Music Promoter to Abandon a Radio Policy He Developed

[SOURCE: New York Times, AUTHOR: Jeff Leeds]
Payola just isn't what it used to be. Jeff McClusky, a music entrepreneur who emerged as an influential behind-the-scenes player in the 1990's by devising a technique to curry favor with radio programmers while sidestepping laws against bribery, said this week that he was dumping the business model he pioneered. The move by Mr. McClusky comes three months after the New York attorney general, Eliot Spitzer, stunned the music business with revelations that the nation's second-biggest music corporation, Sony BMG Music Entertainment, bribed radio station personnel and engaged in other improper promotion practices. In a settlement with Mr. Spitzer, Sony BMG agreed to a series of changes -- including severing ties to certain independent promoters - and to pay $10 million. Federal law prohibits broadcasters from accepting cash or anything of value in exchange for play of a specific song unless the transaction is disclosed to listeners. But since the late 1980's, the major record companies have used a tactic honed by Mr. McClusky. In the structure he engineered, Mr. McClusky provided "budgets," or annual fees, to radio stations, which could use the money to pay for T-shirts, contests and other promotions - but which were not supposed to be tied to airplay of specific songs. He would then bill record companies for each song added to a station's playlist. Major radio corporations and record labels embraced the system for years. But Mr. McClusky said yesterday that amid radio industry consolidation, shrinking music sales, and most recently, the chilling effect of Mr. Spitzer's inquiry, it was time to switch gears.
http://www.nytimes.com/2005/11/03/business/media/03music.html?pagewanted=all
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