Sunday, September 18, 2011

Major Labels Still Using Payola The Same Old Way

TechDirt alerted me to a post by the former president of Rykodisc, George Howard on TuneCore's blog.  As George points out, radio is the last stronghold for the major labels, meaning it's the last place they have some "control".   Getting most records on the radio involves lots of money, hiring "consultants" and being a part of the good old boys network, which still exists and has not been cracked in over 50 years.

In my experience the route to getting a song played on radio has not changed in many years.  It started in the late 80's and was in full swing by the 90's.  George explains the process:

Getting a song “added” to a station’s playlist to get a certain number of plays per week involves a rather byzantine process that brings in various parties, called independent promoters (“indies”).  These “indies” are first paid by the label.  It’s important to note that the money the indies receive isn’t necessarily compensation paid directly to them for getting Program Directors to get a song played.  Rather, they work more like an intermediary to pass the label’s money to the radio station. These indies, with the money paid to them from the labels, pay the radio station money for various listener give-aways, bumper stickers and so on. To top it off,  these very same indies are often also paid a second time by the stations themselves as a consultant to advise the stations on what songs they should play.

This is essentially why very few indie artists are heard on any format other than college radio (there are consultants for that format also).  They have a better chance of being struck by lightening than hearing themselves on Top 40 radio.  The majors have the most money and are tied in to the good old boys network.  If indies have the money, they don't belong to the network.

What George didn't touch on was the cost to the artists.  All this promotion money/payola is recoupable by the artist.  It goes to their bottom line.  It explains why Vertical Horizon had a big hit with Everything You Want and got paid nothing in royalties from their record label.    When I was working with the band, the album had sold about 1.4 million units and the band hadn't seen a penny in royalties.  The flip side of this is you are so happy a label has gotten behind you and is pushing you, that you ignore it as the spread sheet numbers keeps adding up.  It did make them a profitable touring band and the songwriters got nice publishing checks.   As an artist you weigh the outcome.

Things are much different now than 15 years ago.  There are other ways to be heard than on the radio.  The good news for artists is they have access to all of them. 

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