Now let's cover what payola actually is and isn't. First of all, there is no such thing as "legal payola," just like there is no such thing as "legal theft." An activity is either illegal payola, or it is legal. The grand rule that governs the whole thing is section 317 in the Code of Federal Regulations...
40 FCC 317 reads: "All matter broadcast by any radio station for which any money, service or other valuable consideration is directly or indirectly paid, or promised to or charged or accepted by, the station so broadcasting, from any person, shall, at the time the same is so broadcast, be announced as paid for or furnished, as the case may be, by such person: PROVIDED, that the 'service or other valuable consideration' shall NOT include any service or property furnished without charge or at a nominal charge FOR USE ON, or in connection with, a broadcast unless it is so furnished in consideration for an identification in a broadcast of any person, product, service, trademark, or brand name beyond an identification which is reasonably related to the use of such service or property on the broadcast." (emphasis added)
What this says is that if something of value (say, $500 cash, or a DVD player, or 100 CDs) is given to a station with the UNDERSTANDING that a particular song must be played in order for the station to get the valuables, then this fact must be announced to the listeners. If the announcement is made, everything is legal; if not, it is payola. However, if something of value (say, $500 cash, or a DVD player, or 100 CDs) is given to a station for the purpose of GIVING IT AWAY ON AIR during regular programming, then NO announcement is required, and the situation remains perfectly legal. (This is how game shows work.) Here are some FCC examples:
40 FCC 3.119 Example A-1 reads: "A record distributor furnishes copies of records to a broadcast station or a disc jockey for broadcast purpose [i.e., airplay]. No announcement is required unless the supplier furnished more copies of a particular recording than are needed for broadcast [airplay] purposes. Thus, should the record supplier furnish 50 or 100 copies of the same release, with an AGREEMENT by the station, express or implied, that the record will be used on a broadcast [i.e., the song will get airplay], an announcement would be required because consideration BEYOND the matter used on the broadcast was received." (emphasis added). This example points out the difference between giving a station something to keep, versus giving a station something to giveaway on-air; this is the thing that makes the difference. Here's more clarification:
Section C reads: "[No announcement is required] where service or property is furnished free FOR USE ON or in connection with a program, but where there is neither payment in consideration for broadcast exposure of the service or property, nor an agreement for identification of such service or property BEYOND ITS MERE USE ON THE PROGRAM" (emphasis added). Thus, you can give a station whatever you want, as long as it is given away on-air, i.e., used on the regular programming. More:
Example C-10 reads: "Free books or theater tickets are furnished to a book or dramatic critic at a station. [All] the books or plays are reviewed on the air. No announcement is required." But:
Example B-7 reads: "A perfume manufacturer gives five dozen bottles to the producer of a giveaway show, SOME of which are to be identified and awarded to winners on the show, the remainder to be RETAINED by the producer. An announcement is required since those bottle of perfume retained by the producer constitute payment for the identification." (emphasis added).
So, it should be clear that giving a station anything for giveaway on air is perfectly legal; giving a station anything that will NOT be given away on air (except of course your CD for airplay), if there is an understanding that you are doing it so they will play your stuff, is payola.
Conclusion: Paying stations is not a tool for a small indie to get airplay.
Bryan Farrish is an independent radio airplay promoter. He can be reached at 818-905-8038 or www.radio-media.com