Warner Music Group has agreed to pay $5 million to settle a payola investigation led by New York Atty. Gen. Eliot Spitzer, becoming the second record company in four months to formally admit to improper promotion practices.
In a document released Tuesday by Spitzer, senior executives at Warner, the third-largest U.S. music company, were accused of overseeing "pay-for-play" practices that included giving radio station employees trips, laptop computers, Super Bowl tickets and other items in exchange for airplay of specific songs.
Federal and New York state laws prohibit trading anything of value for airplay unless the transaction is disclosed to station management and listeners.
"Warner Music has illegally provided radio stations with financial benefits to obtain airplay and boost the chart position of its songs," said a settlement document released by Spitzer's office, which alleged that pay-for-play was used to bolster such hit bands as Green Day, My Chemical Romance and R.E.M., and was "condoned by senior executives at Warner Music record labels."
In July, the nation's second-largest music company, Sony BMG Music Entertainment, settled a similar probe with Spitzer's office, agreeing to pay a $10-million fine and to discontinue certain practices.
Spitzer is still investigating the two other major record corporations -- Universal Music Group and EMI Group -- as well as several radio companies, including Clear Channel Communications Inc., Infinity Broadcasting Corp. and Entercom Communications Corp.
As part of Warner's settlement, executives promised to stop giving programmers gifts in exchange for airplay and to end the use of independent middlemen to improperly influence radio stations. The fine will be distributed to not-for-profit groups by Rockefeller Philanthropy Advisors.
In a statement, the music company described the settlement process as "valuable." "From our perspective, radio cannot be too consumer-driven," the statement said. "The music that people hear on the radio always should represent the highest quality the industry has to offer."
Tuesday's settlement made clear that record labels weren't always the instigators of pay-for-play. Spitzer noted that radio stations regularly requested improper gifts. He said that programmers at stations owned by the nation's largest radio companies, Clear Channel and Infinity, were more active in soliciting gifts.
