Disgraced lobbyist Jack Abramoff, who served more than three years in prison for his role in the Native American casino lobbying scandal, is likely headed back to prison after reportedly entering into a plea deal with federal prosecutors.
Among the charges? Abramoff allegedly paid writers to publish and disseminate articles touting AML BitCoin, according to a June 25 Department of Justice press release announcing the indictments of Abramoff and AML BitCoin CEO Rowland Marcus Andrade.
In a complaint filed the same day, the Securities and Exchange Commission alleged that Abramoff arranged payments for "purportedly independent articles" about AML BitCoin which contained many misleading statements.
The Daily Beast connected that complaint to Daily Caller writer Derek Hunter, and though Hunter denied receiving secret payments for articles, on June 28, Daily Caller publisher Neil Patel issued a statement saying Hunter was "parting ways" with the outlet.
The dark media ploy exposed by these allegations is known as payola, an underground publicity practice increasingly corrupting segments of the news media. These schemes are largely proliferated by unethical publicity brokers posing as public relations practitioners, often under the guise of "guaranteed placement" or "pay-per-placement" publicity offers.
In an age where deception and misinformation run rampant, these schemes undermine the integrity of ethical media organizations and media consumers alike. It's time for regulators to clamp down on payola schemes and the publicity firms instigating them under a guaranteed placement commitment to their clients.
Payola seeps into digital media
The term payola originated in the 1950s to describe payoffs record labels made to DJs and radio stations to play their new artists. Payola in the record industry has faded, but this devious practice has resurfaced in segments of news media, specifically digital media.
Modern payola occurs when a so-called public relations or marketing agent approaches an online publisher or contributor and offers something of value in exchange for positive coverage, product mentions or backlinks within a news story. Just as payola in the recording industry cheated listeners, online readers are cheated by biased coverage, inaccurate product reviews and hollow endorsements that deceptively imitate objective reporting.
On many popular news websites, rogue contributors engage in quid pro quos to slip a hyperlink or mention into an article even though, in some instances, it adds no value or bears no relevance to the content.
In a 2018 exposé titled "These Are The People Paying Journalists To Promote Brands In Articles," Jon Christian of The Outline describes a dubious trend "where publicists...have carved out a niche arranging undisclosed payments to financially strapped reporters and bloggers in exchange for friendly media coverage of clients."
Not surprisingly, many well-known online publications have taken a hard stance against these schemes with zero-tolerance policies.
In 2018, the New York Post reported that Forbes severed ties with a contributor doubling as a publicity agent, Ky Trang Ho, after allegedly discovering she had violated the terms of her contract. According to Christian, representatives from Inc., Entrepreneur, Forbes and Fast Company told him it is against their editorial guidelines for contributors to take payment for mentioning or linking a brand in an article.
But despite tough policies, online publications struggle to fight payola because unethical pay-per-placement publicity firms and consultants are increasingly driving the demand.
Traditionally, PR firms charge clients on an hourly or retainer basis. They craft compelling story ideas, develop quality content and earn the trust of journalists through honest work. Via skilled effort and execution, their clients often gain exposure in publications without bribery or other improper financial relationships.
Pay-per-placement firms turn this business model on its head. They get paid only when their clients receive mentions or are covered in a publication. They often aggregate and maintain a network of contributors, reporters and editors who accept payola arrangements through inappropriate gifts, favors and direct payments.
John Biggs of TechCrunch wrote, "A pay-for-post huckster is dependent on convincing poorly paid freelance writers to add links and other dross to their posts in order to get a placement. I get requests like this almost every day and almost all the journalists I talked to reported the same."
Regulatory enforcement needed
According to Federal Communications Commission payola rules, broadcasters must disclose any payment transactions in exchange for airing program material. This rule is similar to the Securities and Exchange Commission requirement that financial reporters and newscasters disclose any interests they have in investments they promote.
In recent years, the Federal Trade Commission has enforced payola regulations against influencers and celebrity marketers on social media, often sending letters of misconduct to those who failed to disclose paid sponsorships.
Enforcing anti-payola regulations in broadcast and social media has proven effective in weeding out biased and misleading information. So why have these agencies been sluggish to take similar measures in digital news media?
Since these secret payola arrangements often occur between outside contributors and publicity brokers, it is unreasonable to expect publishers to adequately deter, detect and defend against payola without help from regulators.
These agencies have the power to investigate and institute penalties for payola violations that private media companies do not, as is evidenced by actions taken by the Department of Justice and the Securities and Exchange Commission in the case of AML BitCoin.
Using this authority, they can root out payola at the source, which usually starts with pay-per-placement publicity brokers. Until regulators pursue payola schemes in news media with the tenacity and urgency the issue deserves, media organizations, public relations professionals and consumers must be vigilant in recognizing and exposing bad actors and biased material.