Tuesday, March 25, 2008

Dark Payola

The term is new, but the nomenclature is questionable. I like the sensational effect of the term which is to compare the term with blatant bribery. But it's inaccurate. But i've been seeing the term for almost a year now so I have come to accept that it's part of the jargon now. The oldest reference I can find is in an East Bay express article from April of last year. It's an interview with Rusty Hodge of SomaFM. I don't know if he invented the term but the SF weekly re-used it in the big feature that really laid out the problem. Dark Payola Emerges!

It's s a growing problem with a few moving parts so let's start with the most important fact. I'll quote John Gorman if you don't' mind.
In the record business there is nothing – absolutely nothing - more important than chart position. It’s what label sales weasels use to sell clients on what music to stock at retail.
Labels will do anything, anything for airplay and airplay equals chart position. They have promotion departments that gauge themselves on airplay on an hourly basis. Companies track the airplay and cut it into a hundred different kinds of reports so they can continue to rehash the data to more precisely measure and value the information. It's a high-pressure gig. Anyone that read the emails that Spitzer subpoenaed knows that bribery is just the ground floor. So boring old-fashioned bribery like payola is just pedestrian.

In March of 2007 SoundExchange cut a deal with the big four major labels setting webcast royalties. It raised the rates significantly. As you probably heard, they increased rates for most webmasters to 10 times their income and many ceased to exist. Soma for example went from a $10,000 to a $600,000 bill. SoundExchange agreed to apply the charges retroactively. This was putative, and offensively unfair. It killed internet radio. And they weren't even done yet.

The players that remain are big. Yahoo, AOL, Live 265... some of them have gone on to negotiate direct licenses for airplay at reduced rates. The labels instead of paying bribes, cut discounts on royalties. For them the added bonus is that the money is stolen from the artists they represent. Sadly this is totally legal.

The result is that webcaster playlists include more major label music because it's cost-effective. Soundexchange has argued that webcasters are equally free to cut similar deals with those labels. But ethical dynamics aside, it's not possible for 100,000 webcasters to cut individual deals with 100,000 indie labels. That's so unreasonable in fact that a single group was designated to negotiate that massive deal: Soundexchange. They just fucked it up so bad as to negate their purported purpose for existing.