The Consequences of “Consideration Payments”: Lessons from Radio Payola

The Consequences of “Consideration Payments”: Lessons from Radio Payola The prohibition of radio payola in 1960 gives us an opportunity to examine the effect that “consideration payments” had on the record labels that used them and on overall product variety. Using a historical Billboard chart data, we find that the prohibition of payola reduced musical variety and overall record sales, but may have helped increase access for smaller record labels. These findings support the theory that payola payments, which may impose a non-trivial financial burden on the record label, serve to reduce the radio station’s risk. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

The Consequences of “Consideration Payments”: Lessons from Radio Payola

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Publisher
Springer US
Copyright
Copyright © 2010 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-010-9239-7
Publisher site
See Article on Publisher Site

Abstract

The prohibition of radio payola in 1960 gives us an opportunity to examine the effect that “consideration payments” had on the record labels that used them and on overall product variety. Using a historical Billboard chart data, we find that the prohibition of payola reduced musical variety and overall record sales, but may have helped increase access for smaller record labels. These findings support the theory that payola payments, which may impose a non-trivial financial burden on the record label, serve to reduce the radio station’s risk.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Feb 4, 2010

References

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