FCC Tightens Payola and “Showola” Regulations

Under the FCC’s rules, stations are prohibited from playing recordings in return for payment, unless the airplay is accompanied by a sponsorship identification.  Earlier this year the Commission issued an Enforcement Advisory:

"Payola is the unreported payment to—or acceptance by—employees of broadcast stations, program producers, or program suppliers of any money, service, or valuable consideration to achieve airplay for any programming. Section 507 of the Act requires those persons who have paid, accepted, or agreed to pay or accept such payments to report that fact to the station licensee before the involved matter is broadcast. In turn, section 317 of the Act requires the licensee to announce that the matter contained in the program is paid for, and to disclose the identity of the person furnishing the money or other valuable consideration."

At the time, the Commission noted that would consider increase airplay for playing a corporate events as a form of payola.

"Moreover, broadcast stations that host promotions or events that include artists (whether or not the artists are compensated for the appearance) must take appropriate steps to ensure that all such promotions or events comply with the payola requirements and general public interest components in the Act and the FCC’s rules and avoid agreements that covertly increase the amount of airplay based on an artist’s performance or appearance at a station’s promotion or event."

In response to an inquiry from Senator Marsha Blackburn (R-TN), the FCC commenced an investigation regarding iHeart’s activities.  The FCC and iHeart have entered into a consent decree.  

"Today, the FCC announced that iHeartMedia, Inc. has agreed to enter into a consent decree with the agency.  The agreement resolves an investigation the FCC’s Enforcement Bureau launched last year into iHeartMedia’s compliance with federal rules that prohibit a practice known as payola.  One form of payola, sometimes called “showola,” involves a radio station pressuring artists to perform at station-hosted music shows or festivals for free or for reduced compensation in exchange for more favorable airtime for their songs." 

It is clear from the consent decree that the FCC is serious about enforcing its payola and now “showola” rules.  Stations should be cautious when negotiating for artists to appear at their events.  It is worth taking a look at the terms of the consent decree.

You can access the FCC’s Enforcement Advisory on payola and “showola” here.

You can access the terms of the FCC’s consent decree with iHeart here.