Sony BMG Music settles Spitzer's payola probe

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Executives aware of payola
In the Sony BMG case, Spitzer released to reporters e-mails, most of them dated 2003, 2004 and 2005, that he said showed company executives were well aware of the payola practices.

In one case, an employee of Sony BMG’s Epic label was trying to promote the group Audioslave to a station and asked: “WHAT DO I HAVE TO DO TO GET AUDIOSLAVE ON WKSS THIS WEEK?!!? Whatever you can dream up, I can make it happen.”

In another case in 2004, the promotion department of Sony BMG label Epic Records paid for an extravagant trip to Miami for a Buffalo DJ and three friends in exchange for adding the Franz Ferdinand song “Take Me Out” to the DJ’s station’s playlist.

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And in another, a program director for two Clear Channel radio stations, WKKF-FM and KISS-FM, sent an e-mail to a Sony executive saying: “Looking for a laptop for promotion on Bow Wow,” a reference to a rapper.

Spitzer said Sony BMG employees sought to conceal some payments by using fictitious contest winners to document the transactions.

Still, he praised Sony BMG executives for fully cooperating with the inquiry.

Spitzer has asked for documents from three other major recording industry names — EMI, Warner Music Group and Vivendi Universal SA’s Universal Music Group. While Spitzer would not talk specifically about investigations into those companies, he said the payola problem goes “way beyond Sony BMG.”

Don Henley of the Eagles, a founding member of the Recording Artists Coalition, praised Spitzer for addressing a problem that hurts recording artists.

“We look forward to other record labels agreeing to similar reforms,” said Henley, who has given $25,000 in campaign contributions to Spitzer over the past year. Spitzer is running for governor in 2006.

Sony BMG is a joint venture of Sony Corp. and Germany’s Bertelsmann AG. Shares of Sony were down 23 cents, or about two-thirds of 1 percent, at $34.40 in afternoon trading on the New York Stock Exchange.

Sony BMG is an umbrella organization for several prominent record labels, including Arista Records, Columbia Records, Sony Music International and Jive Records. Star artists signed with the Arista label alone include Whitney Houston, OutKast, Pink and Sarah McLachlan.

The $10 million will be distributed to not-for-profit entities and earmarked for music education programs, Spitzer said.

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