Massive consolidation has significantly changed the radio industry in the last seven years, but one age-old broadcasting blight has survived and thrived in the post-consolidation world: pay-for-play, commonly known as payola. Though there’s no way to determine how many radio stations are guilty of the practice, this much is clear: Even in 2003, four decades after a payola scandal finished the career of legendary rock 'n’ roll deejay Alan Freed, some radio stations still expect record companies to compensate them financially for playing the label’s releases.

Stations in all musical formats do this, and country stations are anything but immune to the practice. At the same time, many honest country programmers despise payola, because it influences the record charts—and hence the songs that all deejays play. Scott Lindy of Clear Channel’s WPOC-Baltimore, named Country Program Director of the Year by trade paper Radio Ink, drew loud applause at February’s Country Radio Seminar (CRS) when he said, “I think the single biggest blame for bad records being played in our format and going up to maybe even No. 1...is because programmers are taking favors and they’re playing these records. That’s killing us.”

Between 5 and 10 percent of country stations may cross the line at times, one Music Row label’s promotion head estimates—but his regional promotion staffs tell him that the number is more like 15 to 20 percent. Here’s how payola works, as explained by Jeff Leeds in The Los Angeles Times: “Federal law prohibits broadcasters from accepting money in exchange for airplay without disclosing such deals to listeners.... Labels have sidestepped the law by paying middlemen to push songs to programmers. These independent promoters pay broadcasters annual fees that they say are not tied to airplay of songs, but bill record labels for each song added to a station’s playlist.” It was disclosed at CRS that labels may indirectly provide cooperative stations with other incentives as well, from office furniture to computers to “flyaway” vacations.

With labels having to promote songs to both honest and dishonest stations, radio promotion has become a skyrocketing expense because shrinking playlists make it increasingly difficult to get a record on the charts. “It costs about $300,000 to get a record generally to around No. 25 or 30, to see if it even has legs. It’s an expensive proposition,” Epic/Monument Nashville senior VP of promotion Larry Pareigis said at CRS. Another promotion man said the rule of thumb was that it costs a label $100,000 to get one of its singles to move 10 spaces up the country charts.

The growth of giant radio chains like Clear Channel (which owns 1,238 stations, including Nashville’s WSIX-97.9 FM and WLAC-1510 AM), Cumulus (which recently purchased WWTN-99.7 FM and WSM-95.5 FM from Gaylord Entertainment), Infinity, Citadel and Cox has greatly upped the ante in this shadowy business. Because these parent companies went so deeply in debt to acquire stations in the wake of the 1996 Telecommunications Act, which eliminated national ownership limits, individual stations now find themselves under intense bottom-line pressure to help the corporations make their money back.

“The share price is everything,” says Terry O’Brien, general sales manager of Infinity’s WUSN Chicago, the nation’s third-largest country station. “Whatever we tell Wall Street we’re going to be at, we’ve got to find a way to be there.”

Never before have corporations spent so much on individual stations, so never before have these stations been pressured to produce such high profit margins. Thus the temptation to use the record labels illegally, as a sort of bank to provide debt service, has reached a crisis point at many stations. Adding to the problem is the fact that the chains have cut stations’ payrolls to the bone as a quick-fix means of improving profitability. Clear Channel is nicknamed “Cheap Channel” by radio insiders for this reason. Morale among the overworked and largely underpaid skeleton crews, WUSN’s O’Brien says, is at an all-time low.

“The fact that some radio stations and PDs [program directors] are on the take has always been fact, in country and all radio formats. I’d like to think they are the minority, but I hear more and more of this,” WPOC’s Lindy says. “It’s tough to put a PD in a situation where they have low or no marketing dollars and a lower salary than they think they deserve, and then a record company offers them a very appealing cash or promotional gift for playing a record. This is hard to say no to sometimes. But when you get right down to it, the job of PD is to play the best records for the listeners.”

It’s absurd, however, to blame only radio. Clear Channel chairman Lowry Mays is right when he says that if record companies were better able to police themselves and would stop paying out, the practice would cease.

The labels feel they too are trapped, because when competitors pay crooked stations and are rewarded with No. 1 records, labels feel they have no choice but to follow the same practice. The five major record companies, like America’s radio stations, are owned by giant multinational corporations: France’s Vivendi Universal, America’s AOL Time Warner, Britain’s EMI, Germany’s Bertelsmann and Japan’s Sony. The labels have also seen both their artist rosters and internal staffs slashed in recent years, and are under brutally intense pressure from parent companies, whose share prices have been battered since the spring of 2000. Several of these parent companies’ music divisions are either on the block now or will be sold in coming years.

Payola is like prostitution: It takes two willing parties to perpetuate the crime, and no matter how hard authorities try to stamp it out, it simply won’t go away. The difference is that there are some ways to address the problem, but these would require a major revision in the way that both radio and the labels do business. Last October, for instance, Atlanta-based Cox Radio became the first major chain to cut all ties to independent record promoters. These indie promoters are often seen as the middlemen in payola—the agents who make it possible to camouflage, or at least blur, the transfer of money from one party to another. Cox, which owns about 75 stations nationwide but none in Nashville, said that it had not seen any improper practices from the promoters it had been using, but it wanted to ensure that nothing unlawful happened in the future.

Significantly, no other radio chains have followed Cox’s lead. One skeptical Music Row label head says that “Cox’s country stations never added a record [to their playlists] until it was in the Top 20 anyway.”

The bottom line is that there appears to be little price to pay for those who do get caught bending or breaking the payola prohibition—meaning that federal regulators have to bear their part of the responsibility here as well. Only one top record executive, Jesus Gilberto Moreno of Latin music label Fonovisa in 1999, has ever been successfully prosecuted for illegally buying radio spins. He was fined $5,000, got two years’ probation, never went to jail and was recently rehired by the world’s biggest record company—Universal Music Group.