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Middlemen Put Price on Airplay

Music: Independent record promoters earn per-song fees, but pay stations for service that avoids anti-payola law.


Los Angeles rock band Smackradio hasn't attracted much interest from major record labels or big-city radio stations. So why did KMBY-FM, a Monterey, Calif., rock station, play the group's song this fall more than hits by such popular acts as Staind and Sum 41?

The band and the station share a common link: Joe Grossman.

Grossman is an independent record promoter who spends most of his time trying to get songs played on certain radio stations for major record labels. Grossman has a pact with the radio station under which he pays KMBY an estimated $200,000 in annual fees in exchange for advance notice of songs added to the station's weekly playlist.

But Grossman also is developing his own music acts. He owns a stake in Smackradio's album, released by tiny All Night Bakery Records.

From Aug. 30 to Oct. 23, Mapleton Communications' KMBY was the only station among 1,100 monitored by industry tracking service Broadcast Data Systems to play the band's single "Rise." Even after Smackradio was touted in an industry trade magazine Oct. 5, only one other station in the national sample played the song. And that Anaheim station also receives payments from Grossman.

Terry Gillingham, KMBY's general manager, said the station's financial ties to Grossman did not induce it to play the Smackradio song.

"The record was played on its own merit," Gillingham said.

It is not illegal for a radio station to take money in exchange for playing a specific song as long as the payment is disclosed to the public. But record companies want listeners to believe stations play their tunes because the songs are hip, not because they are paid ads, so the companies go to great lengths to avoid having to use such on-air sponsorship tags.

And this is where Grossman and other independent consultants fit in. Each year, thousands of new songs are released by record labels, but only 250 or so tunes are added per station.

Promoters sign deals with radio stations enabling them to pitch songs to programmers, then bill record labels up to $4,000 a song when it is added to a station's playlist. In all, these promotions cost the music industry an estimated $100 million a year. Promoters sidestep the federal anti-payola law by paying broadcasters annual fees they say are not tied to airplay of specific songs.

The promotion business has gotten even tougher since the mid-'90s, when President Clinton signed legislation to deregulate the radio industry. With only a handful of major radio companies left, it is even harder to gain access and get air time for new music acts.

To survive, some promoters, including Grossman, have been generating additional revenue by branching into the record labels' territory.

Others take on individual acts as management clients, which allows them to collect up to 20% of the band's revenue.

Breaking into the label business is simple: A promoter identifies a young band and signs it to a contract. If the band gets some airplay or sells a smattering of records, the promoter can sell his stake to a bigger record label for a fee or a percentage of the act's future sales.

Grossman cut such a deal this fall with Universal Records, a division of Vivendi Universal's Universal Music Group. Universal signed pop singer Amanda Perez, formerly with Grossman's label, to a development deal after noticing that certain radio stations, including Stockton station KWIN-FM, began playing her music this summer, according to label executives.

KWIN is another station Grossman pays for playlist information. In August, KWIN was the first radio station to play Perez's song "Never" and during the next five weeks played the tune 138 times before it was picked up by any other station tracked by Mediabase, which monitors 1,100 broadcasters nationwide. A spokeswoman said the station played the song on its merits.

Grossman is not the only independent music promoter working both for record labels and his own acts.

Bill McGathy, one of a handful of promoters to work with the nation's biggest broadcaster, Clear Channel Communications Inc., is in talks to create a multimillion-dollar joint venture label deal with Universal Music Group's Island Def Jam division.

McGathy also manages such rising rock acts as 3 Doors Down and Puddle of Mudd.

McGathy declined to comment.

Some record executives say that paying independent promoters who also are pushing their own acts is a waste of money.

"The record labels are giving clout to the people who are now setting up to compete with them," said music attorney Doug Mark, who represents pop singer Christina Aguilera and independent label Epitaph Records.

Grossman disagreed.

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