this at length recently in a letter I wrote to the editors of several newspapers, which remains unprinted.
"Payola" is a contraction of the words "pay" and "Victrola" (LP record player), and entered the English language via the record business. The first court case involving payola was in 1960. On May 9, Alan Freed was indicted for accepting $2,500 which he claimed was a token of gratitude and did not affect airplay. He paid a small fine and was released. His career faltered and in 1965 he drank himself to death.
Before Alan Freed's indictment, payola was not illegal, however, but commercial bribery was. After the trial, the anti-payola statute was passed under which payola became a misdemeanor, penalty by up to $10,000 in fines and one year in prison.