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Sony Ponies Up for Payola

Behemoth to pay $10 million, stop paying for radio play

July 25, 2005 12:00 AM ET

Sony BMG Music Entertainment -- an umbrella organization that includes Arista Records, Columbia Records, Sony Music International and So So Def Records -- agreed today to pay a $10 million settlement in an industry-wide investigation by New York Attorney General Eliot Spitzer into payola, the practice of paying radio stations for airplay of their artists. The corporation will cease paying for play and, according to Spitzer, will also hire a compliance officer to keep tabs on its behavior.

"Our investigation shows that, contrary to listener expectations that songs are selected for air play based on artistic merit and popularity, air time is often determined by undisclosed payoffs to radio stations and their employees," Spitzer said in a press conference Monday morning. The settlement, he added, "is a model for breaking the pervasive influence of bribes in the industry."

Spitzer's investigation revealed that Sony BMG not only hired independent promoters to provide payments to radio stations for airplay, but funded vacation packages, radio contest prizes and even some station production expenses. Internal emails between Sony BMG executives proved that they were aware of these practices, and one message from an employee to a station read, "WHAT DO I HAVE TO DO TO GET AUDIOSLAVE ON WKSS THIS WEEK?!!? Whatever you can dream up, I can make it happen." Audioslave are among Sony BMG's artists, who also include OutKast, Britney Spears and Whitney Houston.

Spitzer stated that some employees attempted to cover up the transactions as paperwork for fictitious contest winners.

The accepted but rarely acknowledged practice of payola is "wrong and improper," conceded Sony spokesperson John McKay. "Despite federal and state laws prohibiting unacknowledged payment by records labels to radio stations for airing of music, such direct and indirect forms of what has been described generically as 'payola' for spins has continued to be an unfortunately prevalent aspect of radio promotion. Sony BMG acknowledges that various employees pursued some radio promotion practices on behalf of the company that were wrong and improper, and apologizes for such conduct. Sony BMG looks forward to defining a new, higher standard in radio promotion."

According to Spitzer, the $10 million settlement will be distributed to a number of non-profits and set aside for music education programs.

Spitzer has requested documents and information from other industry powerhouses: EMI, Warner Music Group and Vivendi Universal SA's Universal Music Group. Those investigations are currently under way.

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