Undisclosed Payments to Promote Records on the Radio: An Economic Analysis of Anti-Payola Legislation

Abstract

The aim of this paper is the evaluation of anti-payola legislation and its up-to-date enforcement from the law and economics perspectives with special attention paid to the application of anti-payola laws to Internet radio. The paper discusses analyses of payola conducted by Coase, Sidak and Kronemyer and takes the economic analysis of anti-payola legislation a step further, by paying attention to contemporary developments in the radio industry and the advent of Internet radio. Contrary to purely legal analyses of payola, this article draws on cultural and media economics to show why record labels' and radio stations' incentives to engage in undisclosed pay-for-play practices are so strong.

Keywords: Payola, Music Industry, Record Label, Radio, Internet Radio, Independent Promotion, Federal Communications Commission, The Communications Act of 1934, Law and Economics

JEL Classification: K10, K23, L82, L96, Z10