Pay to Play
Encyclopedia : P : PA : PAY : Pay to Play
In politics
In politics, Pay to Play is a practice engaged in by candidates for political office in which contracters and professionals will contribute large sums of money to a political campaign in return for favorable, generally no-bid contracts with the political subdivision to which the candidate is elected to.The practice also extends, especially in the wake of the McCain-Feingold Bill, to Party Organizations, such as County and State Democrat 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 in order to monitor and make more transparent campaign donations.
In video games
In video games, Pay to Play is generally related to online computer games that require continuous payment (usually monthly) in order to continue playing the game. The game usually allows members to download clients in order to connect to the online servers. The online servers check the client if the user has an active membership or not, and then allows the user to begin playing if the user is a member with an active Pay to Play subscription.
An example of such a game is World of Warcraft.
In music
In music, Pay to Play describes when a band pays a promoter to play at a certain live show, instead of being paid. Most often a band would do this in an attempt to increase exposure. This is a heavily criticized practice, most famously alleged to occur amongst local metal bands in the 1980's.
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).
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) which 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.
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