Pay to play

Pay-to-play, sometimes pay-for-play or P2P, is a phrase used for a variety of situations in which money is exchanged for services or the privilege to engage in certain activities. The common denominator of all forms of pay-to-play is that one must pay to "get in the game", with the sports analogy frequently arising.[1]

Not to be confused with Free-to-play.
For the EP by Yashin, see Pay to Play (EP).

In broadcasting
Main article: Brokered programming

The term also refers to a growing trend in which individuals or groups may purchase radio or television airtime, much like infomercials, to broadcast content promoting the payer’s interests. While these types of shows are typically shows that have little sponsor support and have no substantiated audience, some major program producers do purchase airtime to "clear" their programs in certain major markets. This type of format is particularly common among religious broadcasters (televangelism), where the related term pay-for-pray is used.[2]

In corporate finance

Pay-to-play is a provision in a corporation's charter documents (usually inserted as part of a preferred stock financing) that requires stockholders to participate in subsequent stock offerings in order to benefit from certain antidilution protections. If the stockholder does not purchase his or her pro rata share in the subsequent offering, then the stockholder loses the benefit(s) of the antidilution provisions. In extreme cases, investors who do not participate in subsequent rounds must convert to common stock, thereby losing the protective provisions of the preferred stock. This approach minimizes the fears of major investors that small or minority investors will benefit by having the major investors continue providing needed equity, particularly in troubled economic circumstances for the company. It is considered a "harsh" provision that is usually only inserted when one party has a strong bargaining position.

In engineering, design, and construction

Pay-to-play in the engineering, design, and construction industry can refer to:

  1. monetary and gift exchanges to persuade decision makers such that they make decisions in favor of those offering the money or gifts;
  2. exchanges of money or gifts and providing sponsorships such that the engineering, design, or construction company gets considered for work that would not otherwise be available (this in essence becomes a type of pre-qualification for work—contracts; and
  3. illegal acts of bribery.

Pay-to-play might also be used to explain the appearance of engineering, design, and construction public work being done not in an open and fair manner.

In finance

In the finance industry, the term pay-to-play describes the practice of giving gifts to political figures in the hopes of receiving investment business in return.

In the U.S., after discovering that this practice was not uncommon and was undermining the integrity of the financial markets, U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB) severely regulated and limited the interactions and gifts-giving practices between the investment industry personnel and politicians and candidates. This can be seen most notably in Rule 206(4)-5 of the Investment Advisers Act of 1940 and Rules G-37 and G-38 of the MSRB Rule Book.[3]

Pay-to-play occurs when investment firms or their employees make campaign contributions to politicians or candidates for office in the hope of receiving business from the municipalities that those political figures represent. It usually applies to investment banking firms that hope to receive municipal securities underwriting business in return or to investment management firms that hope to be selected for the management of government funds such as state pension funds.

An example of this form of corruption or bribery is the 2009 probe by then New York State Attorney General Andrew Cuomo into private equity funds payments to placement agents with political connections to obtain business with the New York State Common Retirement System.[4][5]

In music
Main article: Payola

The term also refers to a growing trend, where venue owners charge an up-front fee to performing artists for the use of their facilities. The practice began in Los Angeles, California, during the 1980s. It has become common in many U.S. cities at low-turnout all-ages shows where performers are required to guarantee a minimum attendance through pre-show ticket sales.[6] Pay-to-play gigs are a contentious practice in the UK, and some of the largest pay-to-play gig organisers have generated large amounts of discussion and criticism.[7]

The term pay-to-play was also used as the title to a song by the band Nirvana (later renamed to "Stay Away"). The refrain referred to the practice of a band or their record label paying radio stations to put a song into heavy rotation. The phrase is also the title to a song by the band Cringer, in which they denounce the practice.

Music Supervision is a booming field in the music industry, whose professionals place music in many kinds of film, television, commercial, web-based and other live and recorded media cues. While some music supervisors are paid only by their employer or per-project, some companies use a pay-to-play model wherein artists pay to submit tracks for consideration to a variety of media concerns, only to have to pay the Music Supervision intermediary again at a cost of half of its earning for the track placement should it win a placement.

In online gaming
See also: Buy-to-play, Pay-to-win, and Subscription business model

The term is also used as slang to refer to Internet services that require that users pay to use them. Usually, it refers to MMORPGs, where players must pay to maintain a playing account, as is the case with Eve Online or World of Warcraft. This is in contrast to free-to-play games. Many formerly pay-to-play MMORPGs have switched to a free-to-play model, including EverQuest, Star Wars: The Old Republic, Aion: The Tower of Eternity, and The Lord of the Rings Online. The game RuneScape features both free accounts for no money or pay-to-play accounts, with a much larger list of features.

The term may also refer to something like the online game Habbo Hotel, where there are games inside the game, which you may pay-to-play to join into a game whilst it is in progress.

In politics
See also: Political corruption

In politics, pay-to-play refers to a system, akin to payola in the music industry, by which one pays (or must pay) money to become a player.

Typically, the payer (an individual, business, or organization) makes campaign contributions to public officials, party officials, or parties themselves, and receives political or pecuniary benefit such as no-bid government contracts, influence over legislation,[8][9] political appointments or nominations,[10][11] special access[12] or other favors. The contributions, less frequently, may be to nonprofit or institutional entities,[13] or may take the form of some benefit to a third party, such as a family member of a governmental official.[14]

The phrase, almost always used in criticism, also refers to the increasing cost of elections and the "price of admission" just to run for office and the concern "that one candidate can far outspend his opponents, essentially buying the election".[15]

While the direct exchange of campaign contributions for contracts is the most visible form of pay-to-play, the greater concern is the central role of money in politics, and its skewing of both the composition and the policies of government.[16][17] Thus, those who can pay the price of admission, such as to a $1000/plate dinner or $25,000 "breakout session", gain access to power and/or its spoils, to the exclusion of those who cannot or will not pay: "giving certain people advantages that other[s] don't have because they donated to your campaign".[18] Good-government advocates consider this an outrage because "political fundraising should have no relationship to policy recommendations".[19] Citizens for Responsible Ethics in Washington called the "pay-to-play Congress" one of the top 10 scandals of 2008.[20]

Incumbent candidates and their political organizations[21] are typically the greatest beneficiaries of pay-to-play. Both the Democratic and Republican parties have been criticized for the practice. Many seeking to ban or restrict the practice characterize pay-to-play as legalized corruption.

The opposite of a pay-to-play system is one that is "fair and open"; the New Jersey Pay-to-Play Act specifically sets out bid processes that are or are not considered fair and open, depending upon who has contributed what to whom.[22]

Because of individual federal campaign contribution limits in the wake of the Bipartisan Campaign Reform Act (McCain-Feingold), pay-to-play payments of "soft money" (money not contributed directly to candidate campaigns and that does not "expressly advocate" election or defeat of a candidate) donations to state parties and county committees have come under greater scrutiny. This method refers to money that is donated to an intermediary with a higher contribution limit, which in turn donates money to individual candidates or campaign committees who could not directly accept the payor's funds.

Pay-to-Play practices have come under scrutiny by both the federal government[23] and a number of states.[24] In Illinois, federal prosecutors in 2006 were investigating "pay-to-play allegations that surround Democratic Illinois Gov. Rod Blagojevich's administration".[25] The allegations of pay-to-play in Illinois became a national scandal after the arrest of Gov. Blagojevich in December 2008, on charges that, among other things, he and a staffer attempted to "sell" the vacated U.S. Senate seat of then-president-elect Barack Obama.[26][27]

Many agencies have been created to regulate and control campaign contributions. Furthermore, many third-party government "watchdog" groups have formed to monitor campaign donations and make them more transparent.

In a series of academic research articles, Christopher Cotton shows how selling access may lead to better policy decisions compared to other means of awarding access.[28] He also illustrates how wealthy interest groups are not necessarily better off from having better access to politicians.[29]

The U.S. Securities and Exchange Commission has created a rule that puts some restrictions on asset managers when they make campaign contributions. The New York and Tennessee Republican parties filed a lawsuit against the SEC in August over the 2010 rule, arguing that it impedes free speech, seeking a preliminary injunction against the rule. U.S. District Judge Beryl Howell questioned whether the parties have standing to bring the case, noting they failed to name the potential donors and did not cite any investment advisers who are upset about the rule.[30]

In stand-up comedy

In a pay-to-play gig, the performer will either pay the promoter some money to be allowed to perform at the show, or will have to offer some in-kind payment. In a conventional comedy club, the promoter will pay the acts for their performance, and will raise the money to stage the gig by charging the audience. Some clubs offer open mic slots, where newer acts are allowed to learn the craft, unpaid; this is not the same as pay-to-play. Many comedians are against pay-to-play schemes, which they consider exploitative.[31]

Pay-to-play was cited as a cause of major damage to the quality of the New York comedy scene.[32] In economic terms, a pay-to-play strategy elevates those people who can afford to perform for nothing, or can afford to pay for their stage-time, which has nothing to do with their quality as an act. The pay-to-play promoter is able to profit from the goodwill and desire to perform of the acts, while discouraging appearances by those who cannot afford to perform without payment.

In some shows, the performer is asked to bring a certain number of paying audience members. As a payment in kind policy, this has caused similar controversy to pay-to-play.[33] A show where the acts are obliged to bring the audience is called a bringer.[31]

In the visual arts

Similar to the trend cited above in music, pay-to-play is the practice of visual artists paying gallery owners, dealers, curators, publishers, festival and contest sponsors, and better-established artists to critique, review, judge, exhibit, collect, or publish works created in such disparate media as painting, photography, video, and sculpture. Pay-to-play is a type of vanity gallery. Pay-to-play is characterized by cash flow that moves away from visual artists. Pay-to-play is sold to visual artists and justified by visual artists as "an investment in future sales"[34] and may be self-victimization.[35]

See also

References
  1. Golway, Terry (August 26, 2001). "Nothing Innocent About Pay-to-Play". The New York Observer.
  2. Commerce, United States Congress House Interstate and Foreign (1960). Responsibilities of Broadcasting Licenses and Station Personnel.
  3. Lemke and Lins, Regulation of Investment Advisers, §§ 2:190 to 2:192 (Thomson West, 2014 ed.).
  4. Go-Between Tied Funds to Carlyle. New York Times, May 14, 2009
  5. 4 Firms Agree to Settlement in New York Pension Fund. New York Times, September 17, 2009
  6. Wweek.com Archived 2007-01-06 at the Wayback Machine
  7. https://www.wsj.com/articles/BL-SEB-79504
  8. J. Nesmith, Execs Pay to Play with GOP, CommonDreams.org NewsCenter, Jan. 7, 2004 Archived 2008-02-23 at the Wayback Machine, retrieved 2007-12-12.
  9. Chicago's Pay-to-Play Zoning (series of articles from Chicago Tribune)]
  10. L. Riscalla, Pilot shows way to end pay to play, Home News Tribune, Nov. 1, 2005, reprinted by Common Cause at www.commoncause.org Archived 2008-06-10 at the Wayback Machine, retrieved 2008-01-31.
  11. Pay-to-Play, Fletcher-Style, Bluegrassreport.org, February 27, 2007, retrieved 2008-01-31. Archived June 10, 2008, at the Wayback Machine
  12. Governor Giving Carte Blanche, Special Access to Major Donors: Pay-to-Play Abuses Aimed at Derailing Public Employee Unions, Jun. 6, 2005 Archived 2008-12-14 at the Wayback Machine.
  13. H. Hausemann, Politicos should return money from casino owner who admits trying to buy their support, nmpolitics.net, July 18, 2006 (contributions to university and schools).
  14. St. Clair, Stacy (2008-12-11). "Criminal Complaint Reveals Extent of Gov. Blagojevich's 'Pay-for-Play' Scheme". Los Angeles Times. Retrieved 2008-12-23.
  15. M. Schmitt, New America Foundation, Pay to Play: Why a Billion-Dollar Election Isn't a Bad Thing, The New Republic Online, Mar. 16, 2007 Archived 2008-05-13 at the Wayback Machine.
  16. C. Canary and E. Wojcicki, Dollarocracy: Pay-to-play culture still has a chokehold on Illinois politics, Illinois Issues, May 2007 Archived 2008-05-12 at the Wayback Machine.
  17. Clean Money, Clean Elections Archived 2008-12-14 at the Wayback Machine.
  18. Jonathan Fine, president of Preservation Chicago, quoted in D. Mihalopoulos, R. Becker, & D. Little, Neighborhoods for Sale: How cash, clout transform Chicago neighborhoods, Chicago Tribune, January 27, 2008, retrieved 2008-01-31.
  19. J. Rood, On Heels of 9/11, Clinton Fundraiser Raises Eyebrows, ABC News: The Blotter (quoting Danielle Brian, executive director of the Project on Government Oversight).
  20. Top Ten Ethics Scandals of 2008, 2008-12-16.
  21. Soraghan, Mike (2008-12-16). "Experts: 'Pay to play' is the SOP on Capitol Hill". The Hill. Retrieved 2009-02-01.
  22. New Jersey General Assembly. "N.J.S.A. 19:44A-20.4". Statutes of New Jersey. New Jersey.
  23. Public Citizen Pay-to-Play and the Federal Government, 02-03-2004, retrieved 2008-02-09.
  24. Public Citizen, Pay-to-Play and State Governments, 02-03-2004, retrieved 2008-02-09.
  25. Chicago Tribune, Nov. 1, 2006, retrieved 2008-01-31.
  26. TPR (2008-12-09). "Criminal Complaint Reveals Extent of Gov. Blagojevich's 'Pay-for-Play' Scheme". The Public Record. Retrieved 2008-12-23.
  27. Johnson, Carrie (2008-12-13). "Blagojevich aide resigns amid 'pay to play' scandal". Washington Post. Archived from the original on 2012-07-28. Retrieved 2008-12-23.
  28. Cotton, Christopher (2009). "Should we tax or cap political contributions? A lobbying model with policy favors and access". Journal of Public Economics. 93 (7–8): 831–842. CiteSeerX 10.1.1.526.6397. doi:10.1016/j.jpubeco.2009.04.005.
  29. Cotton, Christopher (2012). "Pay-to-play politics: Informational lobbying and contribution limits when money buys access". Journal of Public Economics. 96 (3–4): 369–386. CiteSeerX 10.1.1.602.7936. doi:10.1016/j.jpubeco.2011.11.005.
  30. Lynch, Sarah. "U.S. judge questions Republican challenge to pay-to-play rule". Reuters. Retrieved 12 September 2014.
  31. "C.R.A.P.P.! Comedians Rail Against Pay-to-Play Comedy Gigs". Retrieved 25 November 2016.
  32. Solutions, Powder Blue Internet Business. "Features 2006 : Chortle : The UK Comedy Guide". Retrieved 25 November 2016.
  33. Solutions, Powder Blue Internet Business. "Stop this monkey business! : News 2010 : Chortle : The UK Comedy Guide". Retrieved 25 November 2016.
  34. Harlan Ellison – Pay the Writer, retrieved 2008-04-10.
  35. Artist & Art Competitions, Contests, Opportunities, Gallery Show Scams, Pay to Play, retrieved 2008-04-10.
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