5-14-14
We received quite a few comments after posting the Cumulus/Big Machine record label announcement yesterday. Some of you asked the question, "How can a radio company own a record label, isn't that some form of payola?" It's obvious both Cumulus and Big Machine had done their homework before making the big announcement yesterday. Here's one of the comments we received yesterday...
"This is an unusual development and it will be interesting how it pans out. Is it possible that this could be a conflict of interest or even a form of payola? Cumulus will grow its revenue base directly, when it plays its artists. I would suggest we are not allowed to do that but only to reap a harvest based on the quality of music we play with the benefit being more listeners. Your thoughts are appreciated. Is this a form of payola?"
We turned the question over to two attorney's to get their take. First, the thoughts from Frank Montero, Managing Partner Fletcher, Heald & Hildreth. Montero says, "There?s a misconception that if a radio station accepts payment for playing a record it?s payola or if a station plugs a commonly-owned business it is plugola. If you couldn?t accept payment for putting something on the air, how could you ever sell commercial time? Actually payola and plugola are correlations of the sponsorship identification rule. Sponsorship ID states that where a broadcast licensee has received or been promised payment for airing program material, then, at the time of the airing, the station must disclose that fact and identify who paid for or promised to pay for the material, except when it is clear that the mention of a product or service constitutes sponsorship identification. So if you disclose the payment or the relationship to the public, that sanitizes the payment or the plug. There?s nothing wrong with being paid to play a song or plugging a commonly-owned business on the air, as long as the audience is fully informed of the relationship."
Another attorney responded the following way..."In FCC jargon, I believe that a radio broadcaster that owns an interest in a recording company and plays its records, may be raising a plugola issue. Plugola occurs when the licensee or another person involved in the supply, production or preparation of radio programming material receives consideration as a result of the broadcast of the program material, even if a direct payment is not received. But, with a proper ?sponsorship ID? revealing the connection, plugola is not prohibited."
(5/15/2014 8:27:03 AM)
For years CBS owned radio stations and a record label...and many artists.
Nothing new here.
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