"graft" (originally in reference to bandleaders; later to disc jockeys who took payments from record companies to play their music), 1938, a Variety magazine coinage (e.g. "New Rash of Payola Celeb Nites," Nov. 9, in reference to "Celebrity Nights" at "dine-and-dance spots"). From payoff "bribery" (which was used as an underworld slang word for "graft" by 1930) + ending from Victrola, etc. (see Pianola).
London, Nov. 17. Music publishers are on the war path again, and it is the old trouble, 'Special Arrangements.' This is the charge imposed by band maestros who broadcast, charging as high as $25 for special arrangements per one or two numbers. Gag has been going the rounds for years, with the British Broadcasting Corp. shutting its ears to all squawks. [Variety, "Payola Biz in London," Nov. 30, 1938]
Compare also, from the TV era, plugola "surreptitious promotion of a person or product for a bribe" (1959), from plug (n.) in the advertising sense.