New York Attorney General Eliot Spitzer's investigation into payola -- which resulted in the Warner Music Group paying a $5 million settlement in late November and is expected to target EMI and Universal in coming months -- is forcing record labels and radio programmers to fundamentally change the way they operate.

In Spitzer's two settlements so far (Sony BMG, the first label targeted, agreed to pay a $10 million settlement in July), his office posted dozens of pages of embarrassing revelations online (oag.state.ny.us), and executives at all four major labels have gone to new extremes to make sure they're not breaking any rules. Increasingly, labels demand written permission before even sending free CDs to radio stations, for fear that the promotional copies be considered inappropriate gifts. "People are more careful," says a former label executive. "In more situations, if [programmers] get pressured by the label, they say, 'I'd rather not have the artist.'"

Spitzer has released documents showing Warner and Sony BMG employees paying off programmers in cash and buying them laptops, iPods and gift certificates to increase artists' airplay. Many fear that a Federal Communications Commission investigation into radio stations could turn up more damaging information. Few radio or record executives would comment on the charges; one radio consultant called the issue "radioactive." "It is not business as usual, at least in terms of the record labels buying time on the radio stations," says Gordon Herzog, chief financial officer for Atlanta's Archway Broadcasting, which owns twelve stations. "I'm sure [labels] are wrestling internally with 'How in the world are we going to get airplay? How in the world are we going to get people to hear our artists' songs without breaking the rules?'"

A former label executive adds, "The cajoling and the pushing and the incentives all push the envelope to get programmers to take chances. Without promotion efforts, artists from Depeche Mode to Talking Heads to Nirvana would never have gotten on the radio."

But Spitzer and FCC commissioner Jonathan Adelstein say that the current radio-promotion system benefits only artists with the most money behind them. In a post-payola era, they say, lower-budget artists will have more access to the airwaves. "The airwaves are really in the public domain, and you get a license from the federal government to play certain music and to be fair in choosing what you're going to play," says Terryl Brown Clemons, an assistant deputy attorney general in Spitzer's office. "It's supposed to be the result of an editorial decision -- rather than one where the people who pay the most are the only people who get their music on the air."