FCC Settles Payola Case

The FCC, four major radio broadcasters and a group of independent record labels have reached a pair of tentative agreements resolving an investigation of "pay for play" practices begun by the FCC last year following a similar inquiry by New York Attorney General Eliot Spitzer.

Clear Channel Communications, CBS Radio, Entercom Communications and Citadel Broadcasting admitted no wrongdoing, but have agreed to pay the government $12.5 million and provide 8,400 half-hour segments of free airtime between 6 a.m. and midnight to independent record labels over the next three years.

If approved, the settlement would be the largest fine ever levied at once by the FCC, although it pales in comparison to a proposed $24 million fine pending against Spanish broadcaster Univision, which is under fire for failing to provide educational children’s programming.

There is some skepticism among industry execs, however, as to whether the promise by the broadcasters to provide airtime to indie labels will make much difference, because it’s not clear how radio stations will determine exactly what defines an independent label.

The agreements coincide with an announcement that the American Association of Independent Music, a group of indie record labels, and broadcasters have developed a set of rules that will guide how label reps and radio programmers interact.

The rules include limiting gifts, keeping a database of all items of value supplied by record companies, establishing a hotline for the reporting of infractions and submitting to supervision by independent reviewers.