Pay to Play
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[edit] In politics
In politics, Pay to Play is a practice in which public officials award lucrative no-bid government contracts and grant other favors to individuals, businesses, and organizations in exchange for large political contributions. Incumbent candidates and their political organizations are typically the greatest beneficiaries of pay-to-play. Many seeking to ban or restrict the practice characterize pay-to-play as legalized corruption.
The practice also extends, especially in the wake of the McCain-Feingold Bill, to Party Organizations, such as County and State Democratic or Republican Committees. This manner of pay-to-play utilizes "soft-money," or money which is donated to an intermediary with a higher contribution limit, which in turn donates money to individual candidates or campaign committees.
The practice has come under scrutiny in many states, and is, for the most part, left as a state issue rather than a federal one. 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.
[edit] In music
The term "Pay to Play" is also used as the title to a song by the band Nirvana and as the title to a song by the Cringer, in which they denounce the practice.
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, CA, during the 1990's. 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. reference, article
[edit] Elsewhere
The term is also used as slang to refer to many services online that require that users pay in order to use them (such as chat rooms).
[edit] In corporate law and venture financing
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.
