Pay-to-play, sometimes pay-for-play, 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.
In broadcasting
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.
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:
- monetary and gift exchanges to persuade decision makers such that they make decisions in favor of those offering the money or gifts;
- 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
- 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.
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.
In music
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.
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.
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
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
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, political appointments or nominations, special access or other favors. The contributions, less frequently, may be to nonprofit or institutional entities, or may take the form of some benefit to a third party, such as a family member of a governmental official.
The phrase, almost always used in criticism, also refers to the
increasing cost of elections and the "price of admission" to even run
and the concern "that one candidate can far outspend his opponents,
essentially buying the election".
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 both the composition
and the policies of government.
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".
Good-government advocates consider this an outrage because "political
fundraising should have no relationship to policy recommendations". Citizens for Responsible Ethics in Washington called the "pay-to-play Congress" one of the top 10 scandals of 2008.
Incumbent candidates and their political organizations 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.
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 and a number of states. In Illinois, federal prosecutors in 2006 were investigating "pay-to-play allegations that surround Democratic Illinois Gov. Rod Blagojevich's administration". 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.
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. He also illustrates how wealthy interest groups are not necessarily better off from having better access to politicians.
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.
In sports
Bob Cook's August 22, 2012 article in Forbes addresses the question: "Will 'Pay to Play' Become a Permanent Part of School Sports?"
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.
Pay-to-play was cited as a cause of major damage to the quality of the New York comedy scene.
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. A show where the acts are obliged to bring the audience is called a bringer.
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" and may be self-victimization.
