John Morthland provided a succinct description of the payola phenomenon and the situation prior to 1959 deejay scandal in The Rolling Stone Illustrated History of Rock & Roll (revised edition):
Payola--the narrow definition: pay (cash or gifts) for radio airplay--has been
a factor in radio since the medium's inception. In the Fifties, the practice
flourished among rock 'n' roll disc jockeys. Payola padded their frequently
paltry salaries, and it helped the new music reach its intended audience, no
matter how small the label on which it appeared. By the late Fifties, in fact,
a swarm of independent labels recording rock had broken the stranglehold
of the majors--in particular Columbia, RCA and Decca--on the sales and
airplay of popular records.
As Morthland further noted, the American Society of Composers, Authors and Publishers (ASCAP) also had reason to be unhappy with the state of affairs at that time. The publishing house had become a dominant force in the music business through its licensing agreements regarding the sales of sheet music, piano rolls, and the recordings of Tin Pan Alley songs. A battle between ASCAP and the radio stations--whose programming had become increasingly committed to airing recorded music during the latter 1930s and early 1940s--spurred the latter to boycott ASCAP material and establish their own publishing firm, Broadcast Music Incorporated (BMI). ASCAP's history of ignoring black and country music compositions, combined with the tendency of many radio stations to target regional tastes overlooked by the major networks (ABC, NBC, and CBS) enabled BMI to secure a near monopoly on the material in these categories. The advent of rock 'n' roll, itself largely a product of the marriage of rhythm and blues and country, assured the continued dominance of BMI within the youth music market.
Therefore, it appeared to be a case of protecting vested interests when ASCAP pushed for the House Legislative Oversight subcommittee to broaden its inquiry into corrupt broadcasting practices--centered up to 1959 on television quiz programs--to cover payola practices within radio. According to the perspective held by many within the record industry, the payola investigation would assist in stamping out rock 'n' roll--already reeling from the loss of many of its top stars and faced with an onslaught of media friendly teen idols--altogether.
The music business quickly closed ranks in the face of outside political interference. ABC-TV forced American Bandstand host Dick Clark to unload his holdings in other music-related activities, ranging from record companies to publishing houses. In response to Federal Trade Commission directives, a number of independent record labels and distributors filed consent orders agreeing to eliminate payola. Such moves enabled the industry to withstand formal House hearings in early 1960. Clark, whose deportment under interrogation was that of a model citizen, was not found guilty of directly engaging in payola practices.
On the other hand, Alan Freed, the deejay most clearly identified with the rise of rock 'n' roll, refused to testify despite an offer of immunity. A pariah within the field he'd helped so much to nurture, he was ultimately found guilty on two counts of commercial bribery.
In the end, the committee recommended anti-payola amendments to the Federal Communications Acts which prohibited the payment of cash or gifts in exchange for airplay, and required radio stations to police such activities. These amendments formally became law on September 13, 1960.
While the overall impact of the hearings remains unclear, it is clear that the general media circus surrounding them far over- shadowed whatever concrete results might have taken place. The smaller independent labels had been forced to compete on more equal terms the majors and their superior publicity and distribution networks. As a result, many of the former went of business during the early 1960s. Nevertheless, new labels continued to surface--and sometimes achieve great success--in the upcoming years. Payola itself continued to be employed within the industry, giving rise to yet another scandal in the early 1970s centered around Columbia Records president Clive Davis and allegations of bribes involving money, sex, and drugs.