The messy suicide of commercial radio series; (part 12) We don’t do payola, We let the independent promotion companies handle it (I)

A couple friends of one music commentator promote records independently. They use their contacts and experience in specialised markets to get music released by their clients in those markets in front of as many people as possible. Not long ago, some major record companies hired them to work certain recordings. They received an annual contract that set down the rules of conduct the companies expect promoters they hire to follow. His friends both called him laughing at one of the paragraphs, which basically read, the promoter is not to pay for play, and if the promoter does pay for play, the record company knows nothing about it. In Washington, D.C., they call this “plausible deniability.”

Every record company has a promotion department (even if it’s one of the hats worn by the president and sole proprietor of an artist-run indie). Even the most skilled promoters, however, find markets they can’t crack. Often they’ll get help from specialists, independent promotion people who can get the right record to the right person to get a buzz started. After Juggy Gayles left Atlantic, whenever record companies reached an impasse in New York, he became one of these go-to guys:

I worked for Epic; I worked for Columbia; I worked for Atlantic; I worked for Warner. All they wanted from me was New York City. As long as I knew what the winners were, and I wasn’t picking losers, I could get it played. I had some credibility around the stations here.

By the late 1970s and early 1980s, it took more than credibility to get records played. A network of independent promoters, appropriately called the Network, controlled radio promotion. “I know what radio wants,” one of the Network heads, Joe Isgro, told Columbia Records president Walter Yetnikoff. “Radio knows I can weed. Radio respects me. Radio listens to me. What I bring them, they play. I’m the maitre d’ who decides who gets in the restaurant. Give me a hit record, I’ll make sure it’s played.”

The main difference between Isgro and your average maitre d’ was that Isgro gave out the tips in order to receive the best (turn)tables. And these were not the “$50 handshakes” that Joe Smith or Alan Freed might have accepted during the “bad old days” of payola. Isgro dealt in serious money. One radio general manager claimed that Isgro paid him in excess of $100 000 a year for four years. The estimates for the independent promotion budgets at the major record companies at the time range from $10 million to $80 million a year for each company (there were six majors then). It seemed as if only the independent promoters could get a record on any station on which it was worth getting airplay.

At the time the stakes in the record business were extraordinarily high. The bottom had started to fall out of the business with the ignominious death of disco as a “popular” music. The majors were either owned or had been acquired by public parent organisations (until GE sold RCA Records to privately held Bertelsmann in 1986) that demanded upward trends in sales every quarter. By S = R + P, getting the music on the radio by any means necessary was essential. So if it took $10 million a quarter to keep cash flow high and the books looking good, that’s what they spent. And if it took having bands that sounded like everything else so that the promoters would handle them, well, so be it.

When the record company revenues went into freefall in the early 1980s, however, someone in the corporate suite at Warner Communications began to look at the budgets. The item that stood out on the left side of the expense column was those tens of millions going to the independent promoters. The guys in corporate paid the in-house promotion department’s salaries to get records on the radio. Why should they also have to pay independent promoters? In a rare (at the time) edict to the record companies, Warner Corporate told its three record labels to stop using independent promotion. This seemed like a good idea to the folks at CBS Corporate as well, so Columbia and all the CBS-affiliated labels declared a boycott on independent promoters, too.

It turned out to be a boycott in name only. Yetnikoff recalled:

The artists were furious when they learned that indies would be eliminated. Artists hunger for hits with as much, if not more, desperation than the labels. To get around the ban, the labels, including our own, would give extra money to the artists or their managers so that they, and not us, would hire the indies. Any way you looked at it, independent promoters were in the game.

So it didn’t turn the spigot off, just reallocated the money to a different budget line, but it seemed to appease the corporate offices, at least for a minute or two. However, the game didn’t last long for Isgro and the Network. In the dead of winter 1986, NBC News aired a segment on what it called “The New Payola” – interestingly, only months after NBC’s parent company GE divested itself of RCA Records.

The segment showed pictures of Isgro and his associate Fred Disipio attending the Rock and Roll Hall of Fame inauguration ceremony. It also showed Isgro with a reputed associate of the Gambino crime family, Joseph Armone, whom wiretaps referred to as “his partner.” Up at the Columbia Records offices at Black Rock, Walter Yetnikoff fumed and sputtered with a mixture of fear, loathing, and white-hot fury:

When I saw a tape of the show the next day, I dropped everything and stormed up to [CBS president Thomas] Wyman’s office. I was enraged. “It’s bullshit,” I said. “Not a shred of proof. No substantiation. They film these guys getting out of their cars like they’re convicted killers. As president of CBS you gotta do something. You gotta put out a press release and call it what it is – a journalistic scandal worse than the scandal it purports to expose. You need to defend Columbia Records and you need to defend me.

”Meanwhile, the industry ran for the hills. Disipio and Isgro were dropped by every label, including ours. I had no choice. [CBS chairman William] Paley gave the order.

If NBC had wanted to shut down the Network, it couldn’t have succeeded more thoroughly. If it had wanted to wipe out payola and corruption in the record business, it couldn’t have done worse. As it turned out, Yetnikoff was right. It took three years for the U.S. attorney’s office to deliver any sort of indictment, after a long and arduous investigation.

Isgro, former CBS VP Ray Anderson, and Isgro’s associate Jeffery Monka faced 57 counts, including violations of the Racketeering Influenced and Corrupt Organisations (RICO) Act, defrauding the record companies, payola, money laundering, and kickbacks. However, after a trial that presented a parade of witnesses talking about payola, drugs, threats, and other illicit incentives to play certain records; nearly 10 years of legal wrangling that involved three appeals; spectacular legal gaffes by the government prosecutors; and God knows how much taxpayer money, the cases against Isgro, Anderson, and Monka were dismissed.

Charges were never brought against Disipio, and in 1993, while Isgro et al. were still caught up in the legal morass of appeals and dismissals, EMI president Charles Koppelman hired him as a consultant to teach his promotion department strategy. Koppelman likened it to hiring Joe DiMaggio as a hitting coach.

Still, for all intents and purposes, their credibility and usefulness as promoters evaporated. Their careers went on. Anderson became president of independent R&B label Dr. Dream. Isgro went into movies, producing the film Hoffa. He also started another label, Private I, and consulted through a company called Raging Bull Productions. Private I and Dr. Dream were among the first labels to start signing artists dropped by the majors and capitalising on their followings. Isgro signed Rick James, Bootsy Collins, and the Gap Band to Private I, while Anderson’s label featured Dash Rip Rock, Rich Little, and Paul Kelly.A couple friends of one music commentator promote records independently. They use their contacts and experience in specialised markets to get music released by their clients in those markets in front of as many people as possible. Not long ago, some major record companies hired them to work certain recordings. They received an annual contract that set down the rules of conduct the companies expect promoters they hire to follow. His friends both called him laughing at one of the paragraphs, which basically read, the promoter is not to pay for play, and if the promoter does pay for play, the record company knows nothing about it. In Washington, D.C., they call this “plausible deniability.”

Every record company has a promotion department (even if it’s one of the hats worn by the president and sole proprietor of an artist-run indie). Even the most skilled promoters, however, find markets they can’t crack. Often they’ll get help from specialists, independent promotion people who can get the right record to the right person to get a buzz started. After Juggy Gayles left Atlantic, whenever record companies reached an impasse in New York, he became one of these go-to guys:

I worked for Epic; I worked for Columbia; I worked for Atlantic; I worked for Warner. All they wanted from me was New York City. As long as I knew what the winners were, and I wasn’t picking losers, I could get it played. I had some credibility around the stations here.

By the late 1970s and early 1980s, it took more than credibility to get records played. A network of independent promoters, appropriately called the Network, controlled radio promotion. “I know what radio wants,” one of the Network heads, Joe Isgro, told Columbia Records president Walter Yetnikoff. “Radio knows I can weed. Radio respects me. Radio listens to me. What I bring them, they play. I’m the maitre d’ who decides who gets in the restaurant. Give me a hit record, I’ll make sure it’s played.”

The main difference between Isgro and your average maitre d’ was that Isgro gave out the tips in order to receive the best (turn)tables. And these were not the “$50 handshakes” that Joe Smith or Alan Freed might have accepted during the “bad old days” of payola. Isgro dealt in serious money. One radio general manager claimed that Isgro paid him in excess of $100 000 a year for four years. The estimates for the independent promotion budgets at the major record companies at the time range from $10 million to $80 million a year for each company (there were six majors then). It seemed as if only the independent promoters could get a record on any station on which it was worth getting airplay.

At the time the stakes in the record business were extraordinarily high. The bottom had started to fall out of the business with the ignominious death of disco as a “popular” music. The majors were either owned or had been acquired by public parent organisations (until GE sold RCA Records to privately held Bertelsmann in 1986) that demanded upward trends in sales every quarter. By S = R + P, getting the music on the radio by any means necessary was essential. So if it took $10 million a quarter to keep cash flow high and the books looking good, that’s what they spent. And if it took having bands that sounded like everything else so that the promoters would handle them, well, so be it.

When the record company revenues went into freefall in the early 1980s, however, someone in the corporate suite at Warner Communications began to look at the budgets. The item that stood out on the left side of the expense column was those tens of millions going to the independent promoters. The guys in corporate paid the in-house promotion department’s salaries to get records on the radio. Why should they also have to pay independent promoters? In a rare (at the time) edict to the record companies, Warner Corporate told its three record labels to stop using independent promotion. This seemed like a good idea to the folks at CBS Corporate as well, so Columbia and all the CBS-affiliated labels declared a boycott on independent promoters, too.

It turned out to be a boycott in name only. Yetnikoff recalled:

The artists were furious when they learned that indies would be eliminated. Artists hunger for hits with as much, if not more, desperation than the labels. To get around the ban, the labels, including our own, would give extra money to the artists or their managers so that they, and not us, would hire the indies. Any way you looked at it, independent promoters were in the game.

So it didn’t turn the spigot off, just reallocated the money to a different budget line, but it seemed to appease the corporate offices, at least for a minute or two. However, the game didn’t last long for Isgro and the Network. In the dead of winter 1986, NBC News aired a segment on what it called “The New Payola” – interestingly, only months after NBC’s parent company GE divested itself of RCA Records.

The segment showed pictures of Isgro and his associate Fred Disipio attending the Rock and Roll Hall of Fame inauguration ceremony. It also showed Isgro with a reputed associate of the Gambino crime family, Joseph Armone, whom wiretaps referred to as “his partner.” Up at the Columbia Records offices at Black Rock, Walter Yetnikoff fumed and sputtered with a mixture of fear, loathing, and white-hot fury:

When I saw a tape of the show the next day, I dropped everything and stormed up to [CBS president Thomas] Wyman’s office. I was enraged. “It’s bullshit,” I said. “Not a shred of proof. No substantiation. They film these guys getting out of their cars like they’re convicted killers. As president of CBS you gotta do something. You gotta put out a press release and call it what it is – a journalistic scandal worse than the scandal it purports to expose. You need to defend Columbia Records and you need to defend me.

”Meanwhile, the industry ran for the hills. Disipio and Isgro were dropped by every label, including ours. I had no choice. [CBS chairman William] Paley gave the order.

If NBC had wanted to shut down the Network, it couldn’t have succeeded more thoroughly. If it had wanted to wipe out payola and corruption in the record business, it couldn’t have done worse. As it turned out, Yetnikoff was right. It took three years for the U.S. attorney’s office to deliver any sort of indictment, after a long and arduous investigation.

Isgro, former CBS VP Ray Anderson, and Isgro’s associate Jeffery Monka faced 57 counts, including violations of the Racketeering Influenced and Corrupt Organisations (RICO) Act, defrauding the record companies, payola, money laundering, and kickbacks. However, after a trial that presented a parade of witnesses talking about payola, drugs, threats, and other illicit incentives to play certain records; nearly 10 years of legal wrangling that involved three appeals; spectacular legal gaffes by the government prosecutors; and God knows how much taxpayer money, the cases against Isgro, Anderson, and Monka were dismissed.

Charges were never brought against Disipio, and in 1993, while Isgro et al. were still caught up in the legal morass of appeals and dismissals, EMI president Charles Koppelman hired him as a consultant to teach his promotion department strategy. Koppelman likened it to hiring Joe DiMaggio as a hitting coach.

Still, for all intents and purposes, their credibility and usefulness as promoters evaporated. Their careers went on. Anderson became president of independent R&B label Dr. Dream. Isgro went into movies, producing the film Hoffa. He also started another label, Private I, and consulted through a company called Raging Bull Productions. Private I and Dr. Dream were among the first labels to start signing artists dropped by the majors and capitalising on their followings. Isgro signed Rick James, Bootsy Collins, and the Gap Band to Private I, while Anderson’s label featured Dash Rip Rock, Rich Little, and Paul Kelly.