Previously in the book: Hal Neely began his career with big bands touring the Midwest and California. Then he entered the record business where he met volatile record magnate Syd Nathan and soul star James Brown.
Hal Neely was not a stranger to the darker side of the record business, beginning with dealings with the Mafia and going on to just barely escaping federal repercussions in the payola scandal. It seemed to start out fairly innocently. King Records, as all music corporations, placed records in stores on consignment. What a store could not sell was returned to the company for credit. One time a record store owner tried to return 500 or more copies for credit. Neely balked because the store had held them so long, but eventually he took them back.1
In due course Neely realized he could sell the returned records to the Mafia for cash. The next step was to over-press intentionally records by several thousand copies and sell them to the Mob for a dollar apiece. The unauthorized over-pressing orders were done in the middle of the night when everyone else had gone home. The Mob then sold the records on the streets for a tidy and untraceable profit. Neely never dealt face to face with any of the leaders of organized crime but rather met with nondescript messengers who gave him envelopes stuffed with cash. The pick-up points changed for every transaction. Sometimes a Mafia front man appeared at a record store looking like they were picking up returns but actually were getting a new product. Neely made sure no one snitched on him, and he never felt intimidated by the crime bosses. It was with this undocumented cash that Neely used for payola payments.2
He kept tabs on which record representatives were given cash. When Neely dealt with radio station people, they always knew to look in his top jacket pocket for the bills. He was also busy at the National Association of Broadcasters’ convention every year where radio disc jockeys received special “comps” such as escorts, food, and shows. Of course, the disc jockeys knew when they went home to their radio stations it was time to show their appreciation for the hospitality by pushing the records. Neely never felt he was necessarily doing anything wrong because all the other labels were doing it too, and they needed payola as a promotional tool just to survive.3
In fact, in the beginning payola was not even illegal, but the practice came to the attention of the national news media after a story in the Miami News on May 30, 1959. Details of the shady operations at a recording industry convention swept across the nation. The official name of the event was the Second Annual International Radio Programming Seminar and Pop Music Disc Jockey Convention, but Miami News reporter Haines Colbert described it more as a Roman orgy than a staid businessmen’s meeting.4
“There were expensive prizes, free liquor around the clock in at least 20 suites and girls, imported and domestic,” Colbert wrote in his article. “There are about 2,000 record companies,” a spokesman for one of the major companies told Colbert, “and all of them send all their releases to every disc jockey. The only possible way to get them on the air is by giving the disc jockey personal attention. And that means giving him whatever he wants.”5
The newspaper expose triggered hearings in Congress by the Special Subcommittee on Legislative Oversight. Chief Counsel of the special subcommittee, Robert W. Lishman, had recently honed his investigatory skills with his work delving into rigged television game shows. His definition of payola was as follows:
“Bribes paid to disc jockeys to plug certain songs … It also includes charges of secret payment for plugging products and individuals on television and radio, kickbacks for promoting sales, and conflicts of interest by disc jockeys who have an interest in the manufacturing and sale of records.”6
Another form of payola was a radio station’s “Spin of the Day” which was paid for by the record company. That fact was never announced on the air. While being a “Spin of the Day” did not assure success for a mediocre product, it could help a good performance by a new artist get the recognition it deserved.7
By November of 1959 the scandal had taken its first victim, Alan Freed, a New York disc jockey who had been given the title of the “inventor” of rock ‘n’ roll. He was fired by both radio station WABC and television station WNEW.7 In the same month Frank Hogan, New York district attorney, subpoenaed several independent record companies including King. Cities where disc jockeys were allegedly bribed included Boston, Chicago, Los Angeles, Milwaukee, New York and Detroit. These were considered the important regional centers where new records were introduced to the public.8
Syd Nathan lost no time in giving an immediate interview to the Cincinnati Post in which he said that King “has paid off disc jockeys all over the country and that he has the checks to prove it,” although he qualified that statement by saying he “never paid more than $10 a month to any one disc jockey, although some firms might have paid as much as $300-$400 to get their records plugged.”9
Payola “is a dirty rotten mess and it has been getting worse in the last five years,” Nathan told the newspaper. There are more than 10,000 disc jockeys in the country and less than 200 demanded payola. That small amount could make or break a record. So we cut it out.” He added that King made regular monthly payments in 1957 and 1958 in the amount of $18,000 a month mostly to disc jockeys in Philadelphia and New York.10
He explained why he paid by check. “How else could we account for the money unless it was on our books for what it was? We told the disc jockeys that if they didn’t want to declare it on their incomes, it was their business, but if they were going to get paid it would be by check.”11 Nathan illustrated how out-of-control the practice had become by explaining how he once received a telegram from a disc jockey in Arkansas. Receiving your records periodically, but never any checks. What’s wrong?12
While his statement of culpability may have seemed brave on the surface of it, Nathan nevertheless shifted some of the blame by telling investigators that payola transactions were handled out of King Records’ New York office operated by Henry Glover who had been employed by Syd Nathan since the early 1940s. Glover had been instrumental in bringing several R&B artists to King, including Little Willie John. In later years, Glover told interviewers he felt Nathan had thrown him under the bus during the payola scandal. Shortly after Nathan’s statements Glover resigned as King’s A&R man in New York, though some in the industry say King fired him. Glover immediately formed his own Glover label in association with Old Town Records.13 Hal Neely defended Glover, claiming that he had left the company voluntarily.
“The only two people guilty of payola at King … were Syd Nathan and Hal Neely. The other guys were just doing what they were told,” Neely said. “They might have passed money, but they didn’t unless it was approved. They didn’t get the cash until it was approved,” he reiterated. “I’m the only record executive they didn’t indict for payola, and I am as guilty as anybody.”14 Neely conceded that they knew the company was going to be in trouble.
“We were hot, and we knew we had to stop. It was only a matter of time before an investigation would come. It was out of hand. We stopped two years before the committee came around and that’s what saved us because they only went back two years. I prepared the audit, and we knew we were guilty but we stopped. Everyone was guilty and should’ve shared the blame. Including Dick Clark.”15
Neely bragged about the day federal agents came to his office to look at the books. He turned to his secretary to ask her to bring in the files. The agents asked for accounts starting three days after Neely stopped paying payola. He also re-pressed records with recycled materials from returns of failed artists so there were no files of fresh material. At this same time supplies of records disappeared mysteriously from King storage. Neely had suspicions that his Mafia connections may have destroyed the evidence in an attempt to protect him because he had made so much money for them.16
Ralph Bass also left King Records at this time. Some felt Nathan had shifted some payola blame onto him, and Bass said, “I figured my operation with Syd…well, I was losing something with Syd. I thought he was doing things behind my back. It didn’t feel like he was on my side anymore. I had to get away, to start fresh. I felt I was stagnating at King. So I got a better deal from Leonard Chess and I went over to Chess Records.”17
The irony of the payola scandal was that R&B artists never benefited from it. White radio stations could not be paid enough to put artists like Hank Ballard, Little Willie John and James Brown on the air. This was not to say payola did not exist on black radio stations. For example, one of James Brown’s childhood friends was Allyn Lee, a master of the practice at WAPX in Montgomery, Alabama.18
Lee, who was paid little or nothing by a radio station, made his living from payments by local businesses for on-air promotions. He also arranged local performances by the record artists he broadcasted.19
“Whenever James Brown appeared disk jockeys from within a 200-mile radius came out,” Lee said. “And they would never leave until the manager came out and greeted them because James Brown always gave out an envelope of money. Always. My chauffeur–they once gave him an envelope of money. I said, ‘James, but he’s not a disc jockey.’ And he said, ‘He might be one next week.’ Back then you had 15 to 20 disc jockeys in the area, and depending on your position there might be $50-$500 in the envelope. He would always be appreciating you for you playing his records. ‘Play my records, man, keep me heard.’”20
Jim Crow laws made a black disc jockey in the South like Lee a very powerful person as a promoter for personal appearances by an artist like James Brown. Lee would take 10% for himself and the remainder went to Brown. The reasoning behind this was that the disc jockey had more incentive to sell tickets if some of that money was coming back to him. The disc jockey was now a business partner.21
“That’s why James Brown became more of a legend than the guy who slipped you something in a handshake,” said Bob Patton, a former disc jockey who later was on Brown’s staff. “He made you out to be a businessman, not a whore.”22
Brown may have made some disc jockeys feel like businessmen, but in the mid-1970s, one of them ended up in jail. Frankie Crocker was called one of the most important black disc jockeys in the world. During a new government investigation of payola, Crocker swore to the FBI he had never taken payola; however, the investigators brought in James Brown’s most trusted lieutenant Charles Bobbit who testified he had given Crocker $6,500 over eight years. When Brown took the stand, he claimed he did not know anything about the deal. Crocker went to jail for a year on perjury and Bobbit left Brown’s employ and the country to work for the president of Gabon.23
Footnotes
1 Roland Haneman Interview.
2Ibid.
3Ibid.
4Record Breakers and Makers, 454.
5 Ibid.
6Bryan Powers.
7Fever, 122.
8Record Breakers and Makers, 455.
9Bryan Powers.
10King of Queen City, 158.
11 Ibid. 159.
12Bryan Powers.
13King of Queen City, 29.
14Fever, 122.
15Brian Powers.
16 Roland Hanneman Interview.
17King of Queen City, 93.
18 The One,100.
19 Ibid.
20 Ibid., 101.
21 Ibid., 102.
22 Ibid.
23 Ibid., 316, 317.