FCC Warns that Unreported Exchange of Radio Airplay for Event Participation by Artists Violates Payola Rules

The FCC has issued an Enforcement Advisory reminding radio broadcasters that manipulating airplay based on an artist’s willingness to participate in station promotions or events is illegal under the FCC’s payola rules unless stations broadcast appropriate sponsorship identification announcements. Under the payola rules, the payment of any money, service, or valuable consideration to achieve airplay for any programming is prohibited unless sponsorship identification is included.

Several years ago, the FCC addressed issues involving payola and sponsorship ID, including artist appearances sponsored by record labels, in multiple consent decrees with radio broadcasters. The texts of these consent decrees are linked at the bottom of this FCC Daily Digest. Under the consent decrees, a radio station could arrange for an artist to appear or perform at a station event, including under circumstances where a record label had subsidized reasonable costs related to the appearance or performance; however, the station was required to include an on-air announcement that the artist’s performance was sponsored by the record label. Stations should consider these guidelines when inviting artist participation in promotions and events.

The FCC’s rules require licensees to exercise “reasonable diligence” to comply with the sponsorship identification requirements. According to the Enforcement Advisory, “reasonable diligence” can require a higher standard for stations that are more susceptible to payola, such as music stations that report to record charting services. The FCC noted that for these stations, it may not be sufficient merely to require employees to sign affidavits stating that they will not violate payola laws.

The Enforcement Advisory came after Senator Marsha Blackburn wrote a letter to FCC Chairman Brendan Carr to “sound the alarm” on the practice of radio stations offering artists more airtime in exchange for performing free shows. Blackburn’s letter coincided with the reintroduction in Congress of the American Music Fairness Act legislation, which would require traditional AM and FM broadcasters to pay performance royalties for airplay of music.

If you would like more information about the FCC’s payola rules, contact an attorney in our Media practice group.