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Feingold Concerned About Payola Compliance

Senator Russ Feingold (D-Wis.), one of the Hill's most vocal critics of radio pay-for-play practices, has written CBS Radio, Entercom, Clear Channel, and Citadel Broadcasting asking for more information on how they are complying with their payola settlement agreements.

In April, the companies agreed to pay a collective $12.5 million and agree to take steps to prevent a repeat of the pay-for-play violations, in which station staffers took money and gifts from record companies and consultants to play songs..

As part of that settlement, the companies agreed to make airtime available to the independent artists whose music arguably did not get a level playing field up against big record companies with deep pockets. Feingold says he is concerned about reports that Clear Channel, for one, is "requiring the grant of a royalty-free right and license to the music upon submission."

Requiring them to give up that performance royalty, he says, "seems to violate the April commitment not to barter access to music programmers."

Clear Channel had not returned a call for comment at press time.

The letter from Feingold appears in full below:

Dear _________

As you probably are aware, I have been concerned about payola and other anti-competitive practices in the radio industry for some time.  While I believe that FCC oversight and enforcement could have been stronger, I was encouraged by your willingness to work with the small and independent labels to come to a voluntary side agreement that went along with the consent decree announced in April.  I continue to hope that this agreement will help the public have greater access to local, unsigned and independent musicians, whose voices have unfortunately been missing more often than not from our public airwaves over the past decade or more.

I was pleased that the side agreement included eight “Rules of Engagement,” which laid out how your companies intended to ensure fair interactions with labels, artists and their representatives.  These rules echo requirements from my previous payola legislation and address the core problem of payola by trying to remove coercion, payments or other quid pro quo in exchange for airplay or access to music programmers.  While I continue to have some concern that the enforcement of these rules is voluntary, if they were to be followed industry-wide it would go a long way toward eliminating pay-for-play.

I would like to ask for more information about a couple of these rules that your radio station groups have committed to follow.  The first rule of engagement provides that “Radio should establish, and appropriately publicize, clear and non-discriminatory procedures for music submissions and access to radio station music programmers (to the extent any such access is provided).”  Now that you have had a couple months to put this rule into place, I’d like to request more information on what access you have provided and how it has been publicized.  Have you taken any efforts to increase the amount of access provided and to facilitate submissions?  I’d also be interested in knowing whether this access is through each individual station, to the corporate playlists and testing pools, if applicable, or both.   

Related to this first rule of engagement is the second rule, which states “Radio should not be allowed to sell or barter access to its music programmers.”  I am concerned by recent reports that some Clear Channel stations are requiring the grant of a royalty-free right and license to the music upon submission.  As the debate surrounding the recent Copyright Royalty Board decision to increase the royalty rate for digital performances indicates, these rights clearly have value.  Moreover, the submission form used by these stations apparently indicates that the music and other material will be provided to the music programmers for airplay consideration.  The required royalty waiver seems to violate the April commitment not to barter access to music programmers.  I encourage you all, and Clear Channel in particular, to clarify this issue. 

I have held off on reintroduction of my legislation this Congress because I was hopeful that the voluntary rules of engagement combined with the consent decree could be effective in eliminating payola and related abuses.  But it is very troubling that the voluntary rules seem to have been violated after just a few months.  When the agreement was announced in April, I expressed concern that the consent decrees and side agreement depended so heavily on continued good faith instead of strong enforceable standards.  The weakness of the voluntary reforms is that there is no impartial arbiter like the FCC to determine the meaning of the rules, so they can be parsed or ignored with only public opinion as a partial check.   

I hope that your commitment to meaningful rules of engagement and efforts to eliminate the pervasive payola documented by then-New York Attorney General Spitzer remains strong and look forward to your response.


Russell D. Feingold

United States Senator