Jeff McClusky, an entrepreneur most credited with developing the independent record promoter “budget” to allegedly sidestep payola rules for radio, announced in early November he was abandoning the business model, according to The New York Times.
The move comes three months after New York Atty. Gen. Eliot Spitzer’s payola investigation exposed such practices and forced
Under McClusky’s model, which came into wide use in the 1980s, “budgets,” or annual fees, were provided to radio stations that could use the money to pay for swag, contests or other promotions.
The fees were not supposed to be directly tied to airplay of specific songs, the Times said. The record companies would then be billed for each song added to a station’s playlist.
McClusky reportedly said he notified 30 stations he still works with – down from a high of about 175 five years ago – that he would not renew contracts to provide them with annual fees. He does plan to continue working for the major labels, but will be paid a flat amount rather than by fees tied to radio playlists.
Some of the largest radio chains, including Clear Channel and Infinity, announced in recent years they were ending their relationships with independent record promoters.
The final blow to McClusky appears to have been the Spitzer investigation, in which the AG described McClusky’s business model as “an effort to dodge the payola laws” and a means to “perpetuate the fiction” that stations weren’t being paid to play specific records.
“Whether or not I agree with it, it is what it is,” McClusky told the Times. “… I choose to comply because I do not want to interrupt the excellent promotion relationship I’ve had with Sony BMG labels.”