Will continue working for labels by being paid a flat fee.
Well-known indie promoter Jeff McClusky tells the New York Times he is dumping the business model that he made an industry standard between record labels and radio stations, following the high-profile pay-for-play investigation by New York State Attorney General Eliot Spitzer, which all but makes his practices illegal.
McClusky’s business provided annual fees to radio stations, which were said to be used to fund promotional budgets. While the payouts were not supposed to be linked to airplay of specific songs, McClusky would then bill record labels for each song that was added to one of his client station’s playlist.
Federal law prohibits broadcasters from accepting anything of value in exchange for airplay, unless it is disclosed to listeners.
Five years ago, the Times reported that McClusky had deals with 175 stations. He now has only 30. McClusky said Nov. 2 that amid radio industry consolidation, shrinking music sales, and Spitzer’s sweeping inquiry, that he would not renew contracts that call for him to provide annual fees. He intends to continue working for major record companies, by being paid a flat retainer fee instead of fees tied to radio playlists.
However, it appears clear that the decision was hardly McClusky’s own. Spitzer has called his business model "an effort to dodge the payola laws" and a means to "perpetuate the fiction" that stations were not receiving money or gifts from record companies in exchange for airplay.
As part of a $10 million settlement with Spitzer, Sony BMG agreed not to reimburse independent promoters for any expense made for a station or programmer—in essence, squashing McClusky’s business.
"Whether or not I agree with it, it is what it is," he told the New York Times, "and I choose to comply because I do not want to interrupt the excellent promotion relationship I've had with Sony BMG labels."