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From today's NY Times:
July 26, 2005
Radio Payoffs Are Described as Sony Settles
By JEFF LEEDS and LOUISE STORY
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 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 PlayStation 2 games and an out-of-town trip with his girlfriend.
In another example, a Sony BMG 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 $10 million settlement with Sony BMG that was announced yesterday by New York's attorney general, Eliot Spitzer, exemplify what Mr. 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 Mr. Spitzer's inquiry 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. Mr. 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," Mr. Spitzer said, using a term from the radio scandals of the 1950's 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 deal, 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 BMG 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 better monitor its promotional spending.
The finding that gifts were used to help tailor the playlists of many radio stations comes as audiences show signs of rejecting the music choices made by programmers. The iPod and other portable devices 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 secret payments or anything of value in exchange for airplay of a specific song. While music companies have long tried to sidestep the law, Mr. 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 Beyoncé, 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 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, Mr. 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 Mr. 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 playlist - 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 one case cited by Mr. Spitzer, an executive at Sony BMG's Columbia Records label - after learning that airplay for the John Mayer song "Bigger Than My Body" had declined on certain stations that had accepted a promotion package from the label - told his staff in October 2003 that "many stations here will NOT be given the promo with the airplay" being given at the time. "Either deal with it or pull it," the executive said.
In other cases, Mr. Spitzer said, Sony BMG, a unit of Sony and Bertelsmann, had negotiated large deals with radio conglomerates, in which the record company would fly dozens of national contest winners to see an artist perform. In return, the radio station would commit to playing specific songs a certain number of times a week. He cited one case in which Epic had struck a deal with 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 playlist 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."
It remains to be seen how far-reaching the impact of Sony BMG's new policies will be in altering the culture of promotion. As part of the settlement, Sony BMG agreed to an array of changes. For instance, the company said it would no longer provide stations with cash or gift cards, which are difficult to track, for use in listener contests. The company also said it would no longer use "spin programs," in which it pays stations to play songs as commercials, to manipulate the charts.
The company is also expected to end its relationships with independent promoters unless they meet strict new guidelines, a prospect that many consider unlikely.
In a practice once widespread, the promoters acted as middlemen paying radio stations annual fees - often exceeding $100,000 - not, they say, to play specific songs, but to obtain advance copies of the stations' playlists. The promoters then bill labels for each new song played; the total tab costs the industry tens of millions of dollars a year. Under the new rules, Sony cannot reimburse promoters for any expense for a radio station or contest winner.
The industry has been divided over the impact of the settlement. Many executives say Mr. Spitzer's inquiry amounts to too little too late: radio companies like Clear Channel and Cox Radio severed their deals with independent promoters before the investigation began, for example.
Others, including several independent record labels, say the settlement could signal a shift that might break the major record companies' chokehold on the airwaves.
"This sounds to us like something that will be very helpful," said Don Rose, president of the American Association of Independent Music. "It's obvious to us that we're not getting the fair share because of the embedded relationships with big radio."
July 26, 2005
Radio Payoffs Are Described as Sony Settles
By JEFF LEEDS and LOUISE STORY
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 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 PlayStation 2 games and an out-of-town trip with his girlfriend.
In another example, a Sony BMG 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 $10 million settlement with Sony BMG that was announced yesterday by New York's attorney general, Eliot Spitzer, exemplify what Mr. 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 Mr. Spitzer's inquiry 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. Mr. 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," Mr. Spitzer said, using a term from the radio scandals of the 1950's 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 deal, 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 BMG 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 better monitor its promotional spending.
The finding that gifts were used to help tailor the playlists of many radio stations comes as audiences show signs of rejecting the music choices made by programmers. The iPod and other portable devices 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 secret payments or anything of value in exchange for airplay of a specific song. While music companies have long tried to sidestep the law, Mr. 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 Beyoncé, 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 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, Mr. 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 Mr. 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 playlist - 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 one case cited by Mr. Spitzer, an executive at Sony BMG's Columbia Records label - after learning that airplay for the John Mayer song "Bigger Than My Body" had declined on certain stations that had accepted a promotion package from the label - told his staff in October 2003 that "many stations here will NOT be given the promo with the airplay" being given at the time. "Either deal with it or pull it," the executive said.
In other cases, Mr. Spitzer said, Sony BMG, a unit of Sony and Bertelsmann, had negotiated large deals with radio conglomerates, in which the record company would fly dozens of national contest winners to see an artist perform. In return, the radio station would commit to playing specific songs a certain number of times a week. He cited one case in which Epic had struck a deal with 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 playlist 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."
It remains to be seen how far-reaching the impact of Sony BMG's new policies will be in altering the culture of promotion. As part of the settlement, Sony BMG agreed to an array of changes. For instance, the company said it would no longer provide stations with cash or gift cards, which are difficult to track, for use in listener contests. The company also said it would no longer use "spin programs," in which it pays stations to play songs as commercials, to manipulate the charts.
The company is also expected to end its relationships with independent promoters unless they meet strict new guidelines, a prospect that many consider unlikely.
In a practice once widespread, the promoters acted as middlemen paying radio stations annual fees - often exceeding $100,000 - not, they say, to play specific songs, but to obtain advance copies of the stations' playlists. The promoters then bill labels for each new song played; the total tab costs the industry tens of millions of dollars a year. Under the new rules, Sony cannot reimburse promoters for any expense for a radio station or contest winner.
The industry has been divided over the impact of the settlement. Many executives say Mr. Spitzer's inquiry amounts to too little too late: radio companies like Clear Channel and Cox Radio severed their deals with independent promoters before the investigation began, for example.
Others, including several independent record labels, say the settlement could signal a shift that might break the major record companies' chokehold on the airwaves.
"This sounds to us like something that will be very helpful," said Don Rose, president of the American Association of Independent Music. "It's obvious to us that we're not getting the fair share because of the embedded relationships with big radio."