Warner Music Settles With Spitzer on Radio Payoffs – New York Times

By JENNIFER BAYOT
Published: November 22, 2005
The Warner Music Group, the country’s No. 3 record company, agreed today to cease using pricey gifts and promotional giveaways to buy radio airtime for its artists. It was the second settlement to emerge from the New York attorney general’s investigation into such pay-for-play arrangements.

Home to more than a dozen record labels, including Atlantic, Bad Boy and Lava, Warner Music said that as part of the agreement it would give $5 million to New York music charities and pay the state’s $50,000 in legal expenses. It said it would disclose any valuable items given to radio stations in the future.

” Warner Music Group Corp. acknowledges that various employees pursued some radio promotion practices on behalf of the company that were wrong and improper, and apologizes for such conduct,” the company said in a statement.

“What has been described generically as ‘payola’ for spins has continued to be an unfortunately prevalent aspect of radio promotion,” Warner said, adding that it “looks forward to defining a new, higher standard in radio promotion.”

Eliot Spitzer, the New York attorney general, described the pay-for-play deals as bribes that violate state and federal law while duping listeners into thinking that songs are selected for their popularity or artistic merit. “Unfortunately, other companies continue to engage in them,” Mr. Spitzer said in a statement.

The incentives typically include personal benefits offered directly to radio programmers who decide which songs will receive airtime. Warner offered the programmers electronics, airfare and tickets to major sporting events like the Super Bowl and World Series, Mr. Spitzer said.

Other payments help radio stations cover operational expenses or provide prizes for the stations’ giveaways, like iPods, digital cameras and tickets to events like the Grammy Awards, the MTV Video Music Awards and the American Music Awards.

“Z100 has approached us for a Linkin Park Flyaway to L.A. or Glasgow for a grand prize in their big match game contest on the morning show,” says an internal promotions message dated Feb. 28, 2004. “Can we approve this??” The sender and recipient of the message were obscured.

By increasing a song’s radio presence – described by Mr. Spitzer as the single-biggest driver of music sales – the practices are designed to inflate profits and manipulate a song or album’s ranking on record charts.

Warner’s settlement follows a similar agreement in July by Sony BMG Music Entertainment, a unit of Bertelsmann and one of the country’s largest record companies. The investigation by Mr. Spitzer’s office is continuing, and he has encouraged other music companies to step forward and abandon similar incentives.

The settlement statement released by Mr. Spitzer’s office described many of the practices at Warner in detail. It said the company used independent promoters as a conduit for illegal payments to the radio stations and hired outside venders to call radio stations posing as listeners requesting Warner artists’ songs.

In the 45 years since federal statues banned similar, if less elaborate, inducements, the record industry’s promotional tactics have evolved along with the structure of radio stations, Mr. Spitzer said. As disk jockeys’ power to choose songs has dwindled, radio programmers and the station’s day-to-day expenses have become targets.

For instance, David Universal, a former program director at WKSE in Buffalo, received a trip to Miami, a laptop and several other perks, Mr. Spitzer said. “We all had to do business with Dave if we were going to get our records on,” a promotion manger with Atlantic Records was quoted as saying. “It was a game that you either played or you didn’t have a shot at getting your records on the air.”

Another Warner promotions employee urged colleagues to be aggressive in demanding “spins,” or song plays. “We need to jump into spins immediately this morning,” said an Oct. 13, 2003, e-mail message tagged as high priority. “No one should be less than 21x per week. Will send you a list of offenders. Close the holes!!!”