Sony BMG admits paying bribes to get its artists better radio play

Payola to station employees included electronic devices, trips

July 26, 2005|By NEW YORK TIMES NEWS SERVICE

To disguise a payoff to a radio programmer at KHTS in San Diego, Epic Records called a flat-screen television a "contest giveaway." Epic, part of the music giant Sony BMG Music Entertainment, used the same gambit in delivering a laptop computer to the program director of WRHT in Greenville, N.C. - who also received a Playstation 2 console and an out-of-town trip with his girlfriend.

In another case, a Sony executive considered a plan to promote the song "A.D.I.D.A.S.," by Killer Mike by sending radio disc jockeys one Adidas sneaker, with the promise of the second one when they had played the song 10 times.

The gifts, described in a settlement with Sony BMG that was announced yesterday by New York Attorney General Eliot Spitzer, exemplify what Spitzer called a broad effort by the recording industry to curry favor with radio station programmers in exchange for their promises to play specific songs.

The focus of Spitzer's investigation is now expected to shift to the other three major record companies - Vivendi Universal, the Warner Music Group and the EMI Group - and the radio companies whose employees have accepted gifts in exchange for playing songs.

Spitzer's investigators have served subpoenas on several radio companies, including Clear Channel Communications and Emmis Communications.

"This is not a pretty picture; what we see is that payola is pervasive," Spitzer said, using a term from the radio scandals of the 1950s in describing e-mail messages and corporate documents that his office obtained during a yearlong investigation. "It is omnipresent. It is driving the industry, and it is wrong."

As part of the settlement, Sony BMG acknowledged "that various employees pursued some radio promotion practices on behalf of the company that were wrong and improper, and apologizes for such conduct."

Yesterday, the company fired the top promotion executive at its Epic label. And it disciplined four executives in its Sony Urban unit and at Epic by imposing financial penalties and placing them on probation, said two people briefed on the actions.

Sony also agreed to pay a $10 million fine, to be distributed to nonprofit organizations that promote music education; to follow new policies governing its efforts to cajole programmers, and to tighten its monitoring of how its promotional dollars are spent.

The finding that gifts were used to help tailor the play lists of many radio stations comes as audiences show signs of rejecting the music choices made by programmers.

The iPod and other portable devices that play music have begun cutting into the popularity of radio, and the growth of satellite radio has been putting pressure on the station owners to play a broader range of music.

For more than four decades, federal law has prohibited broadcasters from accepting money or anything of value in exchange for airplay of a specific song. While music companies have long tried conjuring ways to sidestep the law, Spitzer says they have continued to violate it.

The state investigation found that Sony BMG, which releases music by acts including Jennifer Lopez, Good Charlotte and Beyonce Knowles, had provided stations with entertainers for station-affiliated concerts or paid for station equipment or other bills in exchange for having its songs played. It also provided vacations and electronic goods for on-air giveaways in a direct trade for airplay. And it hired independent promoters to funnel money to radio stations.

In addition, the investigation found that the company had tried to distort industry airplay charts - creating the false impression that a song was taking off - by paying radio stations to play its songs as sponsored advertisements. It has also used interns and hired vendors to call radio stations with requests.

As a result, Spitzer said in the settlement documents, "Sony BMG and the other record labels present the public with a skewed picture of the country's `best' and `most popular' recorded music."

While many of the promotions detailed by Spitzer appear to come cheap - for example, $939 to fly a Buffalo programmer and a guest to New York City in connection with the addition of a Jennifer Lopez track to the play list - they add up to millions of dollars a year.

More than that, the settlement documents provide an unusual window on a sector of the music business where the public airwaves are discussed as a commodity, and where little is allowed to stand in the way of bolstering a song's chart position.

In some cases, Spitzer said, Sony BMG had negotiated large-scale deals with major radio conglomerates, in which the record company would fly dozens of national contest winners to see an artist perform. In return, the participating radio stations committed to playing specific songs a certain number of times a week.

He pointed to one case in which Epic had struck a deal with Viacom's Infinity Broadcasting involving the Celine Dion song "Goodbyes."

By e-mail, an Epic executive, whose name was not disclosed, said each station had committed to "report" the song on its play list on a certain date in October 2002.

Infinity declined to comment. Clear Channel said that it was cooperating with the inquiry and that "the allegations made today will be fully investigated and any wrongdoing will be met by swift and appropriate disciplinary action."

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