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Tuesday, July 26, 2005 - Page updated at 12:00 AM

Sony BMG Music agrees to $10 million "payola" settlement

The Associated Press

NEW YORK — Recording-industry titan Sony BMG Music Entertainment agreed yesterday to pay $10 million and stop bribing radio stations to feature its artists in what a state official called a more sophisticated generation of the payola scandals of decades ago.

The agreement springs from an investigation by New York state Attorney General Eliot Spitzer, who called the practice "pervasive" in the industry and suggested other music-industry giants could face similar penalties.

Pay-for-play "is driving the industry, and it is wrong," Spitzer told reporters.

Sony BMG, whose various labels include hundreds of artists from Tony Bennett to the Dixie Chicks, said some of its employees had engaged in "wrong and improper" practices.

A 1960 federal law and related state laws bar record companies from offering undisclosed financial incentives in exchange for airplay. The practice was called "payola," a contraction of "pay" and "Victrola," the old wind-up record player.

Asked why he did not bring criminal charges in the case, Spitzer noted the criminal laws governing pay-for-play are more specific and difficult to violate than the civil laws.

Companies in the recording industry depend heavily on airplay for their artists. Airplay boosts sales and helps recordings climb the charts.

Spitzer said Sony BMG's efforts to win more airplay took many forms, including outright bribes of cash and electronics to radio stations and paying for contest giveaways for listeners.

Jonathan Adelstein, a member of the Federal Communications Commission (FCC), said Spitzer "appears to have found a whole arsenal of smoking guns."

"We need to investigate each particular instance that Spitzer has uncovered to see if it is a violation of federal law. This is a potentially massive scandal," he said.

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

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