FCC Issues Payola Warning

The Enforcement Bureau of the FCC has issued a Enforcement Advisory to ensure compliance with federal law regarding artist performances at radio station events or festivals:

Enforcement Advisory: Neither broadcast licensees nor their staff members are permitted to force or accept undisclosed free or discounted performances from musicians in exchange for enhanced airplay. 

The advisory serves as a reminder that engaging in "payola" violates the United States Criminal Code and can lead to sanctions under the Communications Act of 1934, as amended. Specifically, this advisory highlights the issue of payola where radio stations or their employees covertly manipulate airplay based on an artist's participation in station promotions or events without receiving appropriate compensation or expense coverage.

Definition of Payola:

Payola involves the unreported payment to, or acceptance by, broadcast station employees, program producers, or suppliers of any form of compensation to secure airplay for specific content. 

Legal Obligations:

• Under Section 507 of the Act, any involved party must disclose such payments or agreements to the broadcast station licensee prior to the broadcast.
• Section 317 of the Act mandates that the licensee must then announce that the program content is sponsored and disclose the identity of the sponsor.
• Diligence Requirements: Sections 317(c) of the Act and 73.1212(b) of the FCC's rules stipulate that each licensee must show "reasonable diligence" in gathering necessary information from employees and others to meet the sponsorship identification obligations under Section 317.
• There is an expectation of heightened diligence from stations whose formats or contexts render them more prone to payola, especially those contributing to record chart services, compared to stations with formats like all-news which are less likely to encounter these issues.

The advisory underscores the importance of transparency and compliance to maintain the integrity of broadcast practices.

The warning comes after U-S Senator Marsha Blackburn (R-TN) sent a letter to FCC's Carr concerning the relationship between radio stations and music artists, particularly regarding concert promotions. 

FCC Chair Brendan Carr has directed the FCC's Enforcement Bureau to examine these allegations, calling it an "important issue" and questioning if there has been any "payola" misconduct by broadcasters.

Marsha Blackburn

Senator Blackburn has pushed for an investigation, suggesting that radio stations giving more airtime to artists who perform at free concerts might represent a modern version of pay-for-play. She has not detailed specific artists or stations involved but highlighted that stations might "pressure" artists into performing at events like listener appreciation or charity concerts, with increased airplay as a reward. Blackburn labeled this practice as "exploitative" and unacceptable.

In a letter last Friday to FCC  Chair Carr, Blackborn wrote "From what we have learned, it appears that to sidestep these restrictions, radio stations and networks have adopted a troubling new tactic," Blackburn wrote. "Instead of demanding cash or lavish perks from record labels in exchange for airplay, they now pressure artists to perform 'free radio shows'— also referred to as 'listener appreciation shows' or 'charitable concert events.' We have heard the new scheme works in this manner: radio stations and networks offer more airtime for an artist’s songs if the artist performs a free show.” 

However, some in the broadcasting industry suspect political motives behind Blackburn's call for investigation, noting that it coincided with her reintroduction of the American Music Fairness Act (S.326), legislation aimed at mandating radio stations to pay performance royalties for music played on air.