Payola, in the American music industry, is the illegal practice of payment or other inducement by record companies for the broadcast of recordings on music radio, in which the song is presented as being part of the normal day's broadcast. Under US law, , a radio station can play a specific song in exchange for money, but this must be disclosed on the air as being sponsored airtime, and that play of the song should not be counted as a "regular airplay." The term has come to refer to any secret payment made to cast a product in a positive light (such as obtaining positive reviews).
Some radio stations report spins of the newest and most popular songs to industry publications. The number of times the songs are played can influence the perceived popularity of a song.
The term gets its name as a take-off of the names of some early record-playing machines, such as Victrola or Rockola. A similar concept is "plugola," in which a radio personality gives on-air promotion to an event, act, or establishment in which he or she has a financial interest without full disclosure.
Partially out of payola concerns, a very large majority of DJs are cut out of the song-picking decisions and are instead told, in the form of a playlist, what to play and when, by their superiors (who may include music directors, program directors, general managers, and even owners).
A different form of payola has been used by the record industry through the loophole of being able to pay a third party or independent record promoters ("indies"; not to be confused with independent record labels), who will then go and "promote" those songs to radio stations. Offering the radio stations "promotion payments," the independents get the songs that their clients, record companies, want on the playlists of radio stations around the country.
This newer type of payola was an attempt to sidestep FCC regulations. Since the independent intermediaries were the ones actually paying the stations, it was thought that their inducements did not fall under the "payola" rules, so a radio station need not report them as paid promotions.
Former New York State Attorney General Eliot Spitzer prosecuted payola-related crimes in his jurisdiction. His office settled out of court with Sony BMG Music Entertainment in July 2005, Warner Music Group in November 2005 and Universal Music Group in May 2006. The three conglomerates agreed to pay $10 million, $5 million, and $12 million respectively to New York State non-profit organizations that will fund music education and appreciation programs. EMI remains under investigation.
Concern about contemporary forms of payola prompted an investigation during which the FCC established firmly that the "loophole" was still a violation of the law. Four companies (CBS Radio, Citadel, Clear Channel, and Entercom) settled on paying $12.5 million in fines and accepting tougher restrictions than the legal requirements for three years, although no company admitted any wrongdoing. Because of the increased legal scrutiny, some larger radio companies (including industry giant Clear Channel) now flatly refuse to have any contact with independent promoters.
While payola involves payments for the playing of recorded music, the related practice of [[pay to play|"pay[ing] to play"]] involves payments by bands to promoters or club owners to play live at a live venue, club, or auditorium. Most often a band does this to get increased exposure to a large audience.
In rock and metal music, some clubs and bars ask some bands to pay to perform. Metal/rock drummer Richie Rivera states that the best clubs to play "...are usually pay-to-play (or what the clubs call 'pre-selling tickets'". Rivera says that while his band has done "pay to play" to perform at venues, in the future, the band will "...only do it for a support slot for a national act.
In the US, there are "pay-to-play" "Battle of the Bands" contests where bands pay to perform on stage. Billboard Magazine's Oct. 21, 2006 article "Pay to Get Played" described how a "third-party booking agency in New Jersey" called Audible Spectrum Records was "charging bands up to $350 per show, promising services and opportunities that were never delivered."
Jazz trumpeter Marvin Stamm has described a similar "pay to play" issue in New York city jazz clubs. Stamm says that if a jazz "...artist or group is new or unknown, some clubs - even the larger clubs - will ask that the artist or group’s record company guarantee that the club will break even. If there is no record company to back the artist, then he will probably have to guarantee this himself." If there is a poor turnout at the club, the jazz band leader may have to pay hundreds of dollars to the club.
The practice was criticized in the chorus of the Dead Kennedys song "Pull My Strings," a parody of the song "My Sharona" ("My Payola") sung to a crowd of music industry leaders during a music award ceremony.
The They Might Be Giants song "Hey, Mr. DJ, I Thought You Said We Had A Deal" is another song about the practice. It is narrated from the point of view of a naive and inexperienced musician who has been coerced by a disc jockey into paying for airplay the disc jockey then disappears and does not deliver on his promise.