(CelebrityAccesss MediaWire) — Indie promoter Jeff McClusky has dropped the business model that became an industry standard between record labels and radio stations, following the high-profile pay-for-play investigation by New York State Attorney General Eliot Spitzer, which all but makes his practices illegal.
McClusky developed a practice of providing stations with annual fees, which were said to be used to fund promotional budgets. While the payouts were not supposed be linked to airply of specific songs, McClusky would then bill the record labels for each song that was added to one of his client station’s playlists, according to the New York Times.
Federal law prohibits broadcasters accepting anything of value in exchange for airplay, unless it is disclosed to listeners.
Five years ago, the Times reported that McClusky had deals with 175 stations. He now only deals with 30, and said that amid radio industry consolidation, shrinking music sales and Spitzer’s sweeping inquiry, that he would not renew contracts that call for him to provide the fees. He intends to continue working for major record companies, by being paid a flat retainer fee instead of fees tied to radio playlists.
It appears that the decision was in the wake of Spitzer’s accusation that McClusky’s business model was “an effort to dodge the payola laws” and a means to “perpetuate the fiction” that stations were not receiving money or gifts from record companies in exchange for airplay.
As part of the $10 million settlement with Spitzer, Sony BMG agreed not to reimburse independent promoters for any expense made for a station or programmer – in essence, squashing McClusky’s business.
“Whether or not I agree with it, it is what it is,” he told the Times, “and I choose to comply because I do not want to interrupt the excellent promotion relationship I’ve had with Sony BMG labels.” –by CelebrityAccess Staff Writers