Complete Report
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Acknowledgments FMC would like to thank Jim McGuinn for his original guidance on playlist data, Joe Wallace at Mediaguide for his speedy responses and support of the project, Courtney Bennett for coding thousands of labels and David Govea for data management, Gabriel Rossman, Peter DiCola, Peter Gordon and Rich Bengloff for their editing, feedback and advice, and Justin Jouvenal and Adam Marcus for their prior work on this issue. The research and analysis contained in this report was made possible through support from the New York State Music Fund, established by the New York State Attorney General at Rockefeller Philanthropy Advisors, the Necessary Knowledge for a Democratic Public Sphere at the Social Science Research Council (SSRC). The views expressed are the sole responsibility of its author and the Future of Music Coalition. © 2009 Future of Music Coalition Table of Contents Introduction ..................................................................................................................... 4 Programming and Access, Post-Telecom Act ........................................................ 5 Why Payola? ........................................................................................................... 9 Payola as a Policy Problem................................................................................... 10 Policy Decisions Lead to Research Questions...................................................... 12 Research Results ................................................................................................... 13 Data Attribution .................................................................................................... 14 Data Request ......................................................................................................... 15 Label Coding Process ........................................................................................... 16 Data Limitations.................................................................................................... 17 The Big Picture: label airplay share across all formats ............................................ 18 Airplay share by format................................................................................................ 23 Airplay Share by Release Date .................................................................................... 27 Indie Label Airplay Share of New Releases................................................................ 30 Measuring Indie Labels’ Access.................................................................................. 33 Related Research.......................................................................................................... 36 Rossman’s Payola Analysis .................................................................................. 36 A2IM’s Label Survey ........................................................................................... 40 Conclusion .................................................................................................................... 42 Were the Rules of Engagement Successful?......................................................... 43 Policy Recommendations ............................................................................................ 44 Improve Data Collection....................................................................................... 44 Refocus on Localism............................................................................................. 45 Expand the number of voices................................................................................ 46 Same Old Song: An Analysis of Radio Playlists in a Post-FCC Consent Decree World 3 Introduction In April 2007, the Federal Communications Commission issued consent decrees against the nation’s four largest radio station group owners – Clear Channel, CBS Radio, Citadel and Entercom – as a response to collected evidence and widespread allegations about payola influencing what gets played on the radio. In addition to paying fines totaling $12.5 million, the station group owners also worked with the American Association of Independent Music (A2IM) to draft eight “Rules of Engagement” and an “indie set-aside” in which these four group owners voluntarily agreed to collectively air 4,200 hours of local, regional and unsigned artists, and artists affiliated with independent labels.1 It has been two years since the FCC, radio station group owners and independent labels met around the table. The immediate questions for the music and policymaking community are: Did these agreements serve their purpose? Have payola-like practices been curtailed? Did the agreements have any effect on what gets played on the radio? As we detail in this report, the playlist data that we studied indicate almost no measurable change in station playlist composition over the past four years. Does this mean that payola is alive and well, that the Spitzer and FCC agreements were ineffective? Or does the lack of change in programming behavior suggest other, more systemic, factors? This report seeks to place the impact of the recent payola-driven investigations inside a broader framework about the state of radio thirteen years after the passage of the 1996 Telecommunications Act. This playlist data analysis underscores how radio’s long- standing relationships with major labels, its status quo programming practices and the permissive regulatory structure all work together to create an environment in which songs from major label artists continue to dominate. The major labels’ built-in advantage, in large part the cumulative benefit of years payola-tainted engagement with commercial radio, combined with radio’s risk-averse programming practices, means there are very few spaces left on any playlist for new entrants. Independent labels, which comprise 1 The FCC’s Radio Rules of Engagement are reprinted in Appendix A. Same Old Song: An Analysis of Radio Playlists in a Post-FCC Consent Decree World 4 some 30 percent of the domestic music market, are left to vie for mere slivers of airtime, despite negotiated attempts to address this programming imbalance. This report also confronts a practical challenge in measuring the effectiveness of the policies negotiated by the FCC, broadcasters and the independent music community in 2007. The ambiguous language of the Rules of Engagement and the voluntary agreements make it difficult to set specific policy goals and effectively measure outcomes. In this report’s conclusion, we articulate why we think radio is worth fighting for, and propose practical solutions to assist both broadcasters and FCC policymakers in ensuring a bright future for local radio and for the music community. Programming and Access, Post-Telecom Act Radio, in the words of media scholar Robert McChesney, is “the quintessential people’s medium.”2 A public asset that has been managed on citizens’ behalf by the Federal Communications Commission since 1934, radio is fundamentally inexpensive to produce and receive, allows for “real-time” communication in a regional area without regard to economic or literacy constraints and can offer a wide range of news, entertainment, and discussion to a broad swath of the American public. Even faced with competition from television, the internet and print media, radio reaches 90 percent of American adults every week.3 While the FCC made minor adjustments to radio station ownership limits in the 1980s, the critical event that changed the landscape was the passage of the Telecommunications Act of 1996. Broadcasters successfully lobbied Congress to both eliminate national ownership caps and increase the number of stations one company could own in a specific market. An unprecedented land grab followed. Of the approximately 11,000 stations in 2 Robert MeChesney, “Forward: Radio and the Responsibility of Radio Scholars.” Journal of Radio Studies, Vol. 8, No. 2, 2001. 3 Arbitron, “2008 Radio Today: How America Listens to Radio,” 3. http://www.arbitron.com/downloads/radiotoday08.pdf Same Old Song: An Analysis of Radio Playlists in a Post-FCC Consent Decree World 5 the country, over 2,100 stations changed hands in 1996 alone.4 There was a 33 percent decrease in the number of station owners.5 In short, deregulation brought sweeping change to the radio industry. In 2002 and 2006, FMC conducted extensive research on the effects of the Telecommunications Act on radio and, in particular, how these regulatory changes impacted the music community.6 Using data from BIA Financial Networks, we analyzed changes in the radio industry's structure from 1996 to 2002 and found that deregulation had allowed a few large radio companies to swallow many of the small ones. By 2002, just ten parent companies dominated not only the number of stations owned, but also controlled two-thirds of both listeners and revenue nationwide.7 We also found that oligopolies controlled almost every market. By 2002, virtually every geographic market was dominated by four firms controlling 70 percent of market share or greater. In addition, nearly every music format was controlled by an oligopoly. In 28 of the 30 major music formats nationwide, four companies or fewer controlled more than 50 percent of listeners. As a result, an increasingly small number of companies determined what music was played on specific formats. In addition, radio station group owners introduced cost-cutting measures that reduced local staff and centralized programming decisions at the regional,