Radio’s Payola Scandal Summary

  • Last updated on November 10, 2022

The payola scandal involved disc jockeys who accepted payments from record manufacturers in exchange for broadcasting certain records. In reaction to the scandal, Congress passed amendments to the Communications Act that made the practice illegal.

Summary of Event

A key provision in the Communications Act Amendments of 1960 rendered illegal a prevalent practice in the radio broadcasting industry. Few listeners were aware that some record companies directly or indirectly paid disc jockeys for favoring certain records during radio broadcasts. This practice was called “payola.” Payola Radio;payola scandal Communications Act Amendments (1960) [kw]Radio’s Payola Scandal (Sept. 13, 1960)[Radios Payola Scandal] [kw]Payola Scandal, Radio’s (Sept. 13, 1960) [kw]Scandal, Radio’s Payola (Sept. 13, 1960) Payola Radio;payola scandal Communications Act Amendments (1960) [g]North America;Sept. 13, 1960: Radio’s Payola Scandal[06660] [g]United States;Sept. 13, 1960: Radio’s Payola Scandal[06660] [c]Radio and television;Sept. 13, 1960: Radio’s Payola Scandal[06660] [c]Business and labor;Sept. 13, 1960: Radio’s Payola Scandal[06660] [c]Marketing and advertising;Sept. 13, 1960: Radio’s Payola Scandal[06660] [c]Laws, acts, and legal history;Sept. 13, 1960: Radio’s Payola Scandal[06660] Harris, Oren Clark, Dick Kintner, Earl W. Doerfer, John C. Lishman, Robert W.

The law against payola practices came about as a result of an extensive series of congressional hearings inspired by an inquiry into the rigging of television quiz shows. That inquiry shed some light on the prevalence of payola practices. In particular, during November, 1959, the House Subcommittee on Legislative Oversight House Subcommittee on Legislative Oversight , a subcommittee of the Committee on Interstate and Foreign Commerce House Committee on Interstate and Foreign Commerce , learned from Max Hess Hess, Max , owner of a department store in Allentown, Pennsylvania, about several payments made in exchange for plugs Radio;advertising Television;advertising about the store and its products in radio and television broadcasts. The committee soon discovered that this form of bribery and other closely related forms were common, especially in the recorded music industry. Record producers regularly gave cash or products to disc jockeys in exchange for playing certain records on the air.

To place these developments in perspective, it is useful to review the environment and regulatory framework surrounding broadcasting in the late 1950’s. In a report to President Dwight D. Eisenhower dated December 31, 1959, Attorney General William P. Rogers Rogers, William P. evaluated the broadcasting environment and the goals and obligations of broadcast licensees. Rogers’s report stressed that the public interest was the only justification for the existence of any broadcasting station and implied the need for regulatory action whenever the public interest was not served.

Rogers observed that although the agencies responsible for regulating broadcasts had substantial authority under existing law to prevent abuses, this authority was not always used effectively to protect the public interest. Therefore, Rogers proposed that the Federal Communications Commission Federal Communications Commission Television;commercial broadcasting licenses Radio;commercial broadcasting licenses (FCC) should carefully assess whether broadcast licensees had served the public interest when their licenses were being reviewed for renewal. He also highlighted the importance of requiring proper public disclosure when employees of broadcast licensees received payments from external sources for service connected with broadcasts, or when they held commercial interests that were helped by broadcasts.

The regulatory framework consistently held that listeners of broadcasts are entitled to know when, and by whom, they are being persuaded. That is, laws required explicit announcements concerning all matter broadcast by any station in exchange for valuable consideration from sponsors. The responsibility for sponsorship identification announcements, however, rested entirely on the broadcast licensee until 1960. The law prior to that time failed to address issues such as payola, in which employees of the broadcast licensee (for example, a radio station) were involved, often without the knowledge of the broadcast licensee. To the extent that payola practices appeared to be prevalent, an amendment to the Communications Act of 1934 to extend the scope of sponsorship identification requirements to employees of the broadcast licensee was a step in the right direction.

The congressional hearings on payola began in 1960. Several disc jockeys who testified admitted having received money from various recording companies but claimed or implied that the payments were not in exchange for playing specific records during radio broadcasts. For example, David Maynard Maynard, David , a disc jockey for station WBZ in Boston, acknowledged having received more than $6,800 during the period from 1957 to 1959. He claimed that the payments were for his services in promoting records at “record hops” (dance events at which records were played) that were not broadcast.

Similarly, Joseph Finan Finan, Joseph , formerly a disc jockey for station KYW in Cleveland, testified that he was regularly paid by record companies but that payments were not made in exchange for a commitment to broadcast specific records from these companies. Finan stressed that most radio stations received large numbers of records each week and that most disc jockeys found it impractical to listen to all these records. Such lack of attention could be a barrier to the sales potential of any specific record, since the amount of broadcast “exposure” on radio stations was believed to be a crucial determinant of sales success. Several companies Record labels;payola scandal therefore were willing to pay disc jockeys to listen to their records. The implication was that disc jockeys were asked only to give the records a fair hearing, not necessarily to broadcast them.

Other testimony, by record distributors, suggested that payola payments were fairly common in the record industry. Common justifications for payments to disc jockeys emerged from these hearings. First, disc jockeys often spent their time outside work listening to records at the request of distributors. Second, disc jockeys were often perceived as experts in evaluating records and in identifying those with promising sales potential, an expertise that individuals in the record industry apparently considered to be valuable. Third, because disc jockeys were often popular personalities, they could be employed to successfully promote specific records at nonbroadcast events such as record hops. Fourth, interested parties in the record industry (manufacturers, distributors, and promoters of records) often believed that payola was an acceptable means of establishing and maintaining business goodwill.

Also testifying were Earl W. Kintner, chairman of the Federal Trade Commission Federal Trade Commission (FTC), and John C. Doerfer, chairman of the FCC. Kintner reiterated the FTC view that the nondisclosure of payola payments during broadcasts constituted a deceptive act under section 5 of the Federal Trade Commission Act Federal Trade Commission Act (1914) , because radio audiences were wrongly led to believe that the records broadcast were chosen objectively for their merit or popularity. Further, he stated that the FTC had initiated or docketed several payola cases, and he offered insights into payola practices. First, although the principal form of payola payments was cash or check, sometimes they were “in kind” in the form of gifts such as jewelry, automobiles, or clothing.

Second, payola was sometimes linked to “washout” practices in the recording industry; that is, payments made by disc jockeys to other artists who appeared during record hops or radio programs would be reimbursed by record companies. Third, record manufacturers in some cases arranged for disc jockeys to own an interest in their companies or the record labels they distributed. Several illustrations of this emerged during the testimony of Dick Clark, a disc jockey whom earlier testimonies had identified as seriously involved in payola practices. Payola also took the form of a record manufacturer or distributor assuming the mortgage payments for a disc jockey’s home.

Finally, Kintner suggested that one source of payola was free records furnished to distributors by record manufacturers. The distributors in some cases sold the free records at list prices and used the proceeds to finance payola payments. Kintner also shed light on a related set of practices called “plugola,” which involved plugging products on television programs in return for surreptitious payments. This practice of “sneaked-in” advertising was similar to payola in that it involved deception in the broadcasting industry, as payments were made surreptitiously, without public knowledge.

In later testimony, Doerfer mentioned that the FCC had conducted a survey of more than five thousand broadcast licensees. He indicated that legitimate record industry practices potentially related to payola fell into four categories: supplying free records to broadcast stations (more than half of the licensees surveyed acknowledged receiving such free records); promoting record hops; providing junkets in exchange for exposure of records during broadcasts, or providing transportation to performers on broadcast programs in exchange for product plugs; and donating prizes to be awarded to listeners in exchange for plugs for the donor.

Doerfer noted that the law prevalent at that time failed to allow direct jurisdiction of the FCC over the employees of a broadcast station in regard to payola practices. To remedy this, the FCC recommended an amendment to the law that would impose a criminal penalty for payola. Other recommendations included developing new rules to prohibit broadcasts of rigged quiz and other contest programs, checking for evidence of payola before renewing or transferring broadcast licenses, and requiring licensees to institute procedures designed to prevent payola among their employees.

Following the congressional hearings, the subcommittee chaired by Oren Harris presented a report recommending more legislative control to deter payola in the broadcasting field. The House version of the amended bill that followed held that the Communications Act Communications Act (1934) of 1934 focused the responsibility for sponsorship identification exclusively on broadcasting licensees. Because the licensees frequently delegated the responsibilities for programming to employees, there was a need to extend the responsibility for sponsorship identification to broadcast station personnel. The bill suggested penalties for violations of the new rules. The FCC was authorized to suspend licenses for ten days, in addition to imposing a fine of one thousand dollars per day indefinitely for intentional violations. The suggested penalties were modified later. As signed into law on September 13, 1960, the Communications Act Amendments provided maximum penalties of ten thousand dollars and one year of imprisonment for violations regarding sponsorship identification.

Significance

The congressional hearings on payola had a substantial impact on the broadcasting and record industries. Many broadcast stations were unaware of the nature and prevalence of payola practices. Several disc jockeys were fired for having accepted payola in the past. Some stations started exercising considerable control over the list of records that any disc jockey could choose for broadcast. A few stations even required that disc jockeys sign legal statements that they would desist from payola practices in the future. Disc jockeys who refused to sign these statements, among them Alan Freed Freed, Alan , were fired.

After the Communications Act Amendments of 1960, the number of payola cases went down considerably. Kintner’s congressional testimony indicated that payola practices were widespread prior to 1960, involving hundreds of disc jockeys and other employees of broadcast licensees in fifty-six cities and twenty-five states. In contrast, only a few documented payola incidents occurred after 1960. On the other hand, two points deserve emphasis. First, the FCC has little authority to enforce the law with regard to payola; such power is solely vested in the Justice Department. Second, some radio stations are more susceptible to payola scandals than are others. Most notably, Top 40 stations may be more vulnerable because they restrict their focus to current record hits and play more singles than do most other radio stations. In contrast, classic rock stations are less likely to be breeding grounds for payola because they rely on old standards.

The amended legislation returned honesty and disclosure to the record and music broadcasting industries. Disc jockeys no longer had incentives to be biased toward particular records, so listeners could be more certain of hearing music that radio station personnel thought they would like. Records would succeed on their merits rather than because of manipulation behind the scenes. Payola Radio;pa yola scandal Communications Act Amendments (1960)

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Biagi, Shirley. Media/Impact: An Introduction to Mass Media. Belmont, Calif.: Wadsworth, 1988. Contains a brief but informative description of payola practices in the 1960’s and beyond.
  • citation-type="booksimple"

    xlink:type="simple">Grover, Ronald. “Here’s a Not-So-Golden Oldie: Payola.” Business Week, August 15, 1989, 90. A brief article updating payola practices during the 1980’s.
  • citation-type="booksimple"

    xlink:type="simple">“The Music Industry Fight Against Rock’n’ Roll: Dick Clark’s Teen-Pop Empire and the Payola Scandal.” In The Pop, Rock, and Soul Reader: Histories and Debates, compiled by David Brackett. New York: Oxford University Press, 2005. Anthology section containing two essays on the payola scandal and Dick Clark’s role in it. Bibliographic references and index.
  • citation-type="booksimple"

    xlink:type="simple">U.S. Congress. House. Committee on Interstate and Foreign Commerce. Responsibilities of Broadcasting Licensees and Station Personnel. Washington, D.C.: Government Printing Office, 1960. Presents a verbatim account of congressional hearings on the payola scandal. A useful research source for readers interested in details of specific testimony.
  • citation-type="booksimple"

    xlink:type="simple">U.S. Congress. House. Committee on Interstate and Foreign Commerce. Songplugging and the Airwaves: A Functional Outline of the Popular Music Business. Washington, D.C.: Government Printing Office, 1960. A memorandum prepared by congressional staff for the committee’s use. Provides an overview of the structure of the record industry, describing the roles of record manufacturers, distributors, retailers, performing artists, broadcasters, and the trade press. Offers insights into the reasons for payola practices and recommends vigorous involvement of the FTC and FCC to prevent practices that hinder the public interest.
  • citation-type="booksimple"

    xlink:type="simple">Weinberg, Meyer. TV in America: The Morality of Hard Cash. New York: Ballantine Books, 1962. Offers a good summary of payola practices in television, with implications for radio.

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