The Honorable Kevin Martin
Chairman, Federal Communications Commission
445 12th Street, SW
Washington, DC 20554
Dear Mr. Chairman:
The Future of Music Coalition is encouraged by recent press reports
that the Commission is launching an investigation to examine allegations
of commercial radio licensees engaging in an illegal practice: payola.
Without question, FMC believes this is a tremendously important issue
for musicians and the public, and we are glad to see the Commission is
willing to shed much needed sunlight on this shadowy practice.
We are writing today to reiterate our belief that the flagrancy of labels
and station owners and the pervasiveness of this practice cannot be examined
outside the context of the drastic consolidation in the radio industry
following the 1996 Telecommunications Act.
FMC and other artist organizations have consistently urged the Commission
to recognize the independent radio promotion structure that developed
in the 1990s as a once-removed form of payola.
Most prominently, we discussed payola in our 2002 study “Radio
Deregulation: Has It Served Citizens and Musicians?” This report,
which was filed in the Broadcast Ownership proceeding (MB 02-277), argued
that consolidation in the radio industry, coupled with consolidation
in the recording industry, made conditions more ripe for payola by reducing
the number of gatekeepers and facilitating secretive, payola-like business practices.
We were heartened when the Commission included payola in its 2004 Notice
of Inquiry into Localism in Broadcasting (MB 04-233). In the NOI,
the Commission stated:
When payola causes stations to broadcast programming based on their
financial interests at the expense of community responsiveness, the practice
is inconsistent with localism.
Then the Commission posed a number of key questions including:
What are the various types of payola practices today, and how frequently
do they occur? Do these practices comply with the disclosure
requirements of the Act and our sponsorship identification regulations? Are
the existing rules in any way deficient in addressing the current practices?
[…] Are the Commission’s current disclosure requirements
sufficient to ensure that listeners understand the nature of the programming
they hear? Do radio stations seek payment for back announcing – that
is, announcing songs and artist information after a song is played? If
so, does this practice violate our sponsorship identification rules? 
We saw this as a clear indication that the Commission was at the very
least aware of the widely reported accusations. Now that New York
Attorney General Eliot Spitzer has announced the initial findings of
his wide-ranging investigation, it is becoming clear that major radio
companies did engage in business practices that, at the very least, deserve
a full and immediate investigation by the Commission.
For this reason, as the Commission approaches its next review of the
broadcast ownership rules, we respectfully request that you first complete
a comprehensive investigation of radio consolidation and payola before
moving ahead with any rulemakings that would allow for a) further radio
deregulation, or b) the granting additional resources to commercial radio
broadcasters during the transition to HD radio.
First, it would be irresponsible for the Commission to further loosen
local ownership regulations, as the NAB has recently requested , before
understanding the relationship between consolidation and payola.
Second, HD radio greatly expands the capacity of each station licensee
by increasing the number of uses of their licensed spectrum. It
would send the wrong signal to the public and to the commercial radio
industry if the Commission were to let the HD radio transition proceed
without first identifying which of these commercial broadcasters is guilty
of engaging in payola.
Commissioner Adelstein stated recently that radio stations that have
engaged in the practice of payola “are putting their licenses at
risk”. If this is true,
we should not inadvertently reward these bad actors with added capacity
without establishing a full investigation into payola allegations, and
setting measurable public interest guidelines that will ensure that musicians
and the public are served well in the future.
In conclusion, FMC urges the Commission to take the following steps:
Launch a full and thorough investigation into allegations of payola
in the commercial radio industry.
If alleged payola-like abuses are found to be true:
The Commission should pledge to hold bad actors in the radio industry accountable.
The Commission should not grant the benefits of HD multicasting to
the commercial radio industry without first establishing specific,
measurable public interest guidelines.
The Commission should not consider any rule changes that would pave
the way for further consolidation in parallel markets, including lifting
the ban on broadcast-newspaper cross-ownership.
The Commission should take steps to protect and expand non-commercial
radio, including low power FM.
Future of Music Coalition reiterates
our willingness to work with the Commission in any way as you continue
your efforts to manage and regulate the public airwaves.
Jenny Toomey, Executive Director
Michael Bracy, Policy Director
Kristin Thomson, Deputy Director
Future of Music Coalition
February 15, 2006
Cc: Commissioner Deborah Tate
1. “Hundreds of Radio Stations
in Payola Probe”, by Chuck Taylor, Billboard Radio Monitor, February
13, 2006 http://www.mediaweek.com/mw/news/tvstations/article_display.jsp?vnu_content_id=1001995176
Statement on Current Issues in Radio, May 24, 2002
Deregulation: Has It Served Musicians and Citizens?” November
18, 2002 (MB 02-277)
Joint Statement on Current Issues in Radio, October 8, 2003
Joint Comments on Digital Audio Broadcasting Systems and Their Impact
on the Terrestrial Radio Broadcast Service (MM 99-325), filed June
Comments on Localism in Broadcasting, November 1, 2004 (MB 04-233)
3. “Radio Deregulation: Has
It Served Musicians and Citizens?” November 18, 2002, pp. 60-67.
4. FCC, Notice of Inquiry on Broadcast
Localism (MB 04-233), July 1, 2004, p. 14.
5. Letter from NAB President David
K. Rehr to FCC Chairman Kevin Martin on Media Ownership, February 8,
6. “Report: FCC Conducting
Huge Payola Probe,” Radio and Records, February 10, 2006 http://www.radioandrecords.com/Newsroom/2006_02_10/reportfcc.asp read more
Senator Russ Feingold should be personally thanked
by every independent musician in America. Finally we have a bill that
expands the definition of "payola" to
eliminate the inside dealing and structural abuses in consolidated radio that
have locked local, unaffiliated and independent artists off the airwaves for years. read more
Two of today’s Supreme Court rulings cover separate but interconnected issues that will impact the future of the music economy. NCTA v Brand X impacts the basic architecture of the internet, while MGM v Grokster affects the applications that are offered to consumers using the internet. read more
The Future of Music Coalition applauds the Third Circuit
Court of Appeals for rejecting FCC Chairman Michael Powell’s attempts
to eliminate many of the longstanding media ownership rules that ensure localism, competition and diversity. read more
Philadelphia, PA – Artists Billy Bragg, Steve Earle, Tom Morello, Lester Chambers, Boots Riley, Jill Sobule and comedian/commentator Janeane Garofalo will join together with representatives from key media reform, labor, and economic justice groups to participate in an hour-long forum to discuss media consolidation and trade issues. The forum will take place Friday, November 21 at 1:00 PM at the Independence Mall Visitor Center in Philadelphia, PA. read more