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Payola City
In the wild world of urban radio, money buys hits -- and nobody asks
questions.
http://www.salon.com/ent/music/feature/2001/07/24/urban_radio/index.html
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By Eric Boehlert

July 24, 2001 / "How many CDs you need?"

The question confused the young program director. He had just taken over a
small urban, or R&B, radio station down South; he was talking to a local
independent record promoter, or "indie."


It was confusing because, like programmers at music stations around the
country who decide what songs get spun, the P.D. certainly didn't need any
more copies of the new single the indie was pitching on behalf of a record
company.

"I said, 'We got CDs,'" the P.D. recalls. "I didn't know what he was talking
about. So he says, 'Oh, let me call you on your cellphone.'"

The programmer thought this was strange, too. Why would the promoter want to
discuss the song on a cellphone?

The conversation continued on a wireless. "Anything I can do for you?" asked
the indie. "Anything y'all need? How many CDs you need?"

The P.D. reiterated the station had plenty of CDs on hand.

That's when the indie took a moment to explain the ground rules to the
rookie P.D.. "He said, 'You don't understand the game, do you?'" the
programmer recalls. "I was still green. I didn't know how the system works.
He shed the light."

The programmer had always wondered how his previous boss, who made $35,000 a
year, could afford a Lexus. But now, thanks to the educating indie, he knew;
many urban programmers take illicit payments -- bribes -- on the side.

"There are code words they use," he says today. "'How many CDs you need?'
'CDs' are $100 bills. He explained there's a budget for this and a budget
for that, and how much money people get paid for each record added" to a
station's playlist.

The young P.D. had been working at the station for some time, but hadn't
seen any of that money yet, because unbeknownst to him a consultant working
for the station had convinced record companies that he alone controlled the
playlist, and was pocketing all the indie payments. When the P.D. confronted
him, the consultant generously offered to let the programmer cash in too, by
giving him control of two slots each week on the station's playlist.

The P.D. declined, having learned an object lesson in the forces that rule
in the world of urban radio: "It's payola, basically."

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As a recent series of articles in Salon has made clear, payola is alive and
well in the music business. But urban radio remains a world apart, the Wild
Wild West of the music industry. In the world of white pop and rock radio,
virtually everything on the air is bought and paid for, but in an
increasingly corporatized way, with the money going to the station's budget.
In urban radio, by contrast, the cash still goes into the personal bank
accounts of powerful programmers and consultants, sources say.

Crucial airplay "reports" to the industry's trade magazines, sources say,
are up for sale. Some stations are paid for songs that are never even played
on the air. And as for the money: These same sources say the business is
rife with overnighted packages stuffed with cash and shipped off to
recipients with phony names, or money orders made out to programmers and
sent to home addresses. The practice is widely known in the mainstream radio
industry, but almost never talked about, both because the white radio
industry has its own payola problems, and because of a fear of charges of
racism, industry members say. And thus far, this insular industry has
rebuffed attempts by the mainstream indies to penetrate it.

The result is a brazenly money-driven system that revolves around chronic
payoffs; it actually costs artists earnings; and it is often indifferent to
the songs it puts on the air. Says one source who left radio programming to
work promotion for an urban record company, "I didn't realize how dirty it
was until I went to the label side. Now I know."

From the days of wildcat DJs and fly-by-night promoters in the 1950s and
1960s, black radio has always been a unique and passionate American
institution. And while white mainstream radio has grown increasingly
corporatized and monochromatic in recent years, the country's nearly 300
urban outlets, whether spinning smooth crooners like Usher and Alicia Keys
or bad boy rappers like Jay-Z and Ja Rule, have resisted co-optation.

That's the good news. The bad news is that black radio's hit music stations
play by two rules: Everyone gets paid to play, and nobody ever talks about
the first rule.

Flashback to the '80s: Those rules used to hold sway in the world of pop
radio promotion as well. In 1988, for instance, pop indie promoter Ralph
Tashjian was charged with bribing programmers with cash and drugs, as well
as tax evasion and obstruction of justice. He pled guilty to one payola
charge and filing a false tax return, and admitted having sent a Fed-Ex
package of cocaine to an employee at a Fresno radio station.

More recently, Latin radio was rocked when the head of promotion for
Fonovisa, the largest record label in the genre, pled guilty to illegally
paying off DJs at Spanish-language stations to play its songs.


According to payola laws, it's a crime for a station employee to accept
payment for playing a song, if the station fails to notify listeners about
the financial arrangement.

Today, indie promotion for country, pop and rock remains influential but at
least makes an effort to stay within the letter of the law. Following the
government's late-'80s crackdown, it has simply become much more corporate,
with large indie operations -- the best-connected of which are Jeff McClusky
and Associates and Tri State Promotions and Marketing -- signing above-board
deals with individual stations.

In exchange for paying the stations an annual promotion budget ($100,000 for
a medium-size market), that indie becomes that station's exclusive indie and
gets paid by the record companies every time that station adds a new song.
(Critics say it's nothing more than a sanitized quid pro quo arrangement;
station adds song, indie gets paid.)

Admits one Top 40 indie: "You can't see it but you sense it's out there --
the kickback." But pop and rock indies have their lawyers periodically pore
over their books make sure the transactions, while ethically questionable,
remain technically legal.

Urban promotion on the other hand, remains largely unchanged, or
unchallenged, by any reform efforts.

As an industry practice, independent promotion is rarely discussed in public
and press coverage is frowned upon. Yet even against that backdrop, the
secrecy surrounding urban promotion has always been deafening. Salon
contacted scores of urban record-label executives and radio programmers for
comment; all declined to be interviewed on the record.

How hush-hush is it? Consider the straight-arrow urban P.D. who turned a
top-75 market station around. He got labels to pay for listener vacations
who won call-in contests; he lured big-name artists to make in-person visits
to the station; he even boosted employee morale by giving staffers custom
station jackets.

How did he afford it? "The [promotion] checks were made out to the station,
not Fed-Exed to a P.O. box number," he says today.

When the station owner expressed amazement about what the programmer had
done for the station, the P.D. simply explained the situation. "He didn't
know the previous P.D. was taking money," the P.D. recalls now. That's how
hush-hush it is.

Pick up any music-industry trade guide and you'll see dozens of independent
promotion companies for rock, pop, country, even jazz listed. Only the major
urban players are missing. They don't advertise.

Nonetheless, some inside the world of urban radio and record promotion
agreed to talk to Salon about how the business operates. All requested
anonymity.

They suggest the problem of payoffs is widespread. "I think every reporting
urban station is taking money," says one format programming veteran. He's
referring to the 100-plus stations that, because of their audience size or
influence, are asked to "report" their playlist each week to a trade
magazine, such as R&R or Billboard.

Is the practice that widespread? "What do you mean 'widespread'? It's all
the [urban] stations everywhere," says another urban industry vet.

If a station reports, the monetary value of that playlist increases since
the songs it chooses can affect the trade magazines' weekly charts. And from
a record-company perspective, radio is all about pushing singles up the
chart.

Translation: That's where the money is. According to an urban-radio
programmer, if a station reports just to R&R, a song added to its playlist
is worth roughly $500. If the station reports to both R&R and Billboard,
it's worth roughly $1,200. (In major markets that figure can go much
higher.)

So for an urban station reporting to both trades, and adding five new songs
a week, that's $6,000 a week, or $300,000 a year in tax-free income. Whoever
controls the playlist pockets that money. It could be the station program
director, a consultant, a vice president from corporate programming, or even
the station owner.

As Salon has reported, virtually all the songs played on a typical
commercial radio station -- known as "adds" in the trade -- are paid for.
And while some traditional payola undoubtedly exists in the pop, rock and
country world, more times than not that money goes toward the station's
bottom line to purchase promotional and marketing items (billboards, station
van, etc.), or to help pay bands for an annual all-star concert.

What's different in the urban world, according to format sources, is that
most or all of that money goes directly into somebody's pocket at the
station.

Not surprisingly, with that sort of personal incentive, it's tempting to
stretch the truth. One urban P.D., whose station owner bragged about
stashing away $10,000 each month in indie payments, recalls "adding" songs
that the station never even played on the air. "Sometimes we add eight songs
in one week. Half the songs would show up on the station, and the other half
did not."

But wouldn't record companies fume if they found out a station wasn't
actually spinning songs it reported as added? After all, radio airplay is
supposed to help sell records for artists. Yes, but radio promotion
executives at record companies, already earning healthy six-figure salaries,
often receive hefty bonuses based on how high singles climb the chart, or
simply based on the number of stations that add a particular single.


So if fictitious adds, or "paper adds" as they're called, help secure those
bonuses, the record-company exec won't object too strenuously to the
station's sleight of hand. After all, everyone is happy: The label executive
gets paid, the indie gets paid, and the P.D. gets paid.

Who pays? The artist, for one. Most record companies recoup their costs for
independent promotion from the artist's CD royalties -- which, of course,
would be depleted by the lack of airplay. And, ironically enough, the
stations pay as well, since money that might be used for promotions to build
audience is instead diverted into programmers' personal bank accounts.


Of course some urban acts have a more hands-on relationship with radio
stations. According to a year-old affidavit reviewed by Salon, an executive
at an urban outlet in New Orleans, WQUE, recently testified under oath that
rapper Master P wrote the station a check for $23,000 to help it cover costs
for a poorly attended concert it had sponsored. (The affidavit stemmed from
a non-payola-related wrongful-dismissal suit.)

Within days, the station was spinning Master P's rap songs throughout the
day, from morning to afternoon drive. That, despite the fact that the
station's policy was not to play any hardcore rap until after 6 p.m. (Many
urban stations maintain a similar no-rap policy during the day in an effort
to attract older-skewing advertisers.)

The show was not affiliated with Master P or his No Limit Records, and
Master P wouldn't comment about the check. An internal investigation by the
station owner, Clear Channel Communications, looked into possible payola
activity at the New Orleans station. It found none, although some employees
there complained to Salon that the inquiry was halfhearted at best. (The
company declined to discuss the matter.)

For instance, the affidavit recounted how a record rep from a small
independent label visited the station, hoping to get some airplay for a new
novelty single. The station's music director told him the song might get
played during the morning show, but not in regular rotation.

The record rep actually seemed relieved, exclaiming, "Rotation? I don't have
5,000 fucking dollars to get this in rotation." The implication is that the
label rep knew exactly how much it cost to get a song added at the station.

Earlier this month, WQUE program director Gerod Stevens was fired and
escorted out of the station. General manager Ed Turner, who took over WQUE
in April, says the move had nothing to do with the Clear Channel
investigation. He did add, though, that he wanted a programmer who had "a
little more compassion for our friends in the record industry."

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The current system is able to flourish partly because the major labels,
reluctant to make waves inside the profitable format, have adopted a
hear-no-evil, see-no-evil mentality, turning a collective blind eye to the
corrupt transactions.

Even if the labels did want to alter it, the current system may simply be
too firmly entrenched. That's something McClusky and Tri State recently
found out after trying, unsuccessfully, to crack the lucrative urban market.
According to radio sources, both mainstream indie firms approached the
country's two most influential urban radio chains: Radio One, which owns 63
stations in 22 markets, and Blue Chip Broadcasting, which owns 19 stations
in six Midwestern markets.

The indies proposed forming exclusive relationships with their stations,
which would mean promotion money would go toward stations and not to
individuals. The companies, sources say, declined, preferring to stay with
the old system. (Executives for Radio One and Blue Chip Broadcasting did not
return calls for comment.)

"It seems to be working, and if the money is flowing pretty well, why mess
with it?" asks one source, noting that "Bill Scull [at Tri State] and
McClusky can't break in; they aren't socializing with black P.D.'s." Both
Scull and McClusky are white; most urban indies, label vice presidents and
programmers are black. "Black radio is different, it's like a brotherhood, a
clique," says the source.

Some inside the industry suggest that an element of racial unease has
stopped executives from curbing the corruption. "That's the reason that
white guys at labels aren't going to call them out on it. If you do, you're
called a racist," says one source who's spent the last 10 years in
programming at a major-market urban station.

The source also says, "There is this layer of intimidation that hangs around
[the format]," coming particularly from smaller, black-owned rap labels.
"They says things like, 'Add our product or there'll be problems.' They've
intimidated us into putting records on the air."


There are also stories of life in the urban promotion world that are
outrageous even by radio's fast-and-loose standards. The source recalls the
time a rep from a rap label showed up at the station accompanied by bow-tied
Fruit of Islam security guards. "He just parked them at the station and said
we're going to talk to the G.M." Despite the fact that label reps were not
usually allowed to meet with station management, the rep got in to see the
G.M. "He said, 'Your boys in the music department are not getting the job
done.'"

(In his book about Death Row Records, "Have Gun Will Travel," author Ronin
Ro recounts the time gangsta label chief Suge Knight dragged a radio
promotion executive out of a meeting and choked him in an adjacent office.)

In order for record companies to maintain deniability, to protect themselves
against any allegations of wrongdoing, an extra layer of isolation exists
which is unique to urban radio promotion. It's called the "quarterback."
"They're hired as a promotional or marketing company. That keeps the record
companies in the clear," says one source.

The quarterback receives a lump payment from the label to promote a specific
single at radio. This is a legitimate and legal transaction. The QB then
turns around and either contacts stations himself or more likely hires local
indies around the country who take the song to radio programmers they enjoy
close relationships with. ("Certain P.D.s you have to take out to dinner.
Others, you take them to strip clubs," says one person who's done the
schmoozing for a living.)

The indie, at this point clearly in violation of payola laws, negotiates
directly with whoever controls that station's playlist ("How many CDs you
need?") and arrives at an agreed-upon price for the add. The indie relays
that information, quoting from a sort of FM rate card, back to the
quarterback, who OKs the cash payment. The indie then pays off whoever
controls the playlist. And according to one record-company promotion
executive who personally has sent out the deliveries, that includes
overnight envelopes filled with checks or money orders.

So the money actually goes from the label to the quarterback to the indie to
the programmer. The more hands that touch the money, the harder it is to
trace.

Yet precisely because so many hands touch the money -- and pocket their
share -- during the transaction, the payment scheme for urban is more
freewheeling. Whereas pop and rock indies actually submit detailed invoices
to record labels for services rendered (i.e., specific songs added to
specific playlists), sources say on the urban side things are rarely put in
writing.

For instance, according to an urban source who's negotiated such deals, an
indie may tell the quarterback that a station needs $1,200 for an add when
the station only requested $800. That leftover $400 either goes in the
indie's pocket or is split with the quarterback. Or a station will ask for
$800 and that's what the indie tells the quarterback. But the indie also
lets him know that when the label comes back in a month and asks the station
to increase its spins on the new song, the indie's going to need $300 for
that "spin maintenance." Most likely the station will never know about that
$300 payment.

Three hundred dollars may seem like a small amount, but multiply that by the
hundreds of songs added each year to the hundreds of urban stations and it
all adds up to millions and millions.

Pockets are clearly being lined; some worry that radio is suffering in the
process. "Somebody needs to do something, because stations are not being
programmed to their fullest," says an urban industry insider. "They're just
playing records that [labels] are paying them to play. It's gotten so
corrupt it's ridiculous."