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Streamlining the Hit-Making Process

Clear Channel wants to cut the indies out of the deal

When most people think of payola, they think of a grizzled disc jockey (imagine WKRP's Dr. Johnny Fever) getting bribed to play a tune with the gift of a stripper and/or a vial of cocaine. But WKRP has been bought up by a media group, and Johnny Fever's day is long gone.

By now, it's common knowledge that virtually no commercial radio disc jockeys have anything to do with the songs played on their stations. What few listeners realize is that program directors, too, are for the most part out of the loop. With radio deregulation in the 1990s, media has become more and more concentrated, and what gets on the radio across America is decided by fewer and fewer people, with more and more cash involved and with less thought than ever given to the music's merit.

Here, in a nutshell, is how a song gets on a commercial rock radio station: The label releases a single. To get that single on the radio the labels must deal with middlemen called independent record promoters, or indies. Indies pay the radio stations in their market murky "promotional payments" of six-figure annual sums, which in the course of a year they make back many times over from the labels for services rendered. In addition to these promotional payments, the indies pay illicit fees to the stations in the form of free vacations and untraceable American Express gift certificates.

Clear Channel Communications, the San Antonio-based radio, billboard and concert-promotion behemoth, now wants to cut the indies out of the picture. Clear Channel owns some 1,200 stations nationwide. In Houston, the Buzz, Rock 101, Sunny 99, Mix 96.5 and Classic Rock 93.7 are all Clear Channel stations. As they declare on their Web site, Clear Channel isradio. (Emphasis theirs.)

Tired of seeing the middleman rake in what they see as rightfully theirs, Clear Channel wants the major labels to pay the company directly for playing their songs on its stations. Clear Channel chief executive Randy Michaels acknowledged in the Los Angeles Times earlier this year that this scheme smacks of payola, which is somewhat illegal but not as much as one might think. Paying a radio station to play a song is illegal only if the deal is undisclosed.

In the days of truly competitive radio, most stations would have avoided such an arrangement because of the loss of credibility it brings. Radio stations, then and now, would have us believe that they carefully consider every CD that arrives in the mail, cherrypicking only the very finest for our listening pleasure.

Absent competition, Clear Channel is toying with the idea of having late-night programming directly paid for by the record industry, sponsorship disclaimers and all. As Michaels told the L.A. Times, "The argument would go like this: Would you rather hear a couple used-car commercials and carpet store ads in a row or a song that the record companies believe has hit potential?" (Gee, Randy, I dunno, depends on the car commercial. That 7777 Katy Freeway jingle is catchier than a lot of what the record industry thinks is gonna hit these days.) The prevailing school of thought at Clear Channel appears to be that radio stations are mere supermarkets, with airtime a commodity to be bought and sold like shelf space. In this view, songs are commercials for the CDs that carry them. And where is advertising free?

Needless to say, few record companies have the kind of scratch lying around that Clear Channel will be demanding. Thomas Escalante, whose local indie label Plethorazine is home to Japanic, Middlefinger, MenMechanical and alt-country singer-songwriter Mando Saenz, rates his chances of getting his label's output on a Clear Channel station as "pretty slim and none." Escalante learned long ago that he needn't even try. "The reason they always gave me on the Buzz was 'Well, the sound isn't any good.' From a local's standpoint, it's like, Why even try when everything's stacked up against you before you even walk into the office?"

Ultimately, it's the Big Five (Sony, Universal, Warners, EMI, BMG and their legions of boutique imprints) that fund this payola. They do it, obviously, through record sales. But since Clear Channel's 1990s consolidation of much of the radio market, it has become much more expensive for the labels to get their records played. Thus the labels are putting more and more of a squeeze on the few artists on their rosters that do sell, which brings up another point.

Billboardmagazine recently described recoupment as "the dirtiest word in the record business" In simple terms, record labels will pay for an artist to record an album and promote it. For these services, labels expect to reap 90 percent of the what profits occur, if any. They leave 10 percent to the artist, which seems miserly on its own. But it gets much worse. Out of that tenth, the label expects to recoup its production and promotion costs. What is left over after that, the artist is welcome to. (Worse still, the label gets to keep the recording after its costs have been recouped, even though by this time the artist has paid for it with the pittance the label has pretended to give him.) What all this amounts to is successful acts subsidizing the payola system.

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