August 02, 2005
The Shame of Payola
Posted by Victor Fleischer

Josh makes a strong case that payola is efficient.  At least in terms of competition.  What he doesn't quite convincingly address is what he calls the "deception" case. 

What makes the radio different from groceries?  Our relationship with the radio feels more personal.  I have no special bond with Safeway or Ralphs.  (Whole Foods would be a tougher case.  I like my Whole Foods.  I trust Whole Foods.  Maybe because they don't take slotting fees.

 Listening to the radio is more than a commercial transaction.  When we listen to the radio, we are often alone in the car or at home, and the DJ and his music keep us company.  We bond with our DJs and trust them.  Or at least we used to. 

Something is lost when we dismiss such notions as naive.  Perhaps because payola dates back a few years, the scandal reminds me a bit of the fine film Quiz Show, which explores the loss of a sense of shame in American post-war society. 

(We know where Ribstein stands on this movie.  Shocker.)

What would happen today if American Idol were fixed?  Perhaps it is.  Josh might even call it efficient.

Shame has disappeared as a social norm, at least when it comes to commercial transactions.  And so we must redefine the relationship between consumers and the radio.  DJs are our agents when in comes to picking music, and we routinely require agents to disclose conflicts of interest to their principals.  I don't see why this is different.  Perhaps the radio was never pure -- payola and radio seem to go hand-in-hand -- but that does not seem like a good justification for deceiving the listener. 

So I think a disclosure scheme would help -- just a quick announcement, once an hour, about the payments-for-spins, and which songs are plugged and which are clean.  Commercial radio can have its payola, or it can have our trust, but it cannot have both.

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