Pay for play

Now there's a new and more ominous development. There are rampant industry rumors that Clear Channel Communications, the country's largest radio station owner, is on the verge of formalizing a strategic alliance with one of the biggest indie promotion firms, Tri State Promotions & Marketing. The Cincinnati indie company has been closely aligned with the radio chain for years; now, sources suggest, Clear Channel will be using Tri State exclusively for the company's hundreds of music stations.

If the talk proves to be true, the move would dramatically alter radio's landscape in several ways -- and raise new questions about the effect of the nation's payola laws at a time when the Federal Communications Commission has seemingly given up on regulating radio.

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According to the FCC, there's nothing wrong with a radio station's accepting money in exchange for playing a song. The payment only becomes payola -- and illegal -- if the station fails to inform listeners about the cash changing hands.

But stations, of course, are reluctant to pepper their programming with announcements like "The previous Ricky Martin single was paid for by Sony Records." Besides that, stations want to maintain the illusion that they sift through stacks of records and pick out only the best ones for their listeners.

The secretive, and at times unseemly, indie system has been in place for decades. Rock radio pioneer Alan Freed was convicted in 1960 for accepting bribes in exchange for playing records. (What became known as the payola laws were passed as a response soon afterward.) More recently, legendary indie heavyweight Joe Isgro battled prosecutors for nearly a decade over payola-related charges before they were dismissed in 1996.

Isgro's tale of money, drugs and the mob was told in "Hit Men," Fredric Dannen's revealing 1991 book about the world of independent promoters and the extraordinary power they wielded over record companies.

Amazingly, says one radio veteran, "nothing's changed since 'Hit Men.' The cast of characters is different, but nothing's really changed."

One major-label V.P. agrees: "It's only changed color and form, but in essence it's the same. It's nothing but bullshit and operators and wasted money. But it's very intricate, and the system has been laid down for years."

Some in the increasingly sophisticated and global music business wonder if the time has finally come to break free from the costly chains of independent promotion. After all, no other entertainment industry vests so much power and pays so much money to outside sources who do so little work. Yet just-released figures indicate music sales were soft last year. Will record companies have the power, or the nerve, to walk away?

"Labels claim they're trying to cut back on indies, but everybody just laughs," says one radio veteran, who has both programmed stations and done indie promotion work. (He, like most of the people interviewed for this story, asked that his name not be used.) Adds another veteran: "Labels are pissed off and want to cut back, but they're powerless to do anything about it."

"The labels have created a monster," agrees longtime artist manager Ron Stone. Nevertheless, Stone views indies as an important insurance policy for his clients. "I never want to find out after the fact that we should've hired this indie or that indie. I want to cover all the bases.

"Because you only get 12 weeks for your record to get any traction at radio. After 12 weeks the next wave of record company singles come over the breach and if you don't have any traction you get washed away. But now it's become even more complicated and expensive because of consolidation. It's a high-stakes poker game."

Playing off record industry insecurities, indies have been winning this poker game for decades.

The Clear Channel/Tri State move would be a watershed. Arguably the most powerful force in the music business, Clear Channel's multibillion-dollar assets include 60 percent of the United States' rock-radio business and the leading Top 40 stations in major markets across the country, including KIIS Los Angeles, WHTZ New York, WJMN Boston, WKSC-FM Chicago, KHKS-FM Dallas and WHYI Miami. The company also has extensive holdings in concert venues, concert production firms and outdoor advertising companies, stemming from its merger with the SFX conglomerate last year.

In that arena, Tri State would appear to be a minor player. But by maintaining a close relationship with Clear Channel as the conglomerate mushroomed and bought hundreds of new radio stations in recent years, Tri State has become synonymous with Clear Channel in the industry.

That relationship has translated into power and wealth. "Tri State's billings are probably up more than 1,000 percent since deregulation, considering how many more stations they have influence over," says one indie promoter.

Tri State's chiefs, Lenny Lyons and Bill Scull, did not return phone calls seeking comment.

Clear Channel stations not already using Tri State exclusively are likely to have to terminate their contracts with indie competitors, such as longtime powerhouse Jeff McClusky & Associates. That already may be happening. "They're clearing the decks," says one person who works at a major-label radio promotion department. (McClusky declined to comment.)

Next Page: Clear Channel's big idea: Eliminating the middleman

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