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Sony BMG will end radio pay-for-play
Recording giant hit with $10 million fine
By ERIN McCLAM / Associated Press
07/26/2005
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 version 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 well-known artists, said in a statement that some of its employees had engaged in "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 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.
Recording companies 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 BMG's 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.
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 nation's radio stations, which are licensed to use public airwaves.
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