Radio disc jockey Alan Freed and fans in the studio at WINS 1955.

Payola Then and Now

In November 1959 the U.S. House Oversight Committee initiated hearings. Back in those days of yore it was not about some political malfeasance or attempts to undermine the political order.

Rather it was about radio. Primarily AM radio. Although the first Federal Communications Commission (FCC) license for an FM station went to WDNG on November 14, 1938—in Anniston, Alabama*, which is located about 74 miles east of Birmingham—throughout the 1950s most radios—tabletop or portable transistors—were AM only. It wasn’t until 1958 that Sony started shipping FM-capable transistors to the U.S., so clearly there wasn’t a sufficient number of them in 1959 to get Congress agitated.**

The issue the committee looked into was “payola,” the practice of record companies paying disc jockeys to play specific records a set number of times during a prescribed period. The record companies figured that repeated plays made the music all the more appealing, so if they had to slip a few bucks (yes, there were some DJs who apparently made four figures, which would be about five figures today, based on inflation) to the people who were literally working the turntables, so be it.

Notably, although payola had a long history prior to the advent of rock and roll, which arguably gave rise to the various AM stations that popped up, it didn’t actually become illegal until 1960, when Congress amended the Federal Communications Act to outlaw “under-the-table [turntable?] payments.”

As time has passed, there have been a number of cases brought regarding illegal payments and the promotion of particular music.

And while the notion of transistor radios and disc jockeys like Alan Freed (who was charged early in the period of heightened concern—such that even President Eisenhower spoke out about payola—and was convicted, which led to Freed’s subsequent career being ignominious and his life being cut short, dying at age 43***) seem ol’ timey, last week the Federal Trade Commission and state attorneys general announced lawsuits against Google and iHeartMedia the settlement of which will require, among other things, a payment of $9.4 million.

This isn’t exactly payola, because that’s ostensibly the purview of the FCC not the FTC. But with the definition of “payola” by the FTC saying this:

“If employees of broadcast stations, program producers, program suppliers or others accept or agree to receive payments, services or other valuable consideration in exchange for airing material, federal law and FCC rules require broadcasters to fully disclose this fact to audiences at the time the programming is aired.”

what the FTC found is very much aligned.

The FTC says the companies were behind the airing of “nearly 29,000 deceptive endorsements by radio personalities promoting their use of and experience with Google’s Pixel 4 phone in 2019 and 2020.”

It went like this:

In 2019 Google provided iHeartMedia, which owns more than 850 AM and FM stations and its internet network with scripts touting the Pixel 4: “It’s my favorite phone camera out there. . .” “I’ve been taking studio-like photos of everything. . .” “It’s also great at helping me get stuff done. . . .”

But the FTC points out: “the on-air personalities were not provided with Pixel 4s before recording and airing the majority of the ads and therefore did not own or regularly use the phones.”

This is a rather bizarre situation if you realize that when the 2019 Pixel 4 launched, it retailed at $799. Let’s say that of all the iHeartMedia outlets it was determined that four on-air personalities were determined to be sufficiently persuasive. So if all 3,400 of those people were given a Pixel 4, it would have been an outlay of $2,716,600—and it would have undoubtedly been less than that because Google could have undoubtedly given itself a discount. Google (OK: Alphabet) had 2019 earnings of $173.48 billion, so $2.7 million would be the kind of thing that they’d probably find in the couches at the Googleplex in Mountain View on a given day.

Remember: this FTC announcement was released last week. Radio stations. Illegal payments to ostensible DJs. Government crackdowns. Seems that little changes.

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*The House hearings were led by Oren Harris, Democrat of Arkansas. Seems like the South had a bigger effect on music in somewhat comparatively discrete ways.  However, oddly enough, even though WDNG received that early FM license, the station didn’t go on the air for another 19 years—as an AM station.

**And while on the subject of historical exercises on the airways, the Federal Communications Commission includes among its “major milestones” in commercial radio history WSM-AM’s “Barn Dance,” which debuted on November 28, 1925. That was to become the Grand Ole Opry, which is, per the FCC, “the longest-running radio broadcast in U.S. history.” WSM came into existence on October 5, 1925. It was created by the National Life and Accident Insurance Company. The call letters “WSM” were an acronym of the insurance company’s slogan: “We Shield Millions.” The insurance company was actually somewhat clever in the context of what constitutes payola: it was absolutely upfront with where the money was coming from for its shows. No shadiness involved. And while the WDNG got the first FM license, WSM became the first commercial broadcaster to get a commercial FM license from the FCC, in 1941. And clearly the National Life and Accident Insurance Company was early on a master of all media: on September 30, 1950, WSMV went on the air: Nashville’s first TV station.

***While Freed’s name is associated with payola, the man posthumously received the Ahmet Ertegun Award and was inducted into the Rock and Roll Hall of Fame in 1986. The hagiographic essay that the Hall of Fame produced to provide background and explanation of Freed’s award opens, “Alan Freed was the most effective proselytizer rock and roll has ever known. Spreading the word from a radio pulpit that kicked off nightly to the strains of Freddie Mitchell’s ‘Moondog Boogie,’ Freed kept time to the music by smashing his hand on a telephone book. He first conquered Cleve­land over WJW, and then moved his show to New York’s flagship WINS. Alan not only spun the music; he wrote it, promoted it, starred in its early movies and became one of its first scapegoats.” And it seems he illegally profited from it.

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