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Pay-for-play static cuts; Clear Channel indie ties

Saturday, April 26, 2003

By Adrian McCoy, Post-Gazette Staff Writer

In a move designed to distance it from the "pay-for-play" stigma, Clear Channel Communications is severing ties with independent record promoters.

Clear Channel management cites the company's "zero tolerance" policy toward pay-for-play, but it says the practice of working with the independent promoters could create the wrong impression. "These relationships potentially give the appearance of promoting pay for play," says Gene Romano, a senior vice president of programming for Clear Channel Communications.

The controversy arose from the practice of record companies contracting with independent promoters who are paid when a song is added to a radio station's playlist. The relationship is clouded when promoters pay a station for promotional expenses, such as concerts, an indirect channeling of funds that's a variation on the old payola scandals that plagued the industry decades ago.

Romano said the change was prompted by Clear Channel CEO John Hogan's discussions with the record labels. "It became clear to him that the present system might not be the most productive system to work with labels."

The music industry publication Billboard reported that the company is "bowing to legislative pressure" in response to concerns raised by several members of Congress, including senators Russ Feingold, D-Wis., John McCain, R-Ariz., and Orrin Hatch, R-Utah.

"The company certainly heard the concerns expressed by members of Congress and realized that these independent promo contracts may appear to be something that they're not," Romano said. "It's in our business interest to make it crystal clear by undoing that relationship."

The contracts will end this summer, and the company will restructure its relationships with the recording industry. It will establish "format liaison teams" that will be the point of contact for artists and labels, enabling them to work with multiple Clear Channel stations. The goal, Romano says, is "to build stronger relationships with record labels."

Will it improve the chances for smaller labels and lesser-known artists to get airplay? Guy Zapoleon, a Texas-based media consultant, doesn't think so. "It means that the major labels have an advantage again. To get a fighting chance, many little labels who don't have a field promotion staff use independents to help compete with the fully staffed majors for airplay."

Concerns over pay-for-play allegations came to the forefront in Congress following the massive deregulation of the industry, which allowed companies to own more stations, giving rise to radio giants like Clear Channel, with dominant station clusters in different markets. Clear Channel is now the nation's largest radio conglomerate, with 1,200 stations. It owns six in the Pittsburgh market -- WDVE-FM, WXDX-FM, WWSW-FM, WJJJ-FM, WKST-FM and WBGG-AM. The company is also a dominant force in the concert promotion business.

Feingold applauded Clear Channel's move in a statement but said legislation still needed to be passed to prevent new "pay-for-play" systems from taking root. "Congress must also address the anti-competitive behavior in the concert promotion industry and work to ensure more local input into radio programming decisions."

Feingold introduced the Competition in Radio and Concert Industries Act in January. The legislation is aimed at eliminating anti-competitive practices in the radio and concert promotion businesses: Goals include leveling the playing field for smaller radio owners; promoting diversity in broadcast and concert music offerings, and lowering ticket prices.

In the end, the shift away from independent promoters may be imperceptible to radio listeners.

Ultimately, Romano says, the decision on what music to play "always has and always will" be made by local programmers. "Local managers have to run their own markets. They have to determine what makes the most sense for their market. What works in Pittsburgh doesn't work in New York. Our [program directors] have always selected the music they believe listeners want to hear based on their knowledge of that community...

"There's a misperception that we have a central office that issues playlists."

Adrian McCoy can be reached atamccoy@post-gazette.com .

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