NEW YORK: As state Attorney General Elliot Spitzer continues his investigation into music payola, the radio industry is left to ponder what effect the scandals have on listeners.
Payola, a pervasive issue in the radio and recording industries, involves promoters paying radio personnel ? via cash or gifts ? for airplay.
Sony BMG was the first company to settle in the statewide investigation, paying a $10 million fine and banishing its pay-for-play practice. Sony BMG did not return a request for comment.
Radio conglomerates like Clear Channel and Infinity Broadcasting have also been subpoened in Spitzer's ongoing investigation, according to media reports. While many in the industry have remained mum about the settlement and its implications, Clear Channel released a statement last week to the media that reiterated its announcement in 2003 that it had severed ties with independent promoters.
The company's statement said it was "cooperating fully with Mr. Spitzer's office."
Scott McKenzie, editor-in-chief and managing director of Billboard Radio Monitor, said that Clear Channel, whose 1200 stations bring in 110 million listeners a week, was the only major company he saw reaching out to the media.
"The major radio groups, however, did get messages out before the subpoenas to the individual stations, saying 'this is a zero tolerance policy ? don't deal with independent promoters,'" McKenzie said. "It's not like they haven't been doing anything."
"Anything that creates clarity is positive for radio," said Clear Channel chief communications officer Lisa Dollinger. "The clearer we are, as an industry, about our stance against payola, the better is it for [us] and the listeners. If and when we find wrongdoing, we deal with it appropriately."
She said that the Sony BMG settlement is not a direct issue for Clear Channel, but the company put out the news release just to reconfirm its stance.
"We issued the statement yesterday to clarify because there's great media interest in our perceptions of the matter," Dollinger said.
She added that Clear Channel stations are not always marketed as being a part of the company, but did not want to speculate on whether listeners of particular stations were aware of Clear Channel's stance on payola.
Dollinger did say that internal communications were very important, because it is radio personnel who could run afoul of Clear Channel's policies.
"The bulk of our communications has been [to employees] so they are clear with our policies and understand what the ramifications are," Dollinger said.
Kate Snedeker, director of media and IR for Emmis Communications, declined to discuss outreach efforts, but said that the company gives individual stations in different markets leeway with their own communications.
However, she said, the company maintains a strict policy that all employees involved in on-air programming must affirm in writing that they understand the FCC's policy on payola.
Whether the payola scandal will create a trust gap remains to be seen.
Dollinger would not speculate on how closely listeners were following the news reports, or whether they could have an adverse effect on listening habits. She noted, however, that Clear Channel must pay attention to its listeners, because they have more entertainment choices today than ever before.
"[Listeners] may be aware of some of the things that are happening with the attorney general," she said. "Our stations operate with the listener in mind, and we embrace listener confidence."
"The listening public haven't a clue [who] owns those stations," McKenzie said. "If they've paid any attention [to the recent news], they probably will start to have questions in their mind."