FCC Levies Largest Collective Fine in History of U.S. Broadcasting

| Fri Apr. 13, 2007 2:01 PM EDT

"Payola" is the term for a practice in which radio broadcasters accept gifts and money from recording companies in exchange for playing music those companies select. Payola is fairly common, and actually legal if, when they play a track, radio broadcasters disclose who paid them to play it. (The FCC's rules on payola are easy to find, and quite clear.) Of course, you never hear a radio DJ saying, "We've been paid $3,000 to play this next J. Lo. track, so enjoy!"

The FCC is sending a message to change all that. Clear Channel Communications, CBS Radio, Entercom Communications, and Citadel Broadcasting have been fined a collective $12.5 million and will now be required to track every gift they receive worth more than $25. The fine is the largest in the history of American broadcasting.

My favorite part of the ruling, though, is this:

On top of the fines, the radio companies voluntarily agreed to launch a new program for independent artists... This local artist showcase commits the industry to 4,200 hours of airplay across the four companies between 6 a.m. and midnight.

In a previous payola investigation, Sony BMG Music Entertainment -- which includes Arista Records, Columbia Records, and Sony Music -- had to pay $10 million after then-New York Attorney General Eliot Spitzer went after it.