[Congressional Record Volume 151, Number 154 (Friday, November 18, 2005)]
[Senate]
[Pages S13367-S13369]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD:
  S. 2058. A bill to promote transparency and reduce anti-competitive 
practices in the radio and concert industries; to the Committee on 
Commerce, Science, and Transportation.
  Mr. FEINGOLD. Mr. President, I am pleased to introduce legislation 
today that will promote openness and fair competition in the radio and 
concert industries.
  I have followed the changes in the radio and concert industries since 
the 1996 Telecommunication Act with great concern. For years, I have 
heard complaints from my constituents about the increasing 
concentration of ownership in the radio and concert industries and, in 
turn, the increasingly uneven playing field for small radio stations 
and independent concert promoters. For consumers this has meant less 
diversity, less local content and growing dissatisfaction with the 
radio and concerts they are offered.
  Most recently in the last Congress, I introduced broad legislation to 
address ownership consolidation and the anti-competitive practices 
common in the industry. These practices include tacit or explicit pay-
for-play, or ``payola,'' payments, and corporate radio stations putting 
untoward pressure on artists to play at the same corporation's venues 
use affiliated concert promoters. While I continue to be concerned by 
consolidation and believe this centralization exacerbates the potential 
for abuse, the bill I introduce today focuses instead on the anti-
competitive practices, whether they occur at a radio station group of a 
handful of stations or one that owns thousands of stations.
  Some might question why we need added scrutiny and accountability for 
the radio and concert industries specifically. Besides the unique role 
radio plays for communication and entertainment in each American's 
life, radio also is, in a sense, a public-private partnership. With 
radio's use of the public airwaves, it also has a responsibility to 
serve the public good.
  The abuses within the radio and concert industry are not entirely 
new. In fact, problems have occasionally sprung up almost throughout 
the entire history of the medium. There almost seems to be a cyclical 
pattern as the payola is rooted out and then several years later is 
reincarnated in slightly different form to grow to become pervasive 
again. So while the original payola practices predated the recent rapid 
consolidation in the industry, the concentration of power has made the 
problem more widespread and its effects possibly more severe on local 
stations, promoters, artists and consumers.
  While paying a radio station or radio station employee to play a 
certain song without telling the audience has a long history in radio, 
this does not make the fraud and bribery any more acceptable. In the 
1950s, the practice was relatively simple. Artists, their labels or 
managers would often directly bribe DJs to play their songs either in 
cash or through other consideration. When this practice became public, 
there were investigations and Congress and the Federal Communications 
Commission (FCC) took actions to block this payola.
  The most recent incarnation of payola takes a more complicated and 
sophisticated--corporate, if you will--approach to skirt the current 
rules that prevent direct pay-for-play. Indirect payments through 
independent music promoters have been an open secret, as have more 
direct payments, as the ground-breaking investigation of New York 
Attorney General Eliot Spitzer demonstrates. While the Spitzer 
investigation is ongoing, he has already uncovered significant abuses 
and this summer reached a $10 million settlement with a record label.
  While not traditionally considered payola, there are other abuses of 
power over airplay decisions by radio stations and their corporate 
parents, especially when the conglomerate also owns concert promoters 
and venues. This cross-

[[Page S13368]]

ownership sets up a situation where the same corporation that is 
negotiating a contract for an artist to perform at its concert also 
controls the lifeblood of that artist's success--airplay of his or her 
songs. The result can be intense pressure on artists to play radio 
station-promoted shows and, often, to do so for less than the normal 
rate. This practice hurts the artist, hurts competing independent 
stations and promoters and, ultimately, hurts the listening public, 
which ends up choosing from songs on the radio that have been selected 
based on where and for whom the artist is performing a concert, and for 
the songs' artistic merit. Moreover, for any artist who deigns to 
refuse the direct or implied extortion from the conglomerate, as Don 
Henley's courageous testimony in a 2003 Commerce Committee hearing 
clearly explained, there is the risk of retaliation--either immediately 
or by boycotting the next single or album the artist produces. And with 
the consolidation in the industry, that boycott might not just be in 
one station in one market; it could be forty stations in many markets. 
Facing this kind of potential threat, you can see why even the most 
popular acts are afraid to speak publicly.
  The bill I introduce today proposes a multi-faceted approach to the 
various entrenched forms of payola. The bill would simultaneously 
strengthen the FCC's ability to prove and punish violators, close the 
loophole allowing indirect payola, prevent cross-ownership from 
hindering fair competition, and, perhaps most importantly, increase 
transparency through disclosure of the payments to radio stations from 
artists, labels, promoters and others who may have an interest in 
improperly influencing airplay decisions.
  The bill improves the FCC's ability to enforce payola violations 
through several means. It requires radio stations to make transactions 
with entities like record labels that might have an interest in 
influencing airplay on an ``arm's length basis.'' Moreover the bill 
requires record-keeping of such transactions and makes the records 
available to the FCC in the event of an investigation. In addition, the 
bill significantly increases penalties for payola violations and allows 
the FCC to consider revoking a station's license. As we have seen in 
the realm of indecency, multimillion dollar companies do not blink at 
the current fines of $10,000 per violation, but the prospect of putting 
a license in jeopardy will get their attention.
  As I've already mentioned, the current payola rules were put in place 
for an earlier, simpler incarnation of the practice--the direct bribing 
of DJs and stations. Payola has changed, often going through third 
parties such as independent music promoters or under the guise of a 
legitimate transaction. The bill broadens the current rules to include 
these indirect payments, so no matter what tortured path money or other 
consideration travels, if it is for airplay and not disclosed, it is 
payola.
  Cross-ownership of radio stations and concert promoters or venues 
poses a serious problem for fair competition. Without controls, the 
relationship injects the profitability of a concert and not artistic 
merit into airplay decisions. The bill would either prohibit this, in 
the case of cross-ownership, or place controls to ensure fair 
competition in the concert promotion industry.
  The final element of the bill--increased transparency--hopefully will 
have the biggest impact by deterring payola in all its past, present 
and future incarnations. The bill requires radio stations to disclose 
all receipts of payments or consideration that could be used as a front 
for payola along with a list of the songs played every month, broken 
down by label and artist. While corporations may not fear the current 
hard-to-prove $10,000 fines, they do understand public relations. The 
potential for consumers and the media to use these records to connect 
the dots should have a chilling effect on the practice and may mean 
that the FCC Enforcement Bureau will rarely even need to be involved. 
But if problems persist, this bill will provide the Bureau with better 
powers and evidence to combat payola in all its forms.
  Finally let me put this in context and remind my colleagues that 
radio stations use a public resource, the airwaves, to reach their 
listeners. With this use comes a responsibility to the public and an 
understanding that they accept a degree of increased scrutiny. My 
legislation strives to ensure that the public knows when it hears a 
song on the radio that it is because the station, the DJ, the public, 
or even a focus group, believes it has artistic merit and that it is 
something the listeners will enjoy. Too often, today's radio listeners 
are left to wonder whether a song was played because the station 
manager got a new laptop or because the station's parent company is 
producing the artist's upcoming concert.
  It boils down to choices. This bill will reinstate choices, the 
fundamental basis of competition; choice for the artists to pick which 
concerts to play and who they want to promote their concerts; choices 
for the radio stations to play songs based on merit, or at least not 
based on narrow financial interests; and ultimately choices for 
consumers as artistic merit instead of the ability to pay carefully 
disguised bribes broadens the field of artists who can compete.
  I am pleased that my bill has been endorsed by the following groups, 
and I am grateful for the input they have provided about problems in 
the radio and concert industries: the American Association of 
Independent Music/A2IM; the American Federation of Television and Radio 
Artists; the American Federation of Musicians of the United States and 
Canada; Consumers Union; Free Press; the Future of Music Coalition; the 
National Academy of Recording Arts and Sciences, Inc.; and the 
Recording Artists' Coalition. I urge my colleagues to join me and 
support this legislation to promote fair competition in the radio and 
concert industries. I urge my colleagues to join me and support this 
legislation to promote fair competition in the radio and concert 
industries.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2058

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Radio and Concert Disclosure 
     and Competition Act of 2005''.

     SEC. 2. DISCLOSURE REGULATIONS.

       (a) Modification of Regulations.--
       (1) In general.--Not later than 1 year after the date of 
     the enactment of this Act, the Federal Communications 
     Commission shall modify its regulations under sections 317 
     and 507 of the Communications Act of 1934 (47 U.S.C. 317 and 
     508), to prohibit the licensee or permittee of any radio 
     station, including any employee or affiliate of such licensee 
     or permittee, from receiving money, services, or other 
     valuable consideration, whether directly or indirectly, from 
     a record company, recording artist, concert promoter, music 
     promoter, or music publisher, or an agent or representative 
     thereof, unless the licensee or permittee discloses at least 
     monthly the receipt of such money, services, or other 
     consideration to the Federal Communications Commission (in 
     this Act referred to as the ``Commission'') and the public in 
     a manner that the Commission shall specify.
       (2) Exception.--The Commission in modifying its regulations 
     as required under paragraph (1) may create an exception to 
     the prohibition described under paragraph (1) for--
       (A) transactions provided at nominal cost; or
       (B) paid broadcasting disclosed under section 317 of the 
     Communications Act of 1934 (47 U.S.C. 317), if the monthly 
     disclosure described in paragraph (1) includes the proportion 
     of total airplay considered paid broadcasting.
       (b) Playlist.--The monthly disclosure by a radio station 
     licensee or permittee required under subsection (a) shall 
     include a list of songs and musical recordings aired during 
     the disclosure period, indicating the artist, record label, 
     and number of times the song was aired.

     SEC. 3. ARM'S LENGTH TRANSACTIONS.

       (a) In General.--Not later than 1 year after the date of 
     the enactment of this Act, the Federal Communications 
     Commission shall modify its regulations under sections 317 
     and 507 of the Communications Act of 1934 (47 U.S.C. 317 and 
     508), to require that all transactions between a licensee or 
     permittee of any radio station, including any employee or 
     affiliate of such licensee or permittee, and a record 
     company, recording artist, concert promoter, music promoter, 
     or music publisher, or an agent or representative thereof, 
     shall be conducted at an arm's length basis with any such 
     transaction reduced to writing and retained by the licensee 
     or permittee for the period of the license term or 5 years, 
     whichever is greater.
       (b) Records.--A record of each transaction described under 
     subsection (a) shall be--
       (1) made available upon request to--

[[Page S13369]]

       (A) the Commission; and
       (B) any State enforcement agency; and
       (2) subject to a random audit by the Commission to ensure 
     compliance on a basis to be determined by the Commission.
       (c) Exemption.--The Commission may create an exemption to 
     the record keeping requirement described in subsection (b)--
       (1) for a transaction that is of a nominal value; and
       (2) for a radio station that is a small business, as 
     recognized by the Commission and established by the Small 
     Business Administration under section 121 of title 13, Code 
     of Federal Regulations, if the Commission determines that 
     such record keeping poses an undue burden to that small 
     business.

     SEC. 4. COMPETITION REGULATIONS.

       Not later than 1 year after the date of the enactment of 
     this Act, the Federal Communications Commission shall modify 
     its regulations under sections 317 and 507 of the 
     Communications Act of 1934 (47 U.S.C. 317 and 508), to 
     accomplish the following:
       (1) General prohibition.--To prohibit the licensee of any 
     radio station, including any parent, subsidiary, or 
     affiliated entity of such licensee, from using its control 
     over any non-advertising matter broadcast by such licensee to 
     extract or receive money or any other form of consideration, 
     whether directly or indirectly, from a record company, 
     artist, concert promoter, or any agent or representative 
     thereof.
       (2) Radio station concerts.--
       (A) In general.--To prohibit a licensee or permittee of a 
     commercial radio station, or affiliate thereof, from--
       (i) engaging, receiving, making an offer for, or directly 
     profiting from concert services of any musician or recording 
     artist unless the licensee or permittee does not 
     discriminate, in whole or in part, about the broadcast of 
     non-advertising matter, including any sound recording, by 
     that particular artist upon whether or not that artist 
     performs at the radio station affiliated concert; and
       (ii) engaging or receiving concert services of any musician 
     or recording artist unless the licensee or permittee provides 
     the musician or recording artist with compensation for such 
     services at the fair market value for the performance.
       (B) Definition.--For purposes of subparagraph (A), the term 
     ``fair market value'' shall include such factors as--
       (i) the rate typically charged by the musician or recording 
     artist for a concert of the size being put on for the 
     station;
       (ii) the expenses of the musician or recording artist to 
     travel to, and perform at, the concert location; and
       (iii) the length of the performance in relation to the 
     standard duration for a concert by the musician or recording 
     artist.
       (C) Limitations and exclusions.--The provisions of this 
     paragraph shall not--
       (i) prohibit consideration for the concert services being 
     made in the form of promotional value, cash, or a combination 
     of both; or
       (ii) apply to--

       (I) a radio station that is a small business, as recognized 
     by the Commission and established by the Small Business 
     Administration under section 121 of title 13, Code of Federal 
     Regulations;
       (II) in-studio live interviews and performances; or
       (III) concerts whose proceeds are intended and provided for 
     charitable purposes.

       (3) Radio and concert cross-ownership.--
       (A) In general.--To prohibit a licensee or permittee of a 
     radio station, or affiliate thereof, from owning or 
     controlling a concert promoter or venue primarily used for 
     live concert performances.
       (B) Waiver.--The Commission may waive the prohibition 
     required under subparagraph (A) if--
       (i) the Commission determines that because of the nature of 
     the cross-ownership and market served--

       (I) the affected radio station, concert promoter, or venue 
     would be subjected to undue economic distress or would not be 
     economically viable if such provisions were enforced; and
       (II) the anti-competitive effects of the proposed 
     transaction are clearly outweighed in the public interest by 
     the probable effect of the transaction in meeting the needs 
     of the community to be served; and

       (ii) the affected radio station, concert promoter, or venue 
     demonstrates to the Commission that decisions regarding the 
     broadcast of matter, including any sound recording, will be 
     made at arm's length and not based, in whole or in part, upon 
     whether or not the creator, producer, or promoter of such 
     matter engages the services of the licensee or permittee, or 
     an affiliate thereof.

     SEC. 5. REVIEW OF TRANSACTIONS.

       (a) In General.--Upon petition by a musician, recording 
     artist, or interested party, the Commission shall review any 
     transaction entered into under section 3 or section 4.
       (b) Copy of Petition.--A copy of any petition submitted to 
     Commission under subsection (a) shall be provided by the 
     person filing such petition to the licensee or permittee, or 
     musician or recording artist, as applicable.
       (c) Public Disclosure.--If the Commission, after reviewing 
     a petition submitted under subsection (a) finds a transaction 
     violated any provision of this paragraph or section 3, the 
     Commission shall publicly, after all parties have had a 
     reasonable opportunity to comment, disclose its finding and 
     grant appropriate relief.

     SEC. 6. PENALTIES.

       The regulations promulgated under sections 2, 3 and 4 shall 
     set forth appropriate penalties for violations including an 
     immediate hearing before the Commission upon the issuance of 
     a notice of apparent liability or violation, with possible 
     penalties to include license revocation.

     SEC. 7. REPORT.

       Not later than 2 years after the date of enactment of this 
     Act, and every 2 years thereafter, the Commission shall issue 
     a report to Congress and the public that--
       (1) summarizes the disclosures made by licensees and 
     permittees as required under section 2;
       (2) summarizes the audits conducted by the Commission as 
     required under section 3(b)(2);
       (3) summarizes the cross-ownership waivers, if any, awarded 
     by the Commission under section 4(3)(B);
       (4) evaluates ownership concentration and market power in 
     the radio industry in a manner similar to the most recent in 
     the discontinued series of FCC reports, ``Radio Industry 
     Review 2002: Trends in Ownership, Format, and Finance''; and
       (5) describes any violations of section 2, 3, or 4, and 
     penalty proceedings under section 6, and includes 
     recommendations for any additional statutory authority the 
     Commission determines would improve compliance with 
     regulations issued under this Act.

     SEC. 8. LICENSE REVOCATION.

       Section 312(a) of the Communications Act of 1934 (47 U.S.C. 
     312) is amended--
       (1) in paragraph (6), by striking ``; or'' and inserting a 
     semicolon;
       (2) in paragraph (7), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(8) for violation of or failure to follow any regulation 
     established in accordance with section 2, 3, 4, or 6 of the 
     Radio and Concert Disclosure and Competition Act of 2005.''.

     SEC. 9. INCREASED MAXIMUM PENALTIES.

       (a) Penalties for Disclosure of Payments to Individuals 
     Connected With Broadcasts.--Section 507(g)(1) of the 
     Communications Act of 1934 (47 U.S.C. 508(g)(1)) is amended 
     by striking ``$10,000'' and inserting ``$50,000''.
       (b) Penalties for Prohibited Practices in Contests of 
     Knowledge, Skill, or Chance.--Section 508(c)(1) of the 
     Communications Act of 1934 (47 U.S.C. 509(c)(1)) is amended--
       (1) by striking ``$10,000'' and inserting ``$50,000''; and
       (2) by inserting ``, for each violation'' before the 
     period.
                                 ______