It's a safe bet that most radio listeners have never
heard of rock singer Matthew Harrison. The owner of tiny Third Monk
Records, which released Harrison's album, says there's a simple reason:
The company can't afford the hidden costs of obtaining radio
airplay.
Jeff Robinson, the label's sole proprietor, said he
doesn't have the money to hire independent promoters who heavily influence
station playlists.
"They've got it locked up and there's absolutely
no room to do what I'm trying to do," Robinson said. "And if you can't get
exposure for your product, you'll never be able to sell any records." For
40 years, federal law has prohibited broadcasters from accepting money or
anything of value in exchange for playing songs without disclosing the
practice to listeners. But a loose-knit cadre of independent promoters
dodges the anti-payola law by paying broadcasters annual fees they say are
not tied to airplay of specific songs.
For their services, the
promoters charge record companies as much as $4,000 a song to obtain
airplay for new releases, according to promoters and record executives.
That costs the major record conglomerates an estimated $100 million a
year. But it's a price tag that's out of reach for Third Monk and other
small labels.
The independent labels' fears are increasing because
playlists are controlled by fewer and fewer programmers. The nation's
biggest broadcaster, Clear Channel Communications Inc., recently limited
the number of promoters with access to its stations to six. The small
labels worry that such moves could raise promoters' prices even
further.
"The game is stacked against every little guy," said Dave
Lebental, president of small rock label Pinch Hit Records. "It's not set
up for outsiders to come in. It's not a wide-open
marketplace."
Artists who are not signed to record deals with major
labels are unable to compete on a level playing field, "strictly on the
basis of money," said Robinson, who recently sent a memorandum outlining
his complaints to the Federal Communications Commission.
Though
some independent labels can afford to hire an independent promoter, major
labels can ensure their own songs receive top priority by raising the
ante. The major labels bid up the promoters' base rates and offer bonuses
for getting a song added at a specified number of stations.
To
compete, the small labels sometimes offer extra incentives for an
independent promoter to work their record, including cutting the promoter
in on a percentage of album sales revenue.
"You'd offer anything.
Your sister, anything," Lebental said. "You have to give them some kind of
reason to [push] this record over a major-label record."
It's
unclear how effective these independent promoters are. Executives at the
major record companies have long operated under the assumption that the
independent promoters can influence a song's success not only by getting
it added to a playlist but also possibly by keeping it off.
Radio
programmers, in turn, say they never play specific songs in return for
money. At the same time, they say the annual fees and prizes provided by
independent promoters are crucial to their bottom
lines.
Independent promoters say their services are worthwhile and
are available to anyone willing to pay their asking
price.
Independent labels say that's the problem: They can't
pay.
Many Small Labels Forgo Radio Airplay
The cost of
launching an independent label has dropped dramatically in recent years,
partly because of the wide availability of studio-recording software and
cheap CD-pressing technology.
"I can release a CD for $1,000," said
Robert Walker, president of San Francisco-based Heyday Records, which
specializes in surf and rockabilly music. "But the cost of promotion has
gone way up. Even to get airplay on some of the smaller stations, you're
talking $1,500 for a six- to eight-week promotion. And we're talking
specialty [radio] shows, which means you get two or three spins a week.
For full-blown, heavy-rotation airplay you are talking hundreds of
thousands of dollars."
Many independent labels forgo seeking radio
airplay, preferring to save their money to pay for concert tour costs or
to buy retail or print advertising. But that decision essentially
guarantees lower sales and limits the ability of the small labels to
expand.
Limiting exposure for independent labels also poses
potential problems for the major record companies. The majors often
discover acts that are signed to regional labels, then acquire
distribution rights or purchase the small company to secure a piece of the
bands' hits. Many of the biggest record companies were formed by
corporations that gobbled up hot independent labels such as Interscope,
Island, Def Jam and Virgin during the 1990s.
Though many ultimately
will fail, the more than 500 small companies occupy a giant sector of the
$40-billion-a-year record industry. Independent labels, which often focus
on regional sales and specialize in genres from reggae to polka to speed
metal, collectively account for 14.45% of overall U.S. album sales so far
this year, according to music research firm SoundScan. Together they have
captured a larger overall U.S. market share than either Bertelsmann or EMI
Music, two of the world's five major record conglomerates.
Consider
the case of Robinson, a former radio station program director who started
Third Monk's one-man operation in his house this spring. In April,
Robinson began seeking exposure for the label's first release, Matthew
Harrison's album, "Charmed."
Robinson said he sent copies of the
album to 185 radio stations nationwide. Only three decided to play the
record--two independent stations that don't allow independent promoters,
and one college station.
In May, he said, Third Monk shipped a copy
of the album to Monterey rock station KCDU-FM, owned by regional chain New
Wave Broadcasting.
After a series of phone calls to lobby for the
record--unsuccessfully--Robinson said he spoke with KCDU program director
Mike Skot. Robinson said Skot asked him whether Third Monk had the
financial backing to hire National Music Marketing, an Encino-based
independent promoter.
He said Skot informed him that National had a
contract guaranteeing it the exclusive right to discuss records with New
Wave's radio programmers.
"He said he couldn't do anything because
they're under contract" and cannot deviate from the list of songs allowed
by National, Robinson said.
Skot did not return calls seeking
comment.
Fees Help With Contests, Concerts, Promotions
Jeff
Deane, National's general manager, said his contract does not require KCDU
to play only the songs he promotes.
"They can add anything they
want to add. I have no control over it," he said. "All I get is the weekly
playlist, first."
Charles Cohn, president of New Wave,
agreed.
"We can talk to as many advisors as we choose," Cohn said.
"The agreement that we have with National is strictly regarding
information. We tell them our adds before we tell the general public, and
that's it. The radio stations play whatever records they want to play. If
this was a very popular local band that created real passion in the
Monterey market, we would seriously look at playing a record like
that."
Deane's firm offers stations annual fees as high as $200,000
to defray expenses for giveaway contests, vacations, concerts and other
promotions, according to documents and sources familiar with the company.
The labels pay him about $1,500 for each song that is added to a
playlist.
Deane disputed the notion that small independent labels
are at a disadvantage.
"All record labels have the same chance at
getting their record played, as long as the program director is passionate
about the record," he said. "It doesn't take one promotional dollar to get
that record on the radio."