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Sony BMG payola case settled for $10 million (http://www.signonsandiego.com/news/business/20050726-9999-1n26payola.html)

By Kathryn Balint
UNION-TRIBUNE STAFF WRITER

July 26, 2005

Sony BMG Music Entertainment, one of the top companies in the recording industry, agreed yesterday to pay $10 million to settle allegations that it bribed radio stations, including San Diego's KHTS/FM 93.3, to play its music.

New York Attorney General Eliot Spitzer, who launched the investigation, said Sony BMG bribed radio station employees with vacations, electronics and other expensive gifts, provided giveaways for radio station contests and even paid operational expenses for radio stations to give its songs more airtime.

The practice of giving radio stations "payola," or gifts in exchange for playing specific songs, dates to the 1930s and has been prohibited by federal law for the past 45 years. Still, Spitzer said pay-for-play, as it is also called, is "pervasive within the music industry."

He said the system used today is far more elaborate than that used in payola scandals of the 1950s and '60s, most of which involved direct payments to radio disc jockeys.

"This a more formalized, more corporatized structure to get the same result," he said. "I feel a little like Bill Murray in the movie 'Groundhog Day.' " The movie is the story of a weatherman who is forced to continuously relive the worst day of his life.

Sony BMG, in a written statement of apology, acknowledged that the practice is widespread.

"Despite federal and state laws prohibiting unacknowledged payment by record 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."

The findings of Spitzer's 11-month investigation reveal the extent to which Sony BMG would go to get its songs on the air, then to cover up the true nature of the payments. The findings also show how heavily record companies rely on radio stations to play their music and help boost sales of the songs.

Among the cases cited: Epic Records, part of Sony BMG, gave a flat-screen television to Diana Laird, program director for KHTS, known as "Channel 933," one of Clear Channel Communications' radio stations in San Diego, in November 2002.

To conceal the payoff, Epic's executive vice president of promotion characterized the transaction as a contest giveaway, according to a report by Spitzer.

Epic used the name and Social Security number of a friend of Laird's, who had agreed to accept delivery of the television as the "winner" of the supposed contest. The friend also "agreed" to pay any taxes owed in connection with the receipt of the television, the report said.

Laird did not respond to an e-mail or phone call seeking comment.

In another case, Spitzer uncovered an e-mail to a Hartford, Conn., radio station from a promoter for Epic Records, part of Sony BMG, that said: "WHAT DO I HAVE TO DO TO GET AUDIOSLAVE ON WKSS THIS WEEK?!!? Whatever you dream up, I can make happen!!!" The promoter was pushing to get the song "Like a Stone" by the rock band Audioslave on the air.

Spitzer cited examples of radio station personnel getting what he called "bribes" – everything from airfare to video game consoles to laptop computers – to give airtime to Sony BMG's record labels.

Sony BMG is the world's second-largest music company, with almost a quarter of the global music market. Its labels include hundreds of artists, ranging from Aretha Franklin to Beyonce Knowles to Jennifer Lopez.

The New York Times reported that Sony BMG yesterday fired the top promotion executive at its Epic label. It also disciplined four executives in its Sony Urban unit and at Epic by imposing financial penalties and placing them on probation.

In its statement yesterday, the music company apologized for some of its employees who it said had pursued radio promotion practices "that were wrong and improper." In its settlement with Spitzer, the company agreed to pay $10 million and to end the illegal practice of paying to have its songs played on the air. The $10 million will be distributed to nonprofit organizations that promote music education.

According to 59 pages of e-mails and documents Spitzer uncovered, Sony BMG would often demand that a song be played a certain number of times a day, sometimes even specifying the times of day, for the radio station to be eligible for the payout.

Spitzer's investigation also found that Sony BMG:

 Hired independent promoters to funnel the money and gifts to radio stations.

 Used interns and others it hired to call in requests for certain songs to trick radio stations into playing them more.

 Bought chunks of advertising time, during which its songs were played to boost ratings in the charts. Such airtime was not differentiated from regular music programs.

 Paid radio stations to cover operational expenses in exchange for playing specific songs.

Peter Hart, an analyst with Fairness & Accuracy in Reporting, a media watchdog group, said record labels and radio stations keep coming up with more elaborate payola schemes in an effort to skirt the law.

"I think the main lesson from the last couple of years is that the record labels and the radio business have found ways to get around the rules by creating new and different forms of payola," he said. "So the regulators are often one step behind, trying to play catch-up with what the industry is doing. The dirty little secret about how commercial radio works is slowly coming to light."

Don Henley, a member of the Eagles and founding member of the Recording Artists' Coalition, praised Spitzer's office in a written statement: "There is no question that payola hurts recording artists."

Spitzer is expected to continue his investigation into the other major record companies – Vivendi Universal, the Warner Music Group and the EMI Group – as well as the radio companies that have accepted their gifts.

The standards of the average G4TechTV viewer are extremely low.

superficial hobbies

Hired independent promoters to funnel the money and gifts to radio stations.

All songs on the radio are bought this way. It's the man in the middle which lets them pretend it isn't payola. And a $10 million fine isn't shit to Sony BMG.

I still fail to understand how they'll bribe radio stations and risk million dollar lawsuits so that people can listen to their music for free on the radio, but if someone on the Intarweb tries to do it at no cost to them whatsoever they get all bent out of shape.

What i dont get is how does this get more sales?  I mean you hear a song you like on the radio, ok maybe you'll get the album ifyou hear another song off it thats also good.  But if you beat that song to death, who the fuck gonna buy it?

I still fail to understand how they'll bribe radio stations and risk million dollar lawsuits so that people can listen to their music for free on the radio, but if someone on the Intarweb tries to do it at no cost to them whatsoever they get all bent out of shape.

I must not be like most people I guess.  After I've heard a song 100 times on the radio, I do not want to ever hear it again let alone purchase it for myself.

I'm convinced everyone will be shifted over to satellite radio in 10 years. 

I still fail to understand how they'll bribe radio stations and risk million dollar lawsuits so that people can listen to their music for free on the radio, but if someone on the Intarweb tries to do it at no cost to them whatsoever they get all bent out of shape.

(

I'm honestly surprised people still listen to the radio. I haven't been a regular listener (except for Stern) for decades, radio sucks.

Some of the most common questions we at XRT recieve are:

Why don't you post the name and artist of the song on your website while it's playing on the radio station?

or

How come my car stereo does not display the name or artist of the song like other stations?

Well, we've got one simple response for you...XRT DJ's hand-select the very next song by themselves...without the help of a computer. In order for XRT to display the name and artist of the song in real time both on 93XRT.com and in your vehicle stereo, we would have to pre-program all of our music into a computer well in advance, thereby removing the musical freedom our DJ's have during the course of their shows. That's right - sometimes our DJ's don't even know what they are going to play next...

So in summary, unlike other radio stations, XRT is handcrafted daily, which does not allow song titles and artists to become available for posting until the following day.

I'm honestly surprised people still listen to the radio. I haven't been a regular listener (except for Stern) for decades, radio sucks.

I'm lucky.  My girlfriend and I don't have the exact same tastes, but we both love our System Of A Down and Mars Volta.

And they're touring together this summer. 

You got a link to said concert? I love me some SoaD.

ARRRRG...damn $53 tickets....

Living in a cultural backwater has its advantages, huh?  :evil:

For a concert? WHAT THE...

That's fucking obscene.