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Payola, in the music industry, is the illegal practice of payment or other inducement by record companies for the broadcast of recordings on music radio in which the song is presented as being part of the normal day's broadcast. Under U.S. law, 47 U.S.C. § 317, a radio station can play a specific song in exchange for money, but this must be disclosed on the air as being sponsored airtime, and that play of the song should not be counted as a "regular airplay".
The term has come to refer to any secret payment made to cast a product in a favorable light (such as obtaining positive reviews).
Some radio stations report spins of the newest and most popular songs to industry publications. The number of times the songs are played can influence the perceived popularity of a song.
The term payola is likely a portmanteau, of the words “pay” and either Pianola (a once-common name for player pianos), or “Victrola”, trade name of the widely known early phonographs made by RCA Victor. Payola has come to mean the payment of a bribe in commerce and in law to say or do a certain thing against the rules of law, but more specifically a commercial bribe. The FCC defines "payola" as a violation of the sponsorship identification rule that in 2005-06 resulted in tens of millions of dollars in fines to cable corporations in New York.
"Payola, in one form or another, is as old as the music business." In earlier eras there was not much public scrutiny of the reasons songs became hits. The ad agencies which had labored for NBC radio & TV show Your Hit Parade for 20 years refused to reveal the specific methods that were used to determine top hits, only stating generally that they were based on "readings of radio requests, sheet music sales, dance-hall favorites and jukebox tabulations". Attempts to create a code to stop payola were met with lukewarm appreciation by publishers.
Prosecution for payola in the 1950s was in part a reaction of the traditional music establishment against newcomers. Hit radio was a threat to the wages of song-pluggers. Radio hits also threatened old revenue streams; for example, by the middle of the 1940s, three-quarters of the records produced in the USA went into jukeboxes.Still, in the 1950s, independent record companies or music publishers frequently used payola to promote rock and roll on American radio; it promoted cultural diversity and disc jockeys were less inclined to indulge their own personal and racial biases. 
Alan Freed, a disc jockey and early supporter of rock and roll (and also widely credited for actually coining the term), had his career and reputation greatly harmed by a payola scandal. Dick Clark's early career was nearly derailed by a payola scandal, but he avoided trouble by selling his stake in a record company and cooperating with authorities. Attempts were made to link all payola with rock and roll music.
Payola to DJs is less of a concern today, as they are rarely involved in choosing the songs. Modern radio is widely based on company-delivered playlists, often scheduling every song, commercial break, and DJ talk time, and most shows are pre-recorded well in advance of their broadcast.
Congressional payola investigations
The Congressional Payola Investigations occurred in 1959, after the United States Senate began investigating the Payola Scandal. Among those thought to have been involved were DJ Alan Freed and television personality and host Dick Clark.
The term Congressional Payola Investigations refers to investigations by the House Subcommittee on Legislative Oversight into payola, the practice of record promoters paying deejays or radio programmers to play their labels' songs. Payola can refer to monetary rewards or other types of reimbursement, and is a tool record labels use to promote certain artists. Other forms of payola include making arrangements to purchase certain amounts of advertising in exchange for staying on a stations playlist, forcing bands to play station-sponsored concerts for little or no money in order to stay in a station's good graces, and paying for stations to hold "meet the band" contests, in exchange for air time for one of the label's newer, lesser known bands. The first major payola investigation occurred in the early 1960s. Nationally renowned DJ Alan Freed, who was uncooperative in committee hearings, was fired as a result. Dick Clark also testified before the committee, but survived, partially due to the fact that he had previously divested himself of ownership interest in all of his music-industry holdings.
After the initial investigation, radio DJ's were stripped of the authority to make programming decisions, and payola became a misdemeanor offense. Programming decisions became the responsibility of station program directors. As a result, the process of persuading stations to play certain songs was simplified. Instead of reaching numerous deejays, record labels only had to connect with one station program director.
Labels turned to independent promoters to circumvent allegations of payola. This practice grew more and more widespread until a 1986 NBC News investigation called "The New Payola" instigated another round of Congressional investigations. With the creation of Napster and other now illegal music sharing websites, the power of the independent promoters began to decline. Labels once more began dealing with stations directly.
In 2002, investigations by the office of then- New York District Attorney Eliot Spitzer uncovered evidence that executives at Sony BMG music labels had made deals with several large commercial radio chains. In July 2005, the company acknowledged their improper promotional practices and agreed to pay a $10 million fine.
A different form of payola has been used by the record industry through the loophole of being able to pay a third party or independent record promoters ("indies"; not to be confused with independent record labels), who will then go and "promote" those songs to radio stations. Offering the radio stations "promotion payments," the independents get the songs that their clients, record companies, want on the playlists of radio stations around the country.
This newer type of payola was an attempt to sidestep FCC regulations. Since the independent intermediaries were the ones actually paying the stations, it was thought that their inducements did not fall under the "payola" rules, so a radio station need not report them as paid promotions.
Former New York State Attorney General Eliot Spitzer prosecuted payola-related crimes in his jurisdiction. His office settled out of court with Sony BMG Music Entertainment in July 2005, Warner Music Group in November 2005 and Universal Music Group in May 2006. The three conglomerates agreed to pay $10 million, $5 million, and $12 million respectively to New York State non-profit organizations that will fund music education and appreciation programs. EMI remains under investigation.
Concern about contemporary forms of payola prompted an investigation during which the FCC established firmly that the "loophole" was still a violation of the law. In 2007, four companies (CBS Radio, Citadel, Clear Channel, and Entercom) settled on paying $12.5 million in fines and accepting tougher restrictions than the legal requirements for three years, although no company admitted any wrongdoing. Because of the increased legal scrutiny, some larger radio companies (including industry giant Clear Channel) now flatly refuse to have any contact with independent promoters.
As money laundering schema
In Mexico, South America and some regions of the US south border is common to hear the sudden appear of "new artists", mainly in folk radio stations, who are not known in the music industry, they have no previous career and no one explains where they come from. This music groups and singers start to sound persistently on radio, television and public scenarios with a strong promotion to their concerts. This happens for a fixed amount of time, and in the same sudden way they appear they stop their promotion and disappear from the music scene, or change their stage name. Such artists are commonly manufactured by producers of dubious origin, that pay payola and do events in order to launder money from drug trafficking, prostitution or some other kind of illegal operations.
"Pay to play" for live music
The practice of "pay[ing] to play" is defined as bands paying to play live at a bar, club, or auditorium. The payments are typically made to the owners of the club; sometimes this happens through a middleman or proxy, otherwise known as promoters.
In rock and metal music, some clubs and bars ask some bands to pay to perform. Metal/rock drummer Richie Rivera states that the best clubs to play "...are usually pay-to-play (or what the clubs call 'pre-selling tickets')". Rivera says that while his band has done "pay to play" to perform at venues, in the future, the band will "...only do it for a support slot for a national act".
Jazz trumpeter Marvin Stamm has described a similar "pay to play" issue in New York city jazz clubs. Stamm says that if a jazz "...artist or group is new or unknown, some clubs - even the larger clubs - will ask that the artist or group’s record company guarantee that the club will break even. If there is no record company to back the artist, then he will probably have to guarantee this himself". If there is a poor turnout at the club, the jazz band leader may have to pay hundreds of dollars to the club.
In the US, there are "pay-to-play" "Battle of the Bands" contests where bands pay to perform on stage. Billboard Magazine's Oct. 21, 2006, article "Pay to Get Played" described how a "third-party booking agency in New Jersey" called Audible Spectrum Records was "charging bands up to $350 per show, promising services and opportunities that were never delivered". "Battle of the Bands" are becoming increasingly common in both the U.S.A. and Europe, particularly the U.K. Typically, each band that enters the "battle" will pay a fee, returnable only if a minimum number of tickets is sold for the first round of the contest. Progress in the contest is dependent on "votes". A prize is usually given to the winner.
On September 25, 2007, the U.S. Congress held a hearing on hip hop music entitled From Imus to Industry: The Business of Stereotypes and Degrading Images. In her testimony, Lisa Fager Bediako argued that misogynistic and racist stereotypes permeate hip hop music because record labels, radio stations, and music video channels profit from allowing such material to air while censoring other material. In that context, Fager stated:
Payola is no longer the local DJ receiving a couple dollars for airplay; it is now an organized corporate crime that supports the lack of balanced content and demeaning imagery with no consequences.
Satire of payola practices
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In 1960, Stan Freberg did a parody on the Payola Scandal, by calling it "Old Payola Roll Blues", a two sided single, where the promoter gets an ordinary teenager, named Clyde Ankle, to record a song, for Obscurity Records, entitled "High School OO OO", and then tries to offer the song to a Jazz radio station with phony deals that the Disc Jockey just won't buy it. It ends with an anti-rock song, saying hello to Jazz and Swing, and goodbye to amateur nights, including Rock and Roll.
The practice was criticized in the chorus of the Dead Kennedys song "Pull My Strings", a parody of the song "My Sharona" ("My Payola") sung to a crowd of music industry leaders during a music award ceremony.
The They Might Be Giants song "Hey, Mr. DJ, I Thought You Said We Had a Deal" is about the practice. It is narrated from the point of view of a naive and inexperienced musician who has been coerced by a disc jockey into paying for airplay – the disc jockey then disappears and does not deliver on his promise.
The song "Payola Blues" by Neil Young from his 1983 album Everybody's Rockin'. It opens by saying "This one's for you Alan Freed" and then states "'Cause the things they're doing today would make a saint out of you," implying that Payola corruption is bigger now (or was bigger in the 1980s) than it was in the '50s.
On a Washington, D.C. radio station in 1999, the disc jockeys announced that they were debuting the Lou Bega song Mambo Number 5, by saying that they had accepted a large amount of payola to play the song. Ironically, if they had actually been paid to play the song on the air, it would not have been payola, because payola is the unannounced acceptance of a payment to run a song. If the song is identified before being played as being done because the talent or station is being paid to do so, the playing of the song and acceptance of money to do so is perfectly legal, and does not constitute payola.
The Basque rockband Berri Txarrak recorded a CD called Payola in 2009.
Payola was depicted in the film The Harder They Come, released in 1972, where a record producer, not the recording artist, controls the airwaves. The portrayal of its protagonist (Jimmy Cliff) as an aspiring musician who is forced to sign away his rights to make a hit record depicts the role of record producers and radio DJs as a dominance - the musician ends up with no aspirations or living the same lifestyle, as in the case of the film Rockers.
An episode of the TV series WKRP in Cincinnati titled "Johnny Comes Back" features a story involving Dr. Johnny Fever's (Howard Hesseman) replacement, Doug Winner (Philip Charles MacKenzie), accepting money and drugs from a promoter in exchange for playing specific records.
- "Pluggers war on old curse". Billboard magazine (Nielsen Business Media, Inc.) 61 (44): 3, 13, 47. October 29, 1949. ISSN 0006-2510.
- Dunning, John (1998). On the air: the encyclopedia of old-time radio (revised ed.). Oxford University Press US. p. 739. ISBN 0-19-507678-8.
Only a general statement that hit status was based on "readings of radio requests, sheet music sales, dance-hall favorites and jukebox tabulations"
- Cowen, Tyler (2000). In praise of commercial culture. Harvard University Press. pp. 164, 166. ISBN 0-674-00188-5.
- Cowen, Tyler (1998). In praise of commercial culture. Harvard University Press. pp. 166,167. ISBN 0-674-44591-0.
- "The Jordan brothers: A Musical Biography of Rock's Fortunate Sons", by Maxim W. Furek. Kimberley Press, 1986.
- "Has payola cued a new inspirational wax kick?". Billboard magazine (Nielsen Business Media, Inc.): 6. Jan 16, 1960. ISSN 0006-2510.
"Even now after the payola scandals and the attempt to link all payola with rock and roll recordings, the music with a beat still dominates over 60 percent of The Billboard's Hot 100 chart. This isn't to say that rock and roll isn't fading, or actually evolving into pop music, but .... "
- Richard Campbell et al, Media and Culture: An Introduction to Mass Communication, 2004
- Leeds, Jeff; Story, Louise (2005-07-26). "Radio Payoffs Are Described as Sony Settles". The New York Times.
- Ross, Brian; Walter, Vic; and Esposito, Richard (2006-05-11). "New Settlement in Payola Probe". ABC News.
- Dunbar, John (13 April 2007). "FCC unveils settlement with radio firms". USA Today.
- Rising Stars: Madison Paige (cached version). Retrieved 05-Jan-2009.
- Girl Trouble official web page (cached version). Retrieved 05-Jan-2009.
- "From Imus to Industry: The Business of Stereotypes and Degrading Images", Committee on Energy & Commerce, accessed on September 20, 2011.
- "From Imus-to-Industry: The Business of Degradation in Rap Music", UCLA, Center for Communications & Community, October 03, 2007.
- "Dick Clark survives the Payola Scandal". http://www.history.com.
- "Payola: Can Pay for Play be Practically Enforced". http://testwww.stjohns.edu.
- "NY Times, How Payola Went Corporate". http://www.nytimes.com.
- Dannen, Fredric. Hit Men: Power Brokers and Fast Money Inside the Music Business
- Cartwright, Robin (August 31, 2004). "What's the story on the radio payola scandal of the 1950s?." The Straight Dope.
- Coase, Ronald (1979). "Payola in Radio and Television Broadcasting." Journal of Law and Economics 22: 269-328.
- McCarthy, Jamie (June 5, 2001). "Payola: Another Brick in the Wall." Slashdot Features.
- Boehlert, Eric (March 14, 2001). "Pay for play." Salon.
- Dannen, Fredric (1991). Hit Men: Power Brokers & Fast Money Inside the Music Business. New York: Random House. ISBN 0-679-73061-3. Frederic Dannen.
- The FCC's Payola Rules "" FCC's consumer publications.
- Palmer, Robert (1995). Rock & Roll: An Unruly History. New York: Harmony Books. 325 pages. ISBN 0-517-70050-6. Robert Palmer (writer).
- "Joint statement on current issues in radio" on May 2002 by recording artist groups.