FCC Payola Inquiry Letters Praised by Adelstein, Spitzer
N.Y. Attorney Gen. Eliot Spitzer praised the FCC for stepping up a payola probe, and a separate attempt by more than 100 independent music labels to get broadcasters to agree on standards to avoid further regulatory skirmishes and bolster credibility. An FCC official said it sent letters of inquiry to broadcasters as part of a months-long investigation (CD Aug 9 p8). Adelstein joined Spitzer in lauding the FCC’s move.
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Spitzer welcomes “the FCC’s actions in addressing what is a very serious industry-wide problem, which affects consumers and artists alike,” his spokeswoman told us. Last month, Spitzer slammed the Commission for not moving fast enough to combat alleged abuses, which his office has taken the lead in uncovering (CD March 9 p3). “I am pleased that we have launched this formal phase of the payola investigation,” Adelstein said in a written statement. “This should put to rest any question about the FCC’s commitment to enforce the law.” Although Adelstein called the latest FCC action “formal,” sources said the Commission doesn’t usually use such terminology because it lacks subpoena power.
Smaller music labels working together to fight payola may bear fruit, said analysts and a broadcast lawyer we spoke with. Spitzer’s spokesman agreed, saying: “The labels’ initiative acknowledges the problem. Awareness and law enforcement action are part of the changes needed to ensure the proper management of the public airwaves.”
The American Assn. of Independent Music hopes to come up with standards within a month to improve disclosure of label- broadcaster ties, said acting Pres. Don Rose. He’s banking on broadcasters to give less popular artists more airtime. “We plan to organize a task force that’s organized in the independent community, but also includes music labels and independent promotion people, to develop a set of guidelines that’s not punitive about the past -- it’s all about doing business more openly going forward,” said Rose. Adelstein “has absolutely encouraged us to develop a plan,” he added.
The FCC probe gives broadcasters a strong incentive to come up with changes along the lines of what Rose wants, said analysts. “The timing is perfect because the Spitzer and other reviews and investigations are really heating up,” said Miller Tabak’s David Joyce: “It’s better late than never… It should ease the federal burden and at the same time put some credibility back into industry.” Payola fines wouldn’t hurt broadcasters much, but the investigations will lead to industry compromise, Stanford Group’s Fred Moran said: “To the degree pressure grows on the payola issue, we would suspect that radio would follow their track record of trying to compromise and find reasonable solutions with the parties involved.” Nine radio broadcasters we contacted didn’t comment.
Self-regulation isn’t enough to tamp down payola, said Free Press Campaign Dir. Timothy Karr: “The industry cannot act to regulate itself. When given the opportunity to make money in these types of gray legal areas, they will stretch the limits beyond what is legally appropriate.” Instead, the FCC must step in and take a more active role, Karr added: “Industry standards don’t work without some kind of regulatory framework.” Such standards may influence FCC actions, said Womble Carlyle’s Peter Gutmann: “It provides a basis on which the regulators can consider what type of further regulation might be required. It’s certainly a good idea in trying to take some of the heat off.”