Payola in podcasting, is it even legal? And what are the rules?
Maybe you saw the article in Bloomberg … or heard the NPR piece about it.
I’m talking about PAYOLA.
Yes.. .in podcasting.
What is Payola?
“Payment of a party, especially a disc jockey or radio station, for the promotion of a product or service, such as a commercial musical recording, without making the legally required disclosure of sponsorship.”
The definition of payola is the payment of a party, especially a disc jockey or radio station for the promotion of a product or a service such as a sound recording or a book or a product of some sort without making the legally required disclosure of sponsorship.
History
Starting in the 1940s and up through the 1970s, the broadcasting world was rocked by a series of Payola scandals. Record companies would pay various on-air personalities to play certain records in higher rotation… more frequently, as a way of promoting album sales.
A handful of very high-profile DJs got investigated… Names like. ALAN FREED, and FRANKIE CROCKER were in the headlines, and got fired from their jobs… there were congressional investigations… it was a big deal.
And eventually the radio industry changed… and took programming decisions out of the hands of the DJs almost altogether.
And US Law now makes it illegal to accept any payment for sharing messages on radio or tv without full disclosure.
The government regulates this stuff on the basis of 2 theories. First, that the public airwaves belong to the people, so regulation of licensed broadcasters is handled by the FCC, and SECOND, that consumers need protection against False and Misleading Advertising. That latter arena is the purview of the FTC
So, there’s been a practice in podcasting where some of the shows with larger audiences are charging their guests a fee to appear on the show.
According to the articles I mentioned at the top of this episode, some receive as much as $50,000 for a guest spot. That’s the guest paying the podcaster.
PR teams vs. Podcasters? Who should get paid?
Now, according to the articles I've mentioned at the top of the episode, some of these podcasters are receiving as much as $50,000 for a guest bot. That's the guest paying the podcaster. Now, one of the issues that this has come up is there, there are some people in this space that are actually advocating for podcasters to get paid when they have guests on a show, is that there are PR companies, teams of people who basically book.
Um, book podcast, guests for a living and they are of the mind that, uh, you know, they're collecting money for the act of doing the booking of, of promoting these things. But the thinking is why shouldn't these podcasters be the ones who are getting paid after all? If the, if the author of a book who wants to promote his book is willing to pay someone to promote it and get him on the podcast.
Shouldn't the podcaster get some of that money?
The rules - FTC
Well, The rules are this, the, the audience has a right to know, and the FTC, the federal trade commissioner, uh, commission, excuse me, regulates influencer marketing. And they have a bunch of disclosure requirements. The basic rule is that the disclosure of any kind of a paid relationship between, uh, an, an influencer or a podcast or a blogger or anything has to be clear and conspicuous, you have to say and disclose the nature of the financial relat.
Between the brand that you're promoting or the, or the product or service you're promoting and the podcast or the host. So here's the question. Some of these hosts that are getting paid, just say, this is a sponsored episode. And then they just go right into interviewing the guest or whatever. Well, the question is, is that sponsored episode messaging really enough?
IS “sponsored episode” good enough?
I don’t think so. it’s not clear enough. It doesn’t make it plain that this guest paid to be on the show… it just suggest that *someone* paid
What SHOULD you say?
I’d be more explicit. Either “our guest today is also the sponsor of this episode…”
or, This episode is sponsored by <book title, now avaialbe on Amazon>, and our guest today is the author, John Jingleheimer.
And… it has to be conspicuous… you should say it multiple times… not just at the top or end , but somewhere mid-stream, too. So listeners are more likely to actually hear it, and notice. That’s what this is all about… well-informed consumers
Bottom line, if you’re trying to obscure the fact that you’re being paid, or the listeners won’t know that’s what’s happening, you’re doing it wrong.
FTC has influencer marketing on its radar more than ever these days.
They’ve gone after sports figures promoting crypto, they’ve gone after celebs promoting clothing and skin-care products without making disclosures,… and as podcasters become influencers, and influencers become podcasting,
It’s not a question of whether they’ll go after podcasters… it’s a question of when.
So, isn’t it time to start doing it right?
Just be transparent. In your integrity… It’s the right thing to do. and you’ll save yourself a whole lot of potential trouble later.
