Could an overhaul of payola rules be on the horizon? Majors asked to explain anti-payola practices to FCC

FCC Commissioner Michael O’Rielly has written to Sony Music Entertainment, Warner Music Group and Universal Music Group in the United States to request information from the companies about their current payola-prevention ‘mechanisms’, in addition to their ‘understanding of the current payola rules’.

In the letter, dated January 16, and released yesterday (January 21), O’Rielly explains that he reached out to recorded music trade body RIAA last year “to inquire into recent reports of practices potentially in violation of federal anti-payola laws and regulations”.

The RIAA, says the letter, “claimed that it was not in a position to survey its members’ anti-payola practices and submit responses collectively”.

The RIAA subsequently suggested that O’Rielly and the FCC contact the majors directly, which he has now done, via this letter.

“There is no shortage of accusations that financial enticement is in some cases driving chart rankings, album and song sales, and commercial success.”

Michael O’Rielly, FCC

“Even the most cursory review of consumer complaints and assertions provides cause for concern regarding the persistence of payola,” writes O’Rielly.

“And, in recent months, some artists have responded forcefully against accusations of payola, which speaks to the seriousness of the issue.

“Yet, there is no shortage of accusations that financial enticement is in some cases driving chart rankings, album and song sales, and commercial success.

The letter – addressed to SME’s Senior Vice President, Deputy General Counsel, Wade Leak; UMG’s Head Of Global Compliance Saheli Datta, and WMG’s Senior Vice President, Deputy General Counsel & Chief Compliance Officer Trent Tappe – ends with six questions (see below), which O’Rielly and the FCC ‘respectfully request’ are answered by the end of February.

“As proposals are considered to update laws and regulations to keep pace with the current marketplace, understanding current practices regarding anti-payola compliance is crucial for lawmakers and regulators.”

O’Rielly suggests that current payola restrictions could have an effect on the long-term sustainability of the US radio industry.

He notes that even though traditional radio and streaming services are competing for the same listeners, the “radio industry finds itself subject to payola restrictions when alternative technologies, such as streaming, Internet radio, podcasts and other commercial audio distribution platforms, do not”.

Adds O’Rielly: “Moreover, as the lines between these different technologies are becoming more blurred each day, the compliance difficulties facing dynamic radio companies that deliver content via multiple distribution methods and those that interact with them increase as well.

“As proposals are considered to update laws and regulations to keep pace with the current marketplace, understanding current practices regarding anti-payola compliance is crucial for lawmakers and regulators.”


You can read O’Rielly’s questions in full below:

1. As technologies become more complex and incitide platforms other than traditional over-the-air broadcasting, what types of arrangements exist between your company and radio broadcast stations for song placement and frequency of air time? 

 a. In this context, how does your organization define payola and what specific practices does it deem to be in violation of federal law and FCC regulations?

 b. Does your organization deem the solicitation of artist appearances and performances with implied or express benefits, or pressures against non-participation. as legally prohibited?

2. What specific procedures have you developed, adopted, and implemented to ensure that payola, as defined by federal law, does not occur within your organization? 

 a. What oversight protections do you have in place to report violations and verify compliance? 

 b. Are company employees required to be trained in payola prohibitions and potential penalties?

3. Are you aware of any individual or company, in partnership with, or associated with your organization, that has provided or sought to provide monetary benefit, service, or other consideration in violation of current payola prohibitions in the last five years?

a. If yes, how was the conduct addressed?

b. Have any of your organization’s employees, partnerships, or associations been terminated or disciplined due to potential or actual payola violations?

c. Please provide specific details of any such instances.

4. In the last five years, how many times have you or your organization directed a radio broadcast station to include a notification in a broadcast pursuant to the payola statutory provisions?

5. Where do you see the greatest risk for potential violations within the recording industry as it interacts with ever-changing audio distribution technologies, including the radio broadcast industry’?

6. Have existing federal statutes and the relevant internal compliance processes worked to restrict payola?

a. Where do you see weaknesses in the current approach or need for reform to target and address any remaining violators?Music Business Worldwide

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