What Is Payola? Here’s a Simple Definition

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Last week, Spotify revealed that it would allow artists and labels to influence recommendations provided that they accepted a lowered “promotional recording royalty rate” for the resulting plays. Now, a number of creators and fans are asking: What is payola?

The answer to that age-old question – what is payola? – begins with a quick examination of the radio industry. In the 20th century, labels and promoters often paid station DJs to play records. These broadcasting professionals would then fill the tracks into airtime lineups without mentioning the compensation to listeners – thereby creating the illusion that they’d chosen the songs organically. The works would theoretically find an audience and enjoy bolstered sales following their illicit placements.

Many view payola as underhanded, and it’s illegal today under the Communications Act of 1934 as well as rules of the Federal Communications Commission (which the Communications Act established). Moreover, the federal government has launched multiple probes and inquiries in an effort to eliminate the practice – including the Rep. Oren Harris-led congressional hearings of 1960, which resulted in the Communications Act being revised to expressly prohibit payola.

The summarized answer to the central question – what is payola? – is paying for radio plays when the compensation isn’t disclosed to listeners.

Importantly, paying for radio plays remains legal so long as the station relays “at the time of the broadcast, that such matter is sponsored, paid for, or furnished and the identification of the sponsor,” per the FCC. Some evidence suggests that moves to sidestep the rule, including forming slippery front groups to approach stations and pay for plays, are prevalent.

Though the development (and its potentially far-reaching implications) was quickly placed on the backburner due to the COVID-19 pandemic, it bears mentioning that FCC Commissioner Michael O’Rielly intensified his probe of radio payola at the beginning of this year. After receiving a tepid response from the RIAA, Commissioner O’Rielly approached the Big Three labels themselves and “respectfully” requested that they answer a collection of questions concerning the matter.

In a broader sense, payola has become part of wider industry conversations once again because of its possible presence on music-streaming platforms.

As initially mentioned, Spotify announced six days back that it will enable artists and labels to influence recommendations in exchange for accepting a lower per-stream royalty rate. It remains to be seen whether the practice will compel indie musicians – those who can least afford a royalty reduction – to settle for the “promotional recording royalty rate” to better compete with other Spotify artists.

Lastly, Spotify indicated in March that it intended to expand its pay-for-promotion program (dubbed a “pay-for-play” program by some critics). Bad Bunny’s YHLQMDLG album turned in a strong commercial performance partially because it was advertised on Spotify. And playlists – which are capable of dramatically enhancing the reach and popularity of tracks – re-entered the spotlight earlier this year, when higher-ups at the streaming service stated that artists and labels “cannot pay to get on an official Spotify playlist.”

4 Responses

  1. Avatar
    I am a DEFLATIONARY event

    Your all insane if you don’t think this happens on streaming services

    I hear managers openly admitting to Payola and complaining about the burden of the exspense.
    Tasha K a vloger had The Mygos manager on tape complaining about the payola and admitting to paying 250k for ATL region and it being the reason for an act to sign to a label. No one has investigated.

    The MODEL Is Payola!!!!

    An independent musician allowed to advance would be ruinous for the labels
    The independents you see are well known indi plants. Well documented by another vlogger called Progress who for years has documented the rise of music indi plants. Which I believe are a specific tactic to hide the monopolistic gate the music industry has on the internet. Giving the illusion of naturally rising up on a platform is all a lie!
    While launching their Billy Eyelashes Or A Lil Naz X clown!

    Don’t believe me? Well we’re all home with nothing to do… Have you seen an independent musician rise up out of nowhere… A Cinderella story? No Duh!!!!

    None of you care. The Greatest Art Theft In the world happens right under your noses and not a peep.

    To late now

    The crack up book is here!!!

    The Industry is eating its own head now the swamp creature Irving Asof THE SWAMP CREATURE Calling for more money to musicians! Ha it’s the labels.

    Grab your popcorn…

    Once they lose this time with their tired dusty old overplayed music catalogs which are being sold quickly lately as funds dry up… who lawyers mostly run not the families…. the industry will only be kept alive with musicians who foolishly sign deals. but once you see the power of staying Independent only fools who can’t see the world has changed will comply!

    The richest musician is P Diddy and most of his money did not come from music from vodka. Thus most famous musicians make nothing in comparison to the Label. But now the middleman (the label) is an endangered species.

    CHECK MATE

    I WIN

    Reply
  2. Avatar
    openly discussed

    Payoola which illegal is the model for music companies….not the seedy one who does something. Its an open secret that this happens…..well established…..who goes down for it…only when its in another interest to get someone else out…..the money never trickels down to the artist…..this is a great travesty to any musician who does not comply with the existing model found above….criminals….

    Reply
  3. Avatar
    BAC

    I remember when Spotify started. There were distributors who would put your music on Spotify for free if you gave up all your streaming revenue to the distribution company.

    Where are those distributors now?

    If Spotify offers it, don’t choose it. Make it die a quick death. Let it be just another bad dudebro MBA cokehead idea.

    Reply

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