A Return to Payola?

That's what this post, by Alex Tabarrok (associate professor of economics at George Mason University), seems to be implying. I came across this today while doing some research on music and copyright issues. Tabarrok's argument seems to be that payola is nothing more than payment for advertising (since playing a song from an album is just the same as a 30-second TV ad for that album), so there's no reason for it to be illegal.

Tabarrok seems to have missed the point entirely, and a quick Rock 'n' Roll history lesson would do him well. When this was an issue back in the '50s, radio DJs were very influential people. The were also very individualistic, bringing their own tastes and opinions about what they considered good music to the airwaves. DJs called the shots about what would be played and what wouldn't, and a DJ sunk or swam based on the kind of buzz s/he could generate with his/her play lists. In this context, it is quite scandalous to find out that record labels had been paying DJs to play certain songs.

Furthermore, radio stations were the method of distribution for new music back then. There was virtually no other way to hear about new music except on the radio. To allow labels to pay for their songs to be played would give monopolistic control to the highest bidder.

Yes, payment to a radio station to play a certain song isn't necessarily illegal, but the reason this is so is because stations must disclose such transactions to listeners. That's what makes all the difference -- listeners aren't being duped into believing that the DJ really digs the song s/he is playing and wants other people to hear it too.

But this really is a non-issue today, considering that radio stations employ computer generated play lists simulcast throughout all the parent company's radio stations. People don't really look to DJs anymore for what's new, interesting, or different in music. Moreover, the radio is no longer a leading medium in which music is distributed but is instead a competitor among many different mediums; therefore, it's influence is somewhat diminished.

More importantly, though, Tabarrok glosses over the other key criticism that still stings quite well in today's climate of ultra-consolidated media conglomerates. He characterizes the argument as, "big record companies would use their wealth to promote music that listeners would prefer less to what they would have heard without advertising." Not quite. The fear is not that big record companies would promote "music that listeners would prefer less," but that big record companies would have more power to promote their own catalog over those of smaller, independent labels who don't have quite as much capital to spend on this kind of "advertising." Payola, in this sense, would be rigging the playing field in favor of established labels with established money-making artists.

A further side-effect would be a chill in creativity and innovation. The major record labels don't like to take risks and will continually invest in the tried-and-true models. Major labels will let the independents take all the risks, and then sweep up the break-out bands that create new music trends. What we would have is a system in which the entrenched styles are promoted the most because the majors are antsy about taking risks, and the independents' abilities to produce and promote break-out bands would become diminished.