Ethics Newsline®

NEW YORK
Sony BMG, the world’s second-largest music company, last week agreed to pay $10 million to settle charges that it paid radio stations to play its artists’ songs without disclosing the perks to the public — an illegal practice known as payola.

The settlement follows a yearlong investigation by the hard-charging New York State attorney general, Eliot Spitzer, who also is scrutinizing the practices of EMI, Vivendi Universal, and Warner Music Group.

Spitzer last week criticized Sony’s pay-for-play practices, which included lavishing gifts and trips on radio employees and footing the bills for equipment or other items at stations that played Sony artists’ songs.

“This is not a pretty picture; what we see is that payola is pervasive,” Spitzer charged in a report from the New York Times. “It is omnipresent. It is driving the industry. And it is wrong.”

Payola was outlawed in the United States following pay-for-play radio scandals in the 1950s, though many suspect that the practice has continued quietly in the decades since.

“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 in a statement. “This agreement is a model for breaking the pervasive influence of bribes in the industry.”

Last week, Spitzer urged the Federal Communications Commission (FCC) to investigate whether radio stations that took cash and gifts to skew their playlists should have their licenses pulled, deeming it a violation of both the public trust and misuse of the public airwaves.

“I would certainly encourage the FCC to take a hard look at whether something that is this pervasive, something that is so corrosive to the marketplace should not merely be investigated and pursued but whether some of these stations deserve to have their licenses stripped from them,” Spitzer said.

Sony’s $10 million settlement will be passed along to nonprofits that support music education and appreciation programs in New York, noted the Reuters news agency.