Small Record Labels Say Radio Tunes Them Out

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.”