Payola: Once a dirty word, now the basis of internet radio

Why have internet radio stations started charging bands to appear on their playlists – and do their pay-to-play schemes even work?

Payola – the illegal practice of paying or in any other way bribing a radio station to play your song – has existed since the advent of pop music. In the 1960s, Alan Freed was the first person convicted of payola and the book Hit Men described in detail how the practice was rife in the 70s and 80s. When the US government clamped down on it, record companies (and the radio stations benefiting from payola) got around the problem by paying “independent promoters” who would do the dirty work for them. But as recently as 2005-06, three of the major labels were indicted and settled out of court for pay-for-play practices.

Of course, there are many ways of asking for bribes, without any cash actually exchanging hands. A manager of a successful UK artist told me that radio DJs in the US would ask for the artist to perform at the DJ’s club for free in return for airplay (and the DJ would pocket the profit from ticket sales). Rock and metal acts trying to gain exposure in the US are often asked to “pay-to-play” (as in paying the venue for the pleasure of playing there).

Now webcaster Jango has come up with an ingenious way of legitimising these bribes, by declaring publicly that they’ve been paid to play songs. For as little as $30, a band can buy 1,000 plays on the music-streaming service, slotted in between established artists (who don’t pay for their slots, I assume). The artists themselves choose what other music they’d like to be played next to. It’s similar to the Amazon idea of “if you like this you might also like this” – if Amazon accepted payment to put someone on that list.

As I’ve mentioned in a previous blog, US terrestrial radio stations, as opposed to radio stations in almost any other country in the world, don’t have to pay artists royalties to play their music. Internet radio stations in the US, however, do. Hence why Doug Perlson, the CEO of online radio ad agency TargetSpot, wrote in a recent post on Silicon Alley Insider that he thinks internet radio stations should play songs in return for money to cover that additional cost.

But with the emergence of other music streaming services on the net who operate similar services without letting payola dictate the playlist – is this really a business model that will attract listeners? Is it good value for money for these bands trying to reach an audience, or just a licence to make money and minimising cost for the webcaster?

I asked Simon Wheeler, director of digital for Beggars Group (whose artist roster includes MIA, the White Stripes and Adele), what he thought of the pay-for-play idea. He said that he could see why unsigned bands might give it a try, but – like Brian Hazard – he remained sceptical to what kind of success it would bring. “Music has value,” he says. “The music industry is moving more towards consumption instead of ownership. So, if we give away consumption to these music streaming services without any compensation, the artists end up with nothing.” With services such as Jango’s Airplay programme and Last.fm’s Powerplay, they may even end up in the red.

Jango is not the only music streaming site that is aiming to profit from artists trying to get noticed. Last.fm recently launched its Powerplay campaign – though they charge a whopping $200 for 1,000 plays. You can read about electronic pop artist Brian Hazard’s experience with this service below…