The arguments against illegal payola were first extended by Murray Rothbard. In a talk at the Mises Institute some time in the past couple of years, Martin S. Fridson gave a little blurb about the arguments that brought my attention to them. He also wrote a short chapter in his book "Unwarranted Intrusions" about the history of payola. Here is my off-the-cuff take on the arguments.
The best way for labels to promote their music is for people to hear it. In the 1800's labels would promote sheet music by paying artists to play it in public forums. During the 20's labels would pay artists like Al Jolson (the person who built my apartment complex fyi) to sing a song, because anything that he sang was guaranteed to become a hit. And of course, in the radio era, labels began to pay disc jockeys to spin their albums, thus the beginning of payola. Bottom line; there is a MARKET for having your music heard.
By making payola illegal the market still exists, but it becomes a BLACK MARKET. Labels still pay to play, but now their payments are higher to account for the risk they are taking that they may be prosecuted. This greatly inflates the price to play and makes it nearly impossible for independent labels to enter into that market.
If payola were legalized (as it was during Chess/Sun era) then it would take that risk out of the price of radio airtime. This would normalize the price of the cost for airtime and allow larger independent labels such as Sub Pop, Matador, Merge, Saddle Creek, etc to enter into the market.
Continue reading Want better radio? Legalize payola. .
