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Music industry raises its voice for radio reforms
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By Greg Kot
Tribune rock critic

May 23, 2002

Charging that the radio industry has become a monopoly that restricts
airplay of new music and harms artists financially, an unprecedented
coalition of musicians, recording artists, labor groups, retailers and
record companies has joined with politicians to call for sweeping
changes in an industry they call "anti-artist, anti-competition and
anti-consumer."

The group also is calling for reform of so-called legal payola. The
widespread practice involves record companies funneling promotional
money--estimated as high as $300 million a year by one record company
executive--to radio stations through independent promoters in exchange
for airplay consideration.

The campaign, which will include legislation promised by Sen. Russell
Feingold (D-Wis.), will begin Friday with the release of a joint
statement signed by 10 of the major organizations representing the
musicians and industry that seek major changes in how music reaches
listeners over the radio, the Tribune has learned.

Feingold said Wednesday that he will introduce a bill as early as next
month aiming to abolish or curtail a wide number of troubling industry
practices that he said have led to higher concert ticket prices and
homogenized radio programming that excludes all but the most heavily
financed artists.

"For a coalition this diverse to come forward from the music industry
and demand a voice on Capitol Hill against such a formidable
institution is unprecedented," said Daryl P. Friedman of the National
Academy of Recording Arts and Sciences, which signed the statement.

The statement comes as the radio industry is already under intense
scrutiny from federal legislators, several of whom are calling for the
tide of consolidation that has concentrated power in a handful of
conglomerates, particularly Clear Channel Communications Inc., to
bereversed or at least stemmed.

Since the Telecommunications Act of 1996 deregulated radio
corporations,
which had been limited to owning no more than two stations in one
market and 28 nationwide, a handful have gone on multibillion-dollar
buying sprees. In the Top-40 format, four radio groups now control
music for 63 percent of the 41 million listeners nationwide. In the
country format, they program music for 56 percent of the 28 million
listeners.

Clear Channel is by far the biggest of these conglomerates: It owns
more
than 1,200 stations (including six in Chicago, the biggest of which is
WGCI-FM) and its concert division controls 135 major venues
nationwide, including Tweeter Center in Tinley Park. Last year Clear
Channel sold more than 27 million concert tickets, nearly nine times as
many as its closest competitor.

Since 1996, concert ticket prices have risen 61 percent, said
Feingold's
office, whereas the consumer price index has risen only 13 percent.

In a statement filed with the Federal Communications Commission, Clear
Channel said "empirical data show conclusively that consolidation in
the
radio industry has not harmed competition" and that further
"government regulation simply has the effect of preferring certain
`voices' to others in violation of the 1st Amendment." Clear Channel
did not return calls for comment.

System becomes `offensive'

But Feingold, other legislators and industry spokesmen said the
concentration of radio power adversely affects or simply excludes too
many voices. Radio is a public asset, not a private property, they
point out.

"It is striking the range of people that radio deregulation has
affected
negatively in different parts of the music industry and the economy,"
Feingold said in an interview. "It's a sign of how offensive this
system has become. The reason I have put it high on my agenda is the
range of people it has affected: artists, consumers, labor groups,
concertgoers and every person who listens to radio. This is an
anti-democratic
trend, because a free society is made up of a variety of voices. So to
have music homogenized and controlled by a few big companies is a
significant issue in a democracy and a culture."

"It's a crooked system and it has to end," said one of the more
respected members of the music industry, Howie Klein, who retired as
president of Reprise Records last year. "Payola corrupts the industry,
so we wind up with worse and worse music on the radio, which means
worse and worse artists are being signed and developed. This [reform]
is long overdue."

Airplay on many major commercial stations is now dictated by a few
corporations working with a handful of consultants, known as
independent
promoters. Promoters were considered the money men behind the
pay-for-play payola scandals that tainted commercial radio as recently
as the mid-1980s.

Since then, a new system of "legal payola" has surfaced. Under this
system, label representatives no longer give cash directly to deejays
in exchange for airplay. Instead, record company money is funneled to
radio stations through independent promoters in the form of ticket
giveaways, concert promotions, vacation trips and other perks in
exchange for information about programming decisions.

The practice costs the major labels as much as $300 million a year,
effectively eliminating all but the biggest labels and most
well-financed artists from consideration for radio airplay.

The problem has gotten so out of hand that even the Recording Industry
Association of America, which represents the major record labels, has
signed the statement calling for reform of payola, a system the record
companies initiated decades ago.

The price of a pop hit

"For too long the radio stations have been able to set what it is going
to cost to get a record played," said Tom Lee, international president
of the American Federation of Musicians, one of the groups that signed
the statement. "They have determined that the highest bidder will win. 
And it's not going to change until Congress steps in and does something
about it."

Radio industry insiders dismiss such complaints as sour grapes from a
bunch of artists who aren't good enough to merit airplay. But Rep. John
Conyers (D-Mich.), who also has called on the FCC and federal
government to investigate Clear Channel, disagrees.

"I'm not saying everybody too poor to pay under the table would be a
famous artist," he said in an interview. "All I'm saying is we don't
know who would be famous. I know some of the artists who are famous
wouldn't be if they didn't have agents who could back them up with big
bucks."

"You can't have a pop hit without spending enormous amounts of money in
payments to independent promoters," said Trey Anastasio, a
singer-guitarist whose band Phish is one of the few acts to have sold
millions of albums without significant radio airplay. "Even that
doesn't
guarantee you'll have a hit. But if you don't spend the money, you
definitely won't have one. It has nothing to do with the quality of
music and everything to do with the money spent on promoting it."

"What we have allowed to happen is the equivalent of a privately owned
nationalized broadcast system," said Bert Holman, manager of the Allman
Brothers. "It affects the record-store retailers, because they're
limited as to what they can sell by what is being represented on radio.
It affects record labels because they are having trouble exposing
artists they are investing in. It's affecting the artists and the
musicians
because fewer and fewer of them are getting visibility. And because
there is less chance of records getting played, it offers less
opportunity to record, which in turn affects another entire industry.
Clear Channel has in effect become a bottleneck that is choking off a
number of industries."

Chicago Tribune

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