Elliot Spitzer and the Music Business

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This is Celia Hirschman with On the Beat for KCRW.

Finally, someone is paying attention. Last week, the New York State Attorney General, Eliot Spitzer, launched a serious threat to the independent radio promotion business. Mr. Spitzer served subpoenas to all four of the major label conglomerates, to investigate the financial relationship between them, the indy radio promoters and commercial radio stations. The move made the front page of The New York Times.

To fully understand the implications of this action, you need to be aware of a few changes in the record business. The days of the indy promoter secretly delivering drugs and bundles of cash to radio programmers, in exchange for airplay is gone. Everyone who works in the field these days is far more sophisticated.

In the pop, rock and adult commercial radio formats, the biggest independent radio promoters have deals with many key radio stations.

These indy promoters pay huge annual fees, of up to a million dollars each, to certain radio stations for the exclusive right to receive that stations weekly playlist in advance. The playlist identifies which songs will be added to the music rotation for the week. Once the indy promoter gets the stations' playlist, they call all the labels that will have their record added that week, and demand a promotion fee. The fee is kept by the promoter. Don't ask what happens if the labels don't pay the fee, because it's a moot point. They always pay.

The labels and the indy promoters are not doing anything illegal. This activity is not technically payola because the station doesn't receive payment for a specific song that is added. Instead the station receives a lump sum annual fee from the promoter.

There are two important reasons why this business standard should be stopped. Luckily for Mr. Spitzer, both of them concern the listeners, so he just might be able to affect change.

All radio licenses, not just public radio ones, but all radio licenses, are granted by the FCC under the strict guidelines of maintaining the public's sacred trust of the airwaves. To get a license, a radio station must demonstrate that they will serve the publics' interest, convenience and necessity.

But how can the fact that a radio station, accepting funds from a promoter, paid by record companies, in support of the airplay of songs be in the interest of the public? No, I think the stations are abusing the trust given to them by the FCC.

Another point, is that in the Pop and Rock radio formats, almost no independent artist has been able to significantly penetrate the commercial radio airwaves. I believe this is due to the fact that commercial radio stations are only interested in supporting record labels who pay their independent promoter. Small, independent record labels can't afford to pay those high promotion fees and never seem to get a shot on the radio. The net result is that the public's interest is not being served as they are not exposed to an accurate balance of music released. This is not what our public airwaves were built for, and directly opposes the intention of using the airwaves in the spirit of public trust.

Most in the industry are reacting with trepidation to the news of Spitzer's involvement. Many feel it's far too late for him to have impact. I'm not convinced. Experience tells me that Eliot Spitzer will keep his eye on the ball, and try and bring some balance back to a highly imbalanced world.

It's about time.

This is Celia Hirschman for On the Beat on KCRW.