Sony BMG Music settles Spitzer's payola probe
Recording company to pay $10 million, curb 'pay for play' practices
Associated Press
Updated: 5:22 p.m. ET July 25, 2005
URL: http://www.msnbc.msn.com/id/8700936/
ALBANY, New York - Recording industry titan Sony BMG Music Entertainment
agreed Monday to pay $10 million and stop bribing radio stations to feature
its artists in what a state official called a more sophisticated generation
of the payola scandals of decades ago.
The agreement springs from an investigation by New York state Attorney
General Eliot Spitzer, who called the practice pervasive in the industry
and suggested other music industry giants could face similar penalties.
Pay-for-play is driving the industry, and it is wrong, Spitzer told
reporters.
Sony BMG, whose various labels include hundreds of artists from Aretha
Franklin and Tony Bennett to Beyonce Knowles and the Dixie Chicks, said in
a statement some of its employees had engaged in wrong and improper
practices.
The company said it looked forward to defining a new, higher standard in
radio promotion, but did not say whether it had fired or disciplined any
of those employees. A spokeswoman did not immediately return a call for
further comment.
A 1960 federal law and related state laws bar record companies from
offering undisclosed financial incentives in exchange for airplay. The
practice was called payola, a contraction of pay and Victrola, the
old wind-up record player.
Asked why he did not bring criminal charges in the case, Spitzer noted the
criminal laws governing pay-for-play are more specific and difficult to
violate than the civil laws.
Companies in the recording industry depend heavily on airplay for their
artists. It boosts sales by encouraging listeners to buy their music and
helps them climb the charts, which are based on airplay.
Spitzer said Sony BMGs efforts to win more airplay took many forms,
including outright bribes of cash and electronics to radio stations and
paying for contest giveaways for listeners. In other cases, he said, Sony
BMG used middlemen known as independent promoters to funnel cash to radio
stations.
The attorney general called the system more sophisticated than the 1950s
and 60s payola scandals, most of which involved direct payments of cash to
DJs in exchange for airplay.
This is a more formalized, more corporatized structure to get the same
result, he said. He added, I feel a little like Bill Murray in the movie
Groundhog Day, a story about a cynical weatherman who is forced to
continuously relive the worst day of his life.
Jonathan Adelstein, a Democratic member of the Federal Communications
Commission, said Spitzer appears to have found a whole arsenal of smoking
guns.
We need to investigate each particular instance that Spitzer has uncovered
to see if it is a violation of federal law. This is a potentially massive
scandal, he said.
The FCC has power over the nations radio stations, which are licensed to
use public airwaves.
Executives aware of payola
In the Sony BMG case, Spitzer released to reporters e-mails, most of them
dated 2003, 2004 and 2005, that he said showed company executives were well
aware of the payola practices.
In one case, an employee of Sony BMGs Epic label was trying to promote the
group Audioslave to a station and asked: WHAT DO I HAVE TO DO TO GET
AUDIOSLAVE ON WKSS THIS WEEK?!!? Whatever you can dream up, I can make it
happen.
In another case in 2004, the promotion department of Sony BMG label Epic
Records paid for an extravagant trip to Miami for a Buffalo DJ and three
friends in exchange for adding the Franz Ferdinand song Take Me Out to
the DJs stations playlist.
And in another, a program director for two Clear Channel radio stations,
WKKF-FM and KISS-FM, sent an e-mail to a Sony executive saying: Looking
for a laptop for promotion on Bow Wow, a reference to a rapper.
Spitzer said Sony BMG employees sought to conceal some payments by using
fictitious contest winners to document the transactions.
Still, he praised Sony BMG executives for fully cooperating with the inquiry.
Spitzer has asked for documents from three other major recording industry
names EMI, Warner Music Group and Vivendi Universal SAs Universal Music
Group. While Spitzer would not talk specifically about investigations into
those companies, he said the payola problem goes way beyond Sony BMG.
Don Henley of the Eagles, a founding member of the Recording Artists
Coalition, praised Spitzer for addressing a problem that hurts recording
artists.
We look forward to other record labels agreeing to similar reforms, said
Henley, who has given $25,000 in campaign contributions to Spitzer over the
past year. Spitzer is running for governor in 2006.
Sony BMG is a joint venture of Sony Corp. and Germanys Bertelsmann AG.
Shares of Sony were down 23 cents, or about two-thirds of 1 percent, at
$34.40 in afternoon trading on the New York Stock Exchange.
Sony BMG is an umbrella organization for several prominent record labels,
including Arista Records, Columbia Records, Sony Music International and
Jive Records. Star artists signed with the Arista label alone include
Whitney Houston, OutKast, Pink and Sarah McLachlan.
The $10 million will be distributed to not-for-profit entities and
earmarked for music education programs, Spitzer said.
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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