Friday, November 03, 2006


A One Look dictionary search comes up with the following definition for payola:

"noun: a bribe given to a disc jockey to induce him to promote a particular record"
It's interesting to me that a word would exist specifically regarding record companies bribing disc jockeys for airtime--a term exclusively applying to radio, and not bribery in general. I wasn't aware, until reading an article by Martin Fridson, at TCS Daily, that back in 1960 Congress passed a law against the practice of record producers buying airtime. I'm a little too young to have been aware (or even alive) when the Congress held hearings to debate the scandalous issue of payola. (Wow, it feels nice to still be able to say I'm too young for something.) Anyway, Fridson's article looks at how that whole not-paying-for-airtime thing has worked out over the last several decades--not too well, by his account, and he debates the merit of government intervention in market-related concerns. The question arises as to exactly why such a practice should be illegal? As Fridson points out, the equivalent of payola in other industries is legal and considered perfectly acceptable:
Nowadays, shelf space in supermarkets is routinely and openly purchased by food manufacturers. Bookstores charge for window displays without fear that prosecutors will show up on their doorstep. These mechanisms for achieving consumer awareness represent valuable resources. It furthers economic efficiency for firms to work out appropriate prices for such resources. Why, then, did Congress single out radio airtime as an awareness-building mechanism for which no market may lawfully exist?
Fridson gives some history that indicates with a fair amount of authority that those who promoted the notion of payola as a crime (established record companies whose profits were being threatened by upstarts) did so with their own financial gain very firmly in mind. (Unfortunately, donation-seeking politicians often do the same thing.) Apparently, established companies, who themselves used the system of buying airtime, did not immediately respond to the shift in record purchasers' preferences toward rock and roll by producing rock and roll. Rather, they tried to hinder the companies who were producing it, companies which lacked an established base, and thus relied heavily on buying airtime to get their music to the public. In doing so, by Fridson's account, six large companies pretty much locked up American record sales. Fridson indicates that the real purpose behind the payola law (eliminating competition) has clearly been fulfilled, but also spends some considerable time looking at the ways clever companies circumvent the rules--commit payola-by-any-other-name--and the economic realities of free market enterprise.

I don't really have much to say about the topic. I just found the piece interesting and thought I'd pass it on to you, in case it's the kind of thing that strikes a chord with you. I will say this, though--the market can handle such situations very well, if it's allowed to do so. If a disc jockey is getting paid off by a record company to play music the public doesn't like, the public won't buy it, the radio station will lose listeners and thus advertisers, and the disc jockey and record company will both suffer in the future for putting their resources into that product--the disc jockey by losing his employment, and the record company by leaner bank accounts. Fair competition says make the same options open to everyone, and let them allocate their own resources. All in all, I'm more in favor of letting the market (buyers and sellers working in tandem) regulate itself than letting Congress get too involved in it. Both of them act in in self-interest, but the market is more honest about it.