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Will Internet Radio Fall Victim to Payola?

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In a special editorial report, Chad takes an in depth look at how payola could destroy internet radio in the same way it ruined terrestrial radio years ago.

EDITORIAL:With the exception of a select few independently owned radio stations throughout the country, terrestrial radio has never recovered from the payola scandals that broke in 2004-2005. Record labels and Terrestrial radio were given a huge black eye when it was revealed that top level program directors in several major market stations were accepting expensive “gifts” from major labels in exchange for additional airplay of their artists. In the last ten years, listenership of terrestrial radio has slowly declined, due in large part to the rise of internet radio. Just like the MP3 has successfully dethroned the CD, it seems inevitable that internet radio will replace its terrestrial counterpart. Its advantages are hard to deny, aside from its interactivity and small amounts of commercials, internet radio reminds many longtime music fans of the way radio once was. Playlists full of new and upcoming musicians, fluid playlists based on listener feedback, and no influence from corporations or major labels. Simply put, they just play great music. But with all that internet radio has to offer comes the baggage that it inherits from the terrestrial side, specifically payola. As listeners flock in droves to new stations on the internet, many businesses and record labels have taken notice, and are looking to capitalize on its fast growing user base. Not just by selling advertising, but by selling plays of songs to bands and artists. Many internet broadcasters, like Jango, have started offering rotation packages to bands, openly charging a flat rate for bands to “buy into” rotation on their station. For as little as $30 a month, a band can buy 1,000 plays on the broadcaster’s stations in between songs from established artists (who likely don’t have to pay for the same slots). With stations basing their playlists around paid placement of lesser known bands, broadcasters have essentially ruined what made internet radio so attractive to listeners – great music being played uninfluenced by major labels or corporate direction. While this solution clearly generates the most revenue, what does it say for the genuineness of music being played? Further, it’s likely that practices like Jango’s are only the start, as internet radio continues to grow over the coming years you can expect major labels to start putting a lot of dollars behind internet radio play, especially because the internet is considered to be exempt from many of the laws that congress passed in the 1960’s to prevent payola practices. It’s possible to envision a future where payola is so commonplace on the internet that broadcasters are threatened to start accepting payment for plays or fall behind and eventually be acquired by their competition. One can only hope that the government will interact and find a way to stop internet radio payola before it ruins this great media format in the same way it ruined terrestrial radio years ago.