The messy suicide of commercial radio series; (part 14) We don’t do payola, We let the independent promotion companies handle it (III)

Once again, the scourge of independent promotion became a watchword around the industry, the only way to get anything played. The indies had all the major radio stations contracted to work with them, to the exclusion of even the record company promotion staff. Once again the infection began threatening to break through the surface in a nasty rash of boils.

“Record companies that want to suggest music to radio stations have to now go through the independent promoter that has been hired by the radio station to be the exclusive source of access to the radio station,” said Carey Sherman, president of the RIAA. “And independent promoters pay the radio stations large amounts of money in order to have that exclusive relationship.”

Unlike Isgro, however, McClusky maintained at least the appearance of propriety. He had none of the alleged mob ties. His methods were a lot slicker than any previous indie promotions companies, and his paper trail tended to at least look aboveboard. He had legal contracts with the radio stations. He invoiced the record companies like any other service business. The company maintained an efficient, businesslike demeanor.

Things began to change, however, when another 800-pound gorilla, in this case the recently coalesced 1 200-station-strong Clear Channel chain, began to question the need for McClusky. It had enough spank on its own and could afford the vans and other perks that McClusky brought to the table. “We now recognise that these relationships [with independent promoters] may appear to be something they’re not,” said Clear Channel president and COO Mark Mays. “We have zero tolerance for ‘pay for play,’ but want to avoid even the suggestion that such a practice takes place within our company.”

When Clear Channel’s contracts with the indies ran out, they were not renewed. Clear Channel began using the clout of over 1 200 stations to go directly to the labels for contests, promotions, and marketing. “Strong relationships with artists and record labels are a priority for our business,” said Clear Channel CEO John Hogan. “Eliminating these relationships with middlemen should… provide opportunities for us to create better ways to market and promote music for all concerned.” Suddenly, the services of McClusky became far less valuable to the record companies.

And when New York attorney general Spitzer unveiled the results of his payola investigations, he targeted McClusky, describing his business model as an effort to “dodge the payola laws” and a means to “perpetuate the fiction” that stations were not receiving money or gifts from record companies in exchange for airplay. The investigation found that the independent promotion companies like McClusky allowed the record companies to continue to pay radio to play their songs, keeping the price of a hit high. Instead of the record company’s own employees making the payoffs, they could filter the money through the independents.

For the major record companies, keeping the price of a hit high was part of the idea. It allowed them to maintain a lock on most commercial radio by dint of their deep corporate pockets. While a series of $50 handshakes might have vetted the indies, giving them the appearance of enough prosperity to get a record to the public in the 1950s and ‘60s, the price of independent promotion kept them pretty well out of the game through the late 1980s, ‘90s, and beyond, as McClusky and his peers priced themselves ever higher. Anyone who couldn’t afford it got shut out of the upper echelons of the charts, except in those rare instances when public demand outranked corporate money. Hits by independent record companies became as scarce as foie gras at McDonald’s. 

In 2005 McClusky saw his promotion business go from 175 stations that were his to 30. Having lost most of his business to Clear Channel’s withdrawal, he shuttered that portion of his company, calling the remaining 30 client stations and telling them that he would not renew their contracts or fund their annual promotional budgets as he had in the past. He did hope that they would continue to use him, however, as a “valuable source of information and advice about new music.”

He had diversified his interests in the music business. He claimed that the other areas of JMA had become even more lucrative than his promotion business, saying he made more money, for example, by consulting for publishers and merchandising companies looking for new talent, and venture capital firms who wanted to buy some glamour by investing in the music business. Nor did he plan to totally stop working with the record companies on promoting their records; he would go back to the old way of doing it and work for a flat fee rather than the multi-tiered bonus system.

Indie promoter Lembo reflected on promotion post-McClusky:

Some things we think about now when promoting a record… is there marketing support, internet activity, video (MTV, VH1, BET, Fuse, CMT, etc.), print media, touring, television appearances, satellite radio play (Sirius and XM), Music Choice [the digital music channels on certain cable systems], motion picture soundtracks, use of a song in a television show or advertising campaign? Is the artist top of mind when it comes to popular culture (e.g. American Idol)?

As Clear Channel ascended and McClusky fell, the record business scrambled. On the one hand, the broadcast frequencies remained as monolithic, homogeneous, and monotonous as ever. In reaction to this, new choices like those outlined by Lembo sprang up.

So, did Eliot Spitzer succeed where the Isgro trial failed? Did he wash away the “corrosive” influence on “the integrity of competition… the music industry…” and “the radio industry” allowing “artistic competition, based upon aesthetic judgments or other judgments that are being made at radio stations”? Or did the infection of independent promotion and payola just once again go subcutaneous? One thing is likely, and that is that the half-century-old (or older) rules for getting a hit record won’t change any time soon. “A song without significant record company support,” noted the New York Times’s Jon Pareles, “stands about as much chance as a congressional candidate without campaign funds.”