Radio is serious business.

[Shockeye]

Sony BMG payola case settled for $10 million

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.

Is there anyone out there who isn't suprised by all this?

[stray]

No.

[Merusk]

My god.. I am. I figured Incubus, Chevelle, Shakira and Jessica Simpson all got such huge amounts of airplay around here because they were extrordinary musical talent.  Oh no.. do you think Clear Channel might have been taking money also? How dreadful.

[Sky]

There's no way that concert promoters or ticketmaster are in bed with any of this payola, either.

[schild]

Oh man, I wonder how I can get f13 on G4 and TechTV. Oh, wait, I know. Money and bitches.

[Strazos]

They can be mediocre bitches too.

The standards of the average G4TechTV viewer are extremely low.

[schild]

The standards of the average G4TechTV viewer are extremely low.

If you're talking about their yearly income, then yes, I'll go with you there. Now if we're talking about taste in women, Unfortunately most of the geeks I know and most of the sad hopeless geeks who watch techTV try to bat out of their league. Luckily, geeks - at least the efficient ones tend to have some sort of money from some source somewhere. I'd prefer a cute gurlgamer. But that's just me. I've dated the non-gamers with the superficial hobbies and it got boring.

[Samwise]

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.

(edit) The RIAA's FAQ explaining how they lose money every time a radio station plays one of their songs.

[Merusk]

OMG, Ban radio!

They bitched about videos killing them and not making a profit, too.  Yet they still shoot them despite most 'music video channels' playing little of music or videos.

Then they wonder why we think they're mentally retarded.

[CmdrSlack]

superficial hobbies

Like what, macramae?  Please to elaborate. 

On topic, I'm not at all shocked that payola is still going on.  Hell, I remember some episode of WKRP that dealt with payola.  That show was on at least 20 years ago.  When I was music director of my college station, we didn't get offered cool shit for playing music, we just had the ability to call and ask for literally any CD in the company's catalog and usually get it.  Oh and free concert tickets didn't hurt.  Hmm...maybe there were some payola attempts. 

This does, however, give me a great reason to cancel the bogus music club membership I have through BMG (yes, I know, I know, music clubs are ripoffs, but I was drunk and it seemed like a good idea at the time). 

[HaemishM]

You mean ClearChannel doesn't program their music selection by fair and equitable means? Say it ain't so!

Music television is a brand vehicle, radio stations have become drive time brain candy background static and the recording industry is full of cockgobblers.

[Sogrinaugh]

Always wondered why thier are so many songs on the radio that nobody i know likes, yet they get mad airtime.

[Krakrok]

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.

[Sogrinaugh]

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.

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?

Or you hear a song you dont really like, it gets played out, and you just hate it more?

How often is the case that you hear a song, dont really like it but then it gets played alot and you change your mind?  This has never happend to me.

Anyone understand this form of marketing?

[Yegolev]

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.

They don't understand The World.

[Yegolev]

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.

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?

The thing you are missing out on is that there are enormous numbers of people who buy music because it is cool, and because they like what they are told to like.  They are told what to like by the media outlets, and none of them are as smart as me and you in that they don't realize they simply don't have to like Three Shits Down or Nickelshit or (gah) Ashlee Shitson.  It simply doesn't occur to most people to not do what their masters tell them.  This is why I hate people.

[HaemishM]

Marketing people are under the impression that repetition, no matter how fucking annoying it gets, eventually translates into sales. They call it mind-share, which is marketing speak for "we plug your brain with so many cockholes that eventually one of them will be a womb."

[Sky]

My favorite GWB quote: "Sometimes you gotta catapult the propaganda."

He actually said that, and it's not out of context. His previous sentence was (paraphrased) "How many times do I gotta keep repeating myself ("Your retirement will be safe", his previous three sentences) before you believe me?"

Quite a character, that rascally Curious GWB.

[Merusk]

A lie repeated often enough becomes the truth.

[Dren]

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. 

[Krakrok]

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.

That's how most business people think. If they want something from you they are willing to pay to get it. But if you want something from them they want you to pay to have it. For example, if Ferrari wants to sponsor your video game they will pay big $$$ to do that. But if you want to feature Ferrari cars in it you have to pay them to do that.

Pretty much all "business developement" works this way.

[Sky]

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

[OcellotJenkins]

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.

(

Winnar.

[CmdrSlack]

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

You should check out WXRT.  You have to use IE and some AOL plugin to stream the station, but the hassle is worth the awesome that is WXRT.

WXRT.

EDIT -- I just found something on their site that confirms what I thought (they are an album oriented rock format, which gives DJs more freedom) about their programming

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.

[Evangolis]

XRT ain't what it used to be, back when I first started listening to it in 1975, but it still has top spot on my car stereo tuner.  Some of the DJs are the same ones they started with in 1975.  They have more repetition than they used to, and you never hear sets that have both Beethoven's 5th and Stranglehold (no metal at all, these days) in them anymore, but they can still be pretty cool.  Monday Night about 10PM Central they have various musicians come in for a couple hours and play whatever they want, they call it The Eclectic Company, and you can hear some fairly different stuff then.

[RhyssaFireheart]

I'd be lost without my XRT since none of the other Chicago stations hold my interest for long, but that freaking AOL plug-in crap pisses the hell out of me.  Good thing the co-worker in the next cubical has it on during the day so I can listen then.  Otherwise, it's the car only to and from work.  I'm just far enough out in the NW Suburbs that I can't pull a good signal on the radio, and I refuse to install that plug-in, so no evening listening for me. 

Satellite radio though - I hated the concept of it at first, but the husband bought Sirius for his car and it's not bad.  Makes the 5 hour trips down to my family near St. Louis much nicer when we hit radio wasteland in the middle of the state.  Plus, it now has Radio Margaritaville FTW.  Who could pass that up?

[Yegolev]

Atlanta has WGST, the Georgia State radio station, which is the number one college radio station in the world.  Or so I'm told.  It is pretty damned good, really, and is the only place my tuner goes when not trying to figure out where the FUCK that tractor-trailer flipped over so I can get home in under ninety minutes.  Stream from wgst.com, I guess.

Those of you who are in my fan club know that I mostly just listen to Bowie CDs.

[edit] It is actually WRAS.  WGST is the one I listen to for traffic.  I need sleep.

[Ralence]

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

  It's actually kind of fascinating to me, I only listen to three things in the car, NPR, The Boston sports-talk radio station (WEEI), or my ipod.  My girlfriend on the other hand, is a radio junkie, pop stations, the "urban" stations, or whatever they call them nowadays, and I can't for the life of me figure it out.

  I'm a huge music nut, and I attend probably about 2-3 concerts/shows per month, so because it's an important part of my life, I've tried my damndest to at least try to find music we can both not cringe at when we're in the car together.

  I've tried loading up things I think she'd like based on the things she listens to now, but to no avail, no luck with ANY classics at all, even the mellowed out stuff like The Beatles, 10,000 Maniacs, Tori Amos, Depeche Mode, David Bowie, Elton John, nothing, no interest at all.  But fuck me if Ashley Simpson doesn't come on the radio in her car and she's humming right along with it.

  I don't get it at all, I really think there are a lot of people out there that need to be told what they should like.  I grew up with a very musical background, so it's easy for me to explain why I do/don't like certain things, she just never had that, so she has no idea why she likes it, she just does.  I love her to death, and this is just that one thing that I can't get my head around with her. 

  As of now, I just gave up completely, and she's stuck listening to whatever metal I have blaring in the car, such is life.

[Strazos]

Supposedly, my college station is supposed to be good, but I would have to actually use the radio to listen in. Fuck that.

[Llava]

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.  Talk about your tailor-made concerts.  Who the hell paired those two up?  Are there any people out there besides my girlfriend and I who even like both of them?  Curious.

[Daydreamer]

I all of California I have found two and only two stations I can stand these days:

SD's 94.9
LA's Indie 103.1

[Strazos]

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.

[Viin]

XM Radio 4 The Win!

[Llava]

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.

On systemofadown.com click on Tour.

[Rasix]

System of a Down? Ugggg.. where's Cevik when you need him.