The "pay for play" scheme was a big enough deal back then to prompt congressional investigations, and bring down several key figures, including no less than Alan Freed, the radio pioneer generally credited with coining the term rock and roll. Some of the scarier stories from this period also included rumors of organized crime types shaking down radio programmers who refused to play along.
By the time I was actually working within the record industry myself (in the eighties and nineties), the practice of payola had been supposedly cleaned up. In truth, it actually just shifted itself around a bit. This is where the idea of promos as an acceptable form of currency largely came into play.
On the surface, promo albums as a movable form of something with an actual tangible monetary value are essentially worthless because they are clearly marked as such. In the days of vinyl albums, they were marked with big white labels stating they were not for sale and were intended solely for promotional use, and the jackets also usually had some sort of hole punched in them.
These days, promo CDs go a step further through things like the practice of watermarking, and even more detailed labels stating that the recipient agrees to return the item to the sender — meaning the record label or PR firm — at any time upon request.
Still, this has not entirely stopped the underground promo trade, as any routine visit to sites like eBay will demonstrate. Back in the nineties, it was also not at all uncommon to see new releases being sold at used record shops a few days before the street date.
I have very specific memories of going to such shops when I lived and worked in the record business in L.A. back in the nineties. If you knew where to go back then, you could easily pick up something like the new Snoop Dogg release (to cite a specific memory) on the Thursday before it came out — because promo copies usually were sent out on that day. In the case of the aforementioned Snoop Dogg release, I can actually remember running into a low-level record executive I knew at the time unloading the cargo at one such shop.
What was even more common than underpaid industry types pocketing a few extra bucks by selling promos however, was the use of free-goods or "cleans."