CBS Records, the nation's largest record manufacturer, announced Wednesday in New York that it is severing most of its ties with independent record promoters, culminating a series of similar moves by other leading record companies over the last few days.
In a separate action, A & M Records also said it has suspended its relationship with "various" independents, while PolyGram Records declared it has stopped using all independent promoters.
The actions came in the wake of recent reports of federal investigations into various record industry activities, including possible Mafia payola links to certain of the promoters.
But CBS and A & M were as tight-lipped as their rivals in spelling out why the music industry was suddenly racing away from a longstanding industry practice of using outside record promoters to help obtain airplay on new releases. Industry executives have estimated that independent promotion costs labels a collective $60 million to $80 million annually.
A statement released Wednesday by CBS Records expressed concern about "negative impressions that may have arisen from the recent wave of allegations regarding independent promotion."
The statement added that while CBS, whose major labels are Columbia and Epic, was "unaware of any illegal activities," the company was curtailing "substantially (its use of independent promotion) while the various investigations are taking place." CBS officials refused to make further comment.
However, the question many industry insiders are already asking is which company--eager for an edge on the competition--will be the first to re-enter the controversial world of independent promotion.
"Now is one of the rare moments in time when something can be done about the runaway costs of independent promotion," said a top-level, Los Angeles-based label executive, who asked not to be identified. "But the fact is this probably isn't going to stick. It's naive to think that we'll wake up in June without independent promotion.
"The best we can hope is that record labels can create a new system which doesn't cost a fortune and will have a system of accountability that we haven't seen up until now."
At the same time, an independent promotion executive, who also asked not to be identified, predicted that "it's hard to imagine the industry sticking together long enough to walk away from us. Right now, what we're seeing isn't fear, but panic.
"Even after the first record companies announced (last week) that they were cutting off indies, we had rival labels calling us, saying, 'We're with you 100%. Go out and get our records played.' "
Independent promotion has long been a way of life in the record business. Supplementing their own in-house promotion staffs, record companies pay independents from $40,000 to $150,000 to get individual records played on the radio. This controversial industry practice has drawn periodic rumors of payoffs and other illegal activities involving some of the independents.
While individual companies have frequently voiced concern about paying this enormous tab, they have been reluctant to make unilateral moves, fearing other companies would gain an advantage in radio airplay, which is considered essential to strong sales.
(The industry's two largest companies, CBS Records and Warner Communications Inc., stopped using independent firms in 1980, but soon reversed themselves after suffering a considerable loss of airplay and sales after rival labels stepped up their use of independents).
The latest attempt by record companies to put some distance between themselves and independent promoters began Friday when Capitol/EMI-America and MCA Records announced that they would no longer hire outside firms to promote their new product.
They were joined on Monday by Warner Communications, which controls Warner Bros., Atlantic and Elektra Records and is the second-largest company in the U.S. record business. RCA and Motown Records made similar announcements Monday.
This burst of activity came after a series of media revelations, culminating with several broadcasts on the "NBC Nightly News" last week, which pointed to reported probes by federal investigators into various industry practices, including counterfeiting, sale of surplus "cut-out" recordings and the payola links to certain independent promoters.
The most dramatic public move came last Thursday when a U.S. District Court Grand Jury in New York issued a sweeping subpoena to the Recording Industry Assn. of America (RIAA), demanding all RIAA documents involving record label contracts with independent promotion firms.
In a press release dated the same day, the association, a lobbying organization that represents record-industry interests, said it was willing to take "immediate and corrective action" against individuals or firms if law enforcement could demonstrate they were engaged in "any illegal activities."