The Financial Times' Thomas Hazlett gives us a view of payola much different than what Elliot Spitzer portrays.

" Ronald Coase, the Nobel Prize­winning economist, explained the practice in 1979. Radio stations own something valuable: songs played more tend to sell more. Competition for airtime develops, but how one conducts the best auction – given that station revenues come primarily from selling audiences to advertisers – is complicated.

One view is that radio stations should be faithful to listeners and make choices based only on their DJs’ honest musical appreciation. But how do they know what gangsta rap track is top quality? Payola helps them learn, because record companies will tend to value airtime the most for releases for which they have the highest expectations of future sales."

Payola, he says, is an efficient use of a station's resource -- its airtime. And if you think labels are going to simply give up on trying to influence radio airplay, Hazlett says labels will seek "innovative compensation schemes" and predicts, "Look out for record labels that have plenty of job openings available for friends and relatives of radio station insiders."

(Link via Hits)