Spitzer on Sony BMG scandal
p2pnet.net News Feature- It isn’t often that it’s worth quoting an official provincial or state message in full. But there are exceptions, and this is one of them. It’s from New York attorney general Eliot Spitzer’s office.
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Sony Settles Payola Investigation
Attorney General Eliot Spitzer announced an agreement to halt pervasive "pay-for-play" in the music industry.
Under the agreement, SONY BMG MUSIC ENTERTAINMENT, one of the world’s leading record companies and owner of a number of major record labels, has agreed to stop making payments and providing expensive gifts to radio stations and their employees in return for "airplay" for the company’s songs.
Such payoffs violate state and federal law.
"Our investigation shows that, contrary to listener expectations that songs are selected for airplay based on artistic merit and popularity, air time is often determined by undisclosed payoffs to radio stations and their employees," Spitzer said. "This agreement is a model for breaking the pervasive influence of bribes in the industry."
After receiving tips from industry insiders, Spitzer’s office conducted a year-long investigation and determined that SONY BMG and its record labels had offered a series of inducements to radio stations and their employees to obtain airplay for the recordings by the company’s artists.
The inducements for airplay, also known as "payola," took several forms:
- Outright bribes to radio programmers, including expensive vacation packages, electronics and other valuable items;
- Contest giveaways for stations’ listening audiences;
- Payments to radio stations to cover operational expenses;
- Retention of middlemen, known as independent promoters, as conduits for illegal payments to radio stations;
- Payments for "spin programs," airplay under the guise of advertising.
E-mail correspondence obtained during the investigation shows that company executives were well aware of the payoffs and made sure that the company got sufficient airplay to justify these expenditures.
In discussing a bribe given to a radio programmer in Buffalo, one promotion executive at SONY BMG’s Epic Records wrote to a colleague at Epic:
"Two weeks ago, it cost us over 4000.00 to get Franz [Ferdinand] on WKSE. That is what the four trips to Miami and hotel cost . . . At the end of the day, [David] Universal added GC [Good Charlotte] and Gretchen Wilson and hit Alex up for another grand and they settled for $750.00. So almost $5000.00 in two weeks for overnight airplay. He told me that Tommy really wanted him to do it so he cut the deal."
Another Epic employee who was trying to promote the group Audioslave to a Clear Channel programmer asked in an email:
"WHAT DO I HAVE TO DO TO GET AUDIOSLAVE ON WKSS THIS WEEK?!!? Whatever you can dream up, I can make it happen."
A promotion employee unhappy with the times assigned for spins of the song "I Drove All Night" by Celine Dion wrote this internal email:
"OK, HERE IT IS IN BLACK AND WHITE AND IT’S SERIOUS: IF A RADIO STATION GOT A FLYAWAY TO A CELINE [DION] SHOW IN LAS VEGAS FOR THE ADD, AND THEY’RE PLAYING THE SONG ALL IN OVERNIGHTS, THEY ARE NOT GETTING THE FLYAWAY. PLEASE FIX THE OVERNIGHT ROTATIONS IMMEDIATELY."
The investigation revealed that SONY BMG employees took steps to conceal many of the payments to individuals and radio stations, by using fictitious "contest winners" to document the transactions and make it appear as though the payments and gifts were going to radio listeners instead of station employees.
The Assurance of Discontinuance summarizing the Attorney General’s findings alleges that the illegal payoffs for airplay were designed to manipulate record charts, generate consumer interest in records and increase sales.
Spitzer said: "Aggressive promotion of products is one of the hallmarks of our economy. We expect it and respect it when done creatively and legally. But the efforts outlined in the Assurance clearly crossed the line and must be curtailed."
Ann Chaitovitz, Director of Sound Recordings for AFTRA (American Federation of Television and Radio Artists) said: "We would like to thank Attorney General Spitzer for examining this pernicious issue. Pay-for-play hurts both recording artists and the public. We look forward to his continuing investigation of the other record labels and the vertically integrated radio station owners."
Under the Assurance, SONY BMG, building on guidelines SONY BMG issued earlier this year in response to the AG’s investigation, has agreed to stop making payoffs in return for airplay and will fully disclose all items of value provided to radio stations in the future. SONY BMG also has agreed to corporate-wide reforms, including hiring a compliance officer responsible for monitoring promotion practices and developing and implementing an internal accounting system designed to detect future abuses. This is the first time an entertainment company has agreed to such sweeping reforms.
The company has also issued a statement acknowledging the improper conduct and pledging to abide by a higher standard.
In addition, the company has agreed to make a $10 million payment for distribution by the Rockefeller Philanthropy Advisors to New York State not-for-profit entities in a manner that will inure to the benefit of the residents of the State of New York by funding programs aimed at music education and appreciation.
Spitzer said SONY BMG officials cooperated fully with his investigators and promptly agreed to reforms when the problems were identified. He commended the company for taking steps that should serve as a model for the rest of the industry.
Spitzer also noted that his office continues its broad investigation of pay-for-play practices in the recorded music industry.
The investigation and settlement were handled by Assistant Attorney General Kathleen O’Neill of the Telecommunications & Energy Bureau, and Ricardo Velez of the Criminal Prosecutions Bureau, under the direction of Terryl Brown Clemons, Assistant Deputy Attorney General for the Division of Public Advocacy.
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July 28th, 2005 at 2:07 am
I remember not too long ago we had an article dealing with the immoral acts of pirates and what they were doing to the poor music industry. (You know, the typical line from the RIAA.) How the music industry just wasn’t doing well and all these poor workers could get decent and long lived jobs in the music industry because of all the “stealing” going on.
A few at the time made note that they didn’t feel a lecture from a morally bankrupt cartel was in keeping with the picture being painted in words. Here is but another example of the cartels with their fingers caught in the cookie jar. So $5000 bucks for one night play of a featured artist is the going price for this one station. How about the rest of the stations across this nation? How about the rest of the world? No wonder the cartels are going broke (to hear them claim it). Just how many sales does it take to recoup that expense? Evidently they feel it is worth is as all are playing and paying the same game.
The commercial radio stations are no longer the place to hear new music. With the continuing payolla schemes there is no changes to allow such to come into airplay time. Now I don’t know about the rest that are reading these words but for me, I have all but quit listening to commercial radio. There are simply too many ads and too many replays of the same songs hour after hour, day after day. The heyday of The Eagles, The Who, and others from the 60’s-80’s have pretty much come and gone. There is nothing new out there that tickles the fancy, I long ago bought those I wanted from the range above and don’t need a remix. Cds last a long time, unlike records so no one really needs to repurchase and therefore the continual need to rebuy for some new format is gone.
It appears as if the sue’em all campaign is nothing but a money maker for feeding yet more bs to the public. By the words of past RIAA officals they know they aren’t going to get everyone, they know that the downloading isn’t going to stop no matter what they do. So it has become a second income to the RIAA (which in no way goes to the artist) to support whatever it is the RIAA has in mind next. This sure doesn’t sound like the RIAA should enjoy tax free status as they are definately making money through the lawsuits. Mostly making profits eliminates the tax free status. So why do they still have it? I mean it looks to me like they are spending money left and right to cover the idea that it is a cash cow.
Prehaps something else for Spitzer to look into when this little theme runs dry he is on now.
July 28th, 2005 at 2:14 am
One other thing to add to this…
The newest payolla scheme is paying for advance playlists from radio stations. One would think that a proposed playlist would not be too expensive, after all it is a statement of intent not something written in stone to be unchanged forever. But the cartels are laying out thousands of dollars for one playlist. It is understood but not written that the money isn’t really for the songlist but rather to pay for what their choices are and to modify the preposed list before it is sent out to the stations on what to play. As such it is sort of like a service they are buying, just like in the payolla but instead they are paying in the public eye for a list. (Dang expensive list if you ask me.) It can’t be the ink on the paper that is expensive, nor can it be the paper itself. Even the hours that might have been spent by the station programmer can’t account for the expense.
July 28th, 2005 at 2:25 am
*Sarcasm Alert Begins*
A member organisation of the RIAA engaged in less than completely legal/ethical/moral activities!?!?!?!?!?!?!?!? Never! Say it isn’t so!
*Sarcasm Alert Ends*
Honestly, who the heck is surprised by this! Then companies like this have the nerve to wonder why their “sweetness and light” advertising campaigns to convince consumers of how wonderful they are, just don’t work! “Well Duh!” If these corporations hired someone with a brain, and then actually LISTENED to that person, they’d be dangerous.
July 28th, 2005 at 4:48 am
Back in the early 1900’s it was discovered that one of the baseball teams in the Worldseries that year had players who had been bribed to not perform well and to THROW the game so the other team would win!!!! Who can respect that????? Look what baseball did to correct the problem!!! Just ask Pete Rose!!!! How can you listen to the radio and not say “Gee I wonder how much the major label paid to get that song played on the radio”????? The FCC must act against these radio stations who have been involved with this PAYOLA SCANDAL!!!! Spitzer has already uncovered which radio stations were involved!!!! The FCC must act now and Yank them off the Air for a period of time and the stations involved pay some heavy fines and the radio stations must fire the ones involved. Only then will the music and radio industries get the message that this kind of PAYOLA B.S. will not fly anymore!!!!! When the FCC went after the Janet Jackson Titty Flash it was front page news!!!! This Payola scandal needs to become front page news!!!!! People who play Sports who are discovered to have CHEATED in some way to win are booted out of the game!!!!! Radio/Music labels/ Artists who CHEAT to get air play need to be booted out of the game!!!!! How would you feel if Tiger Woods was found to have paid off the other Golfers so he could win the Masters?????? I urge all here to write or E mail the FCC to demand that they take action NOW!!!!!! Only then will this scandal reach the music fans and just maybe the Sheep will turn into wolf’s and hopefully turn against these labels and radio stations and DJ’s and Program director’s like they did in the 50’s and put an end to this PAYOLA B.S. once and for all!!!!!!!!!!!!!!!!!!!!!!!!
July 28th, 2005 at 4:52 am
Roughly 150 million dollars is spent on PAYOLA in a year!!!!!!!
July 28th, 2005 at 8:41 am
Anyway why are wast time with payolla why dont they just buy up radio stations up. I doute this would be to much of issue for RIAA club, ow I forgot there running out of money beacause they
* RIAA Spin *
spent so much money promoting the music so I would share it with everyone because of all the payments of paolla.
* End RIAA Spin*
Oups sorry for that is just RIAA talk affecting my sence of logic thinking and there rubbish has turn my brain in to mush.
July 28th, 2005 at 10:53 am
Record and film companies pretent they are all honest working, hard done by angels, wheras in fact they are the mafia of the entertainment industry.
July 28th, 2005 at 3:28 pm
the cartel started the payola, and now that the radio stations are getting larger (for example, clearnet) and therefore have more power, they want to stop it.