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Sony BMG Is Sued by Small Label in 'Pay to Play' Case

October 19, 2005|Charles Duhigg | Times Staff Writer

A tiny Tarzana-based record label sued music giant Sony BMG Music Entertainment on Tuesday, claiming that the company broke antitrust laws by lavishing gifts on radio station employees in exchange for airplay.

The lawsuit by TSR Records, filed in U.S. District Court in Los Angeles, builds its case on Sony BMG's "pay for play" civil settlement in July with New York Atty. Gen. Eliot Spitzer. The company paid a $10-million fine and admitted that some employees used improper promotion practices. Among the allegations: Sony BMG employees gave plasma-screen TVs and provided travel to radio programmers.

TSR, a New Age and smooth-jazz label with about $1 million in annual revenue, alleged in the lawsuit that pay-for-play actions by the industry's second-largest company made it nearly impossible for independent labels to get airplay for their artists.

"The best way to sell albums is to get songs played on the radio," TSR President Tom Hayden said. "But we can't afford to bribe programmers with plasma-screen TVs, so we're shut out."

A representative for Sony BMG said the company did not comment on pending litigation.

Legal experts said TSR's suit faced an uphill battle, although courts have looked favorably on similar claims in the oil and grain industries when payments were made to undermine rivals.

"If Sony BMG is getting songs played on the radio through illegal means, and if it is happening frequently enough to harm competitors, then there is a legitimate antitrust claim," said Robert Lande, a professor of law at the University of Baltimore. "But you can't just piggyback on Spitzer's investigation."

TSR's claim may benefit from Spitzer's inquiry, Lande and other experts said, because the independent label might force Sony BMG to hand over documents the company provided to Spitzer. Only a small portion of those records, estimated at hundreds of thousands of e-mails and memos, was released in July.

The lawsuit, which does not specify the damages sought, is the latest fallout from a settlement that continues to ripple through the music industry. Last week, Clear Channel Communications Inc. confirmed it had fired two employees identified in the Sony BMG-Spitzer settlement as having accepted gifts.

Spitzer continues to investigate the three other major record companies -- Universal Music Group, EMI Group and Warner Music Group -- and the country's largest radio chains. New York and federal law bans programmers from accepting gifts in exchange for airing specific songs unless the transaction is revealed to listeners.

Hayden said his lawyers, Neville Johnson and Maxwell Blecher, might ask the court to declare the suit a class-action case and include all the major record companies as defendants. If granted, the designation would potentially treble the damages that could be recovered.

"Maybe if it's too expensive to cheat," Hayden said, "then I'll stop walking into programmers' lobbies only to find out that their playlists have been sold to the highest bidders."

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