Rumored FCC Payola Settlement Angers Critics

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Last year, the Federal Communications Commission promised to pick up Elliot Spitzer's investigation into payola. But rumors around Washington and the music industry suggest that the FCC is dropping the investigation and settling with broadcasting companies.

The music industry received a big jolt a few years ago after a payola investigation conducted by Spitzer, then New York State's attorney general, resulted in multi-million dollar settlements with two record companies.

Musician advocates and media critics hoped it might pave the way for further reforms in the industry — including the other half of the issue: the media companies that work with record labels.

But sources have told NPR that the Federal Communications Commission is planning to announce a settlement with broadcasters over the payola issue.

A standard payola scenario occurs when someone from a record company "encourages" someone from a radio station to play its songs. In one recent instance, a song by Jennifer Lopez received increased airplay after Sony BMG employees spent thousands of dollars on gifts for people working at radio stations.

The American Association of Independent Music and small-market music labels welcomed Spitzer's investigation, and the push for enforcement that followed. Many say they hoped that would be just the beginning.

After Spitzer turned over his findings to the FCC, there was talk among some industry watchers that the Justice Department might get involved and that payola would be taken seriously at the federal level.

FCC Chairman Kevin Martin spoke last month at a [public hearing on media ownership] in Nashville, Tenn. He assured the hundreds of attendees, many of whom work in the country music industry, that he took payola seriously, and that his agency would enforce the law.

Some artist advocacy groups, such as the Future of Music Coalition, are fearful that in its settlement, the FCC will not adequately address enforcement and oversight. Until payola is removed from both the broadcasting and recording arms of the music industry, they say, future abuses are likely.