Michael O’Rielly 375

FCC Commissioner Michael O’Rielly is pressing ahead with his effort to gain answers from the record labels about how they’re living up to anti-payola regulations. He says the answers the Federal Communications Commission gets could offer insight into whether some of the statutes need to be updated or repealed altogether.

“Once again, we see a legacy regulation remaining in place for broadcasters that other substitute services are not required to abide by,” he said. “It should not be lost on me or anyone else observing the industry that this is another area where the cutting edge high-technology companies operate without similar restrictions.” Speaking to the Massachusetts Broadcasters Association last week, he noted the requirements dictating how radio stations and record companies interact were put in place long before music streaming services developed and expanded. Services such as Spotify, Pandora and Apple Music aren’t required to comply with the FCC’s anti-payola regulations.

The issue of radio’s relationship with labels sprang back into the limelight in August when a story published in Rolling Stone alleged pay-to-play practices continue, albeit in new forms. That prompted O’Rielly to seek answers from the Recording Industry Association of America. But he said the response he received was “underwhelming” and the RIAA told him to contact the record labels directly.

O’Rielly told Massachusetts broadcasters his office is now in the process of doing just that. “I’ll be asking for feedback on what processes record labels have in place to prevent payola and their structure for responding if evidence shows the need to do so,” he said. O’Rielly said he’s also been hearing from people in the radio industry, and thanks to social media, directly from individual listeners as well. “There are some legitimate questions involving fairness, competitive effects, industry trends, and the like generated by accusations of payola,” he said, adding, “It is not necessarily a victimless crime.”

‘Long Game’ On Pirate Fight

Massachusetts remains one of the hot spots for pirate radio, with FCC statistics showing a total of 51 pirate actions in the state between Jan. 3, 2017 and Oct. 30, 2019. That represents 11% of all FCC pirate actions. Only Florida, New York and New Jersey have more actions related to unlicensed operations.

O’Rielly conceded action to shut down the pirates hasn’t been as successful as he’d hoped. “Unfortunately, progress is slow, and I hoped to see more success when I first got involved several years ago,” he told broadcasters. “That said, we are playing a long game here, and there is reason to be optimistic that we will be able to get a better handle on the situation in the coming years.”

The punishment for operating a pirate station could soon be toughened if Congress passes the proposed Preventing Illegal Radio Abuse Through Enforcement Act or “PIRATE” Act (H.R. 583). On a voice vote the House has already unanimously passed the bill that would allow the FCC to fine someone who “willfully and knowingly” operates an unlicensed radio station up to $100,000 for each day they’re on the air—up to a maximum $2 million per incident. The PIRATE Act would also require the FCC to conduct at least twice-a-year enforcement sweeps in the top five radio markets—New York, Los Angeles, Chicago, San Francisco and Dallas.

The bill is now pending in the Senate and O’Rielly said he’s told its passage is “imminent” and the legislation should be signed into law in the near term. “Increasing the amount of the fines is significant, not simply as a punitive measure, but in order to attract the attention of the Department of Justice,” he said. “In the case of prosecutions to collect our forfeitures, the cases must be worth more than a few hundred, or even thousand, dollars to gain the attention of DOJ, so the PIRATE Act will help in this regard.”

But O’Rielly also said in order for the effort to be effective there will need to be a public education effort to alert pirates of the fines they could face. He also called on advertisers to guarantee they’re not supporting an unlicensed operator.

“It will continue to be a top priority for me during my time at the Commission,” said O’Rielly, who said the agency is deploying state of the art technology to make it very difficult for pirates to hide. “You should know that legislation alone won’t completely solve the issue and the Commission is focused on using all of its tools to identify, track, punish, and end pirate radio in the Boston market and everywhere else,” he said.