Clear Channel's Steve Smith excels at the business of music.
Clear Channel's Steve Smith excels at the business of music.


A while back, an area record producer completed the latest album by a well-loved local act. This artist had been supported for years by a successful radio station in the region, and since one tune in particular fit the outlet's format perfectly, the producer naturally assumed it would receive a sizable number of spins.

He was wrong.

According to the producer, the program director at the signal, which is part of Clear Channel (the country's largest owner of radio properties), said he liked the track but noted that, because of corporate policy, he couldn't place it on the playlist unless it was first brought to him by an independent radio promotion company -- an operation that's paid by record labels to pitch tunes to broadcasters. The exec then provided the phone number for one of the firms that worked with the station, but when the producer called it, he was told that the cost of taking on the song in question was $3,000 -- an awfully hefty investment to get someone who'd already listened to the track to do so again.

Stories like this are a dime a billion on today's corporate radio scene. There's nothing illegal about the practice, and with the Justice Department focusing on identifying terrorist cells and Congress embroiled in wartime security matters, attempts to create regulations or pass bills curtailing it aren't even near the stove, let alone on a back burner. But to critics, the often-shady relationship between radio stations, labels and independent promoters is nothing less than new-millennium payola that helps explain why the nation's airwaves sound worse than ever.

The word "payola" entered the lexicon in the 1950s, at a time when record companies routinely paid radio personalities handsomely to showcase their songs. Late in that decade, Congressional hearings chaired by Representative Oren Harris, an Arkansas Democrat, turned a spotlight on many of those taking advantage of the system, including American Bandstand host Dick Clark and Alan Freed, the influential DJ credited with popularizing, if not inventing, the term "rock and roll." As evidenced by his continuing presence on New Year's Eve broadcasts, Clark skated, but Freed became the symbol for these questionable dealings, and eventually wound up pleading guilty to a couple of commercial bribery beefs. By 1965, when a discredited and destitute Freed died at age 43, laws were on the books that made direct payment for airplay a criminal offense.

Predictably, these edicts didn't eliminate the desire on the part of power brokers to influence which ditties became radio smashes, and over time it became apparent that independent radio promoters -- the modern equivalent of what were once known as song pluggers -- could be used as middlemen. As documented in a series of articles by Los Angeles Times scribe Chuck Philips and Eric Boehlert, a senior writer for, the result is a smooth-running procedure in which nearly everyone's palm gets greased, especially at the major-market level. Generally speaking, large promotion companies give influential radio outlets specializing in new music plenty o' greenbacks -- as much as $100,000 per annum -- in exchange for exclusive access to their key decision makers; in order to avoid the appearance of impropriety, the cash is designated for "promotional support," but because the station isn't told how to spend this windfall, it's often little more than a slush fund. Labels then pay these indie promoters up to $3,000 each time a station puts one of its songs into rotation. This is how record companies, radio stations and indie promoters get what they want -- airplay, moolah and more moolah, respectively -- without explicitly violating payola statutes.

Even so, the transactions have a foul scent about them, which helps explain why the parties involved don't enjoy talking about the subject. KBPI, a Clear Channel hard rocker, has an exclusive deal with Jeff McClusky & Associates, a massive independent promoter based in Chicago; JMA has been named as the best at what it does by the industry publication Radio & Records for four consecutive years, and its Web site boasts of working with clients such as Madonna, Eminem, Britney Spears and U2. However, JMA spokesmen did not respond to interview requests.

The folks at New York's McGathy Promotions were even more direct when asked to discuss their work with Clear Channel alternative-rock purveyor KTCL and dozens of other stations, issuing a blanket "no comment." And Kraig T. Kitchin, president and chief operating officer for Clear Channel-owned Premiere Radio Networks, and the man charged with coordinating interactions with independent promoters for the conglomerate, failed to return calls as well. But that was understandable considering that Premiere's biggest, most profitable star, Rush Limbaugh, announced last week that he's going deaf, thereby throwing his future into doubt and Kitchin into damage-control mode. On October 11, the Premiere chieftain appeared alongside Limbaugh's doctors at a Los Angeles press conference.

Still, one Clear Channel honcho -- Steve Smith, president and chief operating officer for Clear Channel Entertainment, the company's concert wing -- did talk during his recent Denver visit, touching on the subject in more detail than have any of his colleagues. He began by pointing out, accurately, that "the independent promotion business is not unique to Clear Channel radio" before insisting that "what Clear Channel has done in the last year is to try to put some restraints and controls on our relationships with independent promoters -- because it is such a cause célèbre."

Next, Smith tried to shift blame for the growing clout of independent promoters onto the music industry. "[They] would be out of business tomorrow if the record labels wouldn't pay them money. The market power there is in a record business that's willing to put up the cash." He added, "Clear Channel was concerned that these independent record promoters were being paid staggering sums of money, and it wasn't clear where the money was going. So we wanted to establish very specific rules of engagement. You can't put them out of business, because the record business is still throwing money at them, right? So if the record business is still throwing money at them, we're going to establish rules."

And what are these rules? "We're going to interview the promoters," Smith said, "and we're going to decide what promoters work with what radio stations. And the independent promoters pay Clear Channel a fee -- a license, if you will -- to be the agent for that radio station. It's just like you might hire a consultant or an agent to represent an act. Those radio stations are paid a fee by the promoter, and that promoter is the only person who is allowed to filter all the stuff that comes in from all the sources and then present it to the radio station. But the radio station programmer makes the ultimate decision about what gets played."

This suggests that only songs hyped by the designated promoter will be heard on a participating station, but Smith said, "I think that's over the top." Later, though, he contradicted himself. "If you have a financial interest in getting a record played, this is the way it works," he maintained. "You've absolutely got to pay this guy money, because he's paying Clear Channel for the rights to be the agent. But the relationship between the independent and Clear Channel is aboveboard. The checks are deposited at the radio station, the taxes are paid, and there's no back office, no back-channel relationship allowed. And frankly, it's consistent with the way most major music radio stations, Clear Channel or otherwise, work in 2001 -- with the exception of the fact that Clear Channel has put more controls into the process, not less."

Without legislation to stop it, this bleak scenario seems guaranteed to lead to even greater centralization of the business, with just a handful of huge outfits able to compete for the attention of equally gigantic radio multinationals. But thus far, a few companies that do things the old-fashioned way, sans exclusive deals, are still flying under the radar. Take Coast to Coast Promotions, a San Francisco-area firm run by industry veteran Susan B. Levin. A former employee at Elektra Records and Blue Note Records, Levin hung out her shingle just over eleven years ago, and she says she continues to do business as she always has. Record companies pay Coast to Coast stipends of, on average, $600 a week per song, with occasional pre-negotiated bonuses if a tune heads toward the top of the charts, to promote the work of smooth jazz, traditional jazz and adult-album-alternative, or Triple-A, artists to stations on her roster -- 105 at last count. Included in this number is Clear Channel-owned KBCO. But Smith's statements to the contrary, Levin doesn't pay program director Scott Arbough to take her calls. He continues to work with her, she believes, because "we have a longstanding business relationship that I think he values as much as I do."

Because Levin specializes in music that's somewhat outside the mainstream and deals with a large percentage of non-commercial or inveterately individualistic stations, she hasn't been as affected by exclusive pacts between independent promoters and radio groups as have some of her peers. But she concedes that she's lost access to about 10 percent of her stations because of such deals, and worries that the trend is accelerating. "I just have to work harder and more creatively," she says. "And I'm grateful for all the stations that still decide what they want to play based on the music."

Unfortunately, such stations are increasingly outnumbered by ones that will weigh a song's quality only after it's collected a payment to do so. That leaves the local record producer whose tale kicked off this column with only one option: Since he can't afford to pay an independent promoter, he has to kiss hometown airplay goodbye.

The tao of Steve, part two: Clear Channel Entertainment COO Steve Smith talked about a lot more than independent radio promotion while in Denver. In addition to denouncing a lawsuit filed against the company by a Colorado concert partnership, Nobody in Particular Presents ("The Clear Channel Empire Strikes Back," October 11), he also took on several other hot topics about which his company has been largely mute up to this point.

They include:

•The state of the concert business. Smith acknowledged that Clear Channel felt the pain of a weakening economy throughout the just-completed summer season, and last month's terrorist attacks only made matters worse. "Things have been totally off the charts since the eleventh of September," he said. "I imagine a couple of times since then, you've looked at yourself and said, 'Do I really need to go out tonight?,' and artists and lighting directors and everybody else feels the same way." But, he went on, "I think we've done as well as could possibly be imagined with the hand we've been dealt."

Not that anyone should expect lower ticket prices as a way to lure customers back to theaters and arenas. Indeed, Smith went so far as to deny that Clear Channel's policy of paying astronomical amounts to buy entire tours by big-name performers has driven prices to new and frightening heights, as is almost universally believed by industry observers. "That arithmetic is fundamentally wrong," he argued, stating that "efficiencies" actually keep costs down. Guess those 'N Sync tickets you went into debt to buy were bargains after all.

•The rumored sell-off of the concert branch. Some investors feel that Clear Channel Entertainment grew too fast too quickly and that it should be split up and peddled piecemeal in an effort to lessen losses that are sure to blossom as the economic downturn worsens. But Smith flatly rejected this prospect: "It's absolutely untrue, and I'm in a position to know if it were true...I don't know where this stuff comes from. It's just preposterous."

•The rumored expansion of the radio branch. Gossipmongers have suggested that Clear Channel isn't content with possessing a mere 1,200 radio stations; rather, it wants to own the maximum allowable number of stations -- the FCC limit is eight -- in each of the top one hundred radio markets in the country. Smith said, "I've never heard that goal articulated...I can't imagine that our company or any broadcast company would make that kind of blanket statement." But he emphasized that Clear Channel wouldn't necessarily mind getting bigger, even if doing so makes it more difficult to keep tabs on all of its component parts. "We will do things tomorrow that will have the potential to offend or shock you -- that you will think are inappropriate," he said. "But we'll also do something tomorrow that you will think is brilliant, genius, great work...And my suggestion is to just judge us by our body of work."

Tight times: Slow ad sales are hitting publications of every kind, with a variety of repercussions. Last week, the E.W. Scripps company, owner of the Rocky Mountain News, announced that the News would take longer to return to profitability than had originally been predicted following the finalizing of a joint-operating agreement linking its business operations to that of the Denver Post. Meanwhile, the Denver Business Journal reported that salespeople for the Denver Newspaper Agency representing the Post and the News have gone off their advertising rate cards in an effort to lure advertisers back into the papers. DNA spokesman Jim Nolan energetically refutes this assertion and swears the News is pulling its weight; he says the DNA recently registered a quarter's worth of positive cash flow for the first time since the JOA. But, he admits, "We've felt the effects of the national stuff just like everybody else."

Smaller papers are being hit as well. The bi-weekly magazine Go-Go is hanging in there, having just hired a new editor, former Go-Go intern Matt Davis, but the music publication Soundboard has been forced into hiatus. Mat Hall, Soundboard's editor and publisher, is spinning the move as a "restructuring"; he says he's had meetings with several potential investors and hopes to have the publication up and running again "soon." He just can't say when.

As for The Onion, a satirical publication based in New York, with a secondary operation in Boulder, it seemed all but certain to be hurt in the wake of September 11, because no one in America was in the mood to laugh about current events. But after a one-week break from new material, the paper returned with some of the best, funniest and most trenchant prose imaginable, including pieces with headlines such as "A Shattered Nation Longs to Care About Stupid Bullshit Again" and "U.S. Urges Bin Laden to Form Nation It Can Attack." Says Boulder Onion publisher Dave Haupt, "We've gotten a lot of praise, and no one's pulled out because of the content. I don't know that we're going to be affected by what's happened much at all."

Finally -- amid all the bad news, a glimmer of hope.


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