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How will this affect the consumer: Sony Settles 'Payola' Probe for $10M

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How will this affect the consumer: Sony Settles 'Payola' Probe for $10M

Old 07-25-05, 06:00 PM
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How will this affect the consumer: Sony Settles 'Payola' Probe for $10M

Not shocked that this still happens...

Sony Settles 'Payola' Probe for $10M
Monday, July 25, 2005

link: Sony pays to play!

ALBANY, N.Y. — Sony BMG Music Entertainment (search) agreed Monday to pay $10 million and to stop paying radio station employees to feature its artists to settle an investigation by New York Attorney General Eliot Spitzer (search).

The agreement resulted from Spitzer's investigation of suspected "pay for play" practices in the music industry.

A Sony BMG spokesman didn't immediately respond to a request for comment.

But Spitzer said Sony BMG has agreed to hire a compliance officer to monitor promotion practices and to issue a statement acknowledging "improper conduct" and pledging higher standards.

He commended the company for its cooperation.

"Our investigation shows that, contrary to listener expectations that songs are selected for air play based on artistic merit and popularity, air time is often determined by undisclosed payoffs to radio stations and their employees," Spitzer said. "This agreement is a model for breaking the pervasive influence of bribes in the industry."

Spitzer had requested documents and information from EMI, Warner Music Group, Vivendi Universal SA's Universal Music Group as well as from Sony BMG, which is a joint venture of Sony Corp (SNE) and Bertelsmann AG.

Spitzer said his investigation showed Sony BMG paid for vacation packages and electronics for radio programmers, paid for contest giveaways for listeners, paid some operational expenses of radio stations and hired middlemen known as independent promoters to provide illegal payments to radio stations to get more airplay for its artists.

Spitzer also said e-mails among company executives showed top officials were aware of the payments.

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

In one case, an employee of Sony's Epic label was trying to promote the group Audioslave (search) 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, a promoter unhappy that Celine Dion's (search) "I Drove All Night" was being played overnight on some stations threatened to revoke a trip to a Dion show in Las Vegas unless the play times improved.

Sony BMG Music is an umbrella organization for several prominent record labels, including Arista Records, Columbia Records, Sony Music International and So So Def Records.

Star artists signed with the Arista label alone include Aretha Franklin, 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.

Record companies can't offer financial incentives under a 1960 federal law that made it a crime punishable by a $10,000 fine and up to a year in prison to offer money or other inducements to give records airplay. The practice was called "payola," a contraction of "pay" and "Victrola" record players.

The law was passed in response to the payola scandals of the 1950s and early 1960s that implicated some then-famous disc jockeys
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Old 07-25-05, 06:02 PM
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...and an editorial piece about the fine

Payola Shocker: J-Lo Hits, Others Were 'Bought' by Sony

link: Hits? What hits?

I always say when people ask me that the so-called vipers of the movie business would not last a day in the record business. Now Eliot Spitzer's office has decided to prove the point.

"Please be advised that in this week's Jennifer Lopez Top 40 Spin Increase of 236 we bought 63 spins at a cost of $3,600."

"Please be advised that in this week's Good Charlotte Top 40 Spin Increase of 61 we bought approximately 250 spins at a cost of $17K …"

Ironically, it didn't help, as the memo notes that the company actually lost spins — or plays of the record — even though they laid out money for them.

See above: The internal memos from Sony Music, revealed today in the New York state attorney general's investigation of payola at the company, will be mind blowing to those who are not so jaded to think records are played on the radio because they're good. We've all known for a long time that contemporary pop music stinks. We hear "hits" on the radio and wonder, "How can this be?"

Now we know. And memos from both Sony's Columbia and Epic Records senior vice presidents of promotions circa 2002-2003 — whose names are redacted in the reports but are well known in the industry — spell out who to pay and what to pay them in order to get the company's records on the air.

From Epic, home of J-Lo, a memo from Nov. 12, 2002, a "rate" card that shows radio stations in the Top 23 markets will receive $1000, Markets 23-100 get $800, lower markets $500. "If a record receives less than 75 spins at any given radio station, we will not pay the full rate," the memo to DJs states. "We look forward to breaking many records together in the future."

Take Jennifer Lopez's awful record, "Get Right," with its shrill horn and lifted rap. It's now clear that was a "bought" sensation when it was released last winter. So, too, were her previous "hits" "I'm Glad" and "I'm Real," according to the memos. All were obtained by Sony laying out dough and incentives. It's no surprise. There isn't a person alive who could hum any of those "songs" now. Not even J-Lo herself.

Announced today: Sony Music — now known as Sony/BMG — has to pony up a $10 million settlement with New York's Attorney General Eliot Spitzer. It should be $100 million. And this won't be the end of the investigation. Spitzer's office is looking into all the record companies. This is just the beginning.

But what a start: Black-and-white evidence of plasma TVs, laptop computers and PlayStation 2 players being sent to DJs and radio programmers in exchange for getting records on the air. And not just electronic gifts went to these people either. According to the papers released today, the same people also received expensive trips, limousines and lots of other incentives to clutter the airwaves with the disposable junk that now passes for pop music.

More memos: "We ordered a laptop for Donnie Michaels at WFLY in Albany. He has since moved to WHYI in Miami. We need to change the shipping address." One Sony memo from 2002: "Can you work with Donnie to see what kind of digital camera he wants us to order?"

Another, from someone in Sony's Urban Promotion department: "I am trying to buy a walkman for Toya Beasley at WRKS/NY.… Can PRS get it to me tomorrow by 3 p.m. … I really need to get the cd by then or I have to wait a week or two before she does her music again …"

Nice, huh? How many times have I written in this column about talented and deserving artists who get no airplay, and no attention from their record companies? Yet dozens of records with little or no artistic merit are all over the radio, and racked in displays at the remaining record stores with great prominence. Thanks to Spitzer's investigation, we now get a taste of what's been happening.

More memos. This one from Feb. 13, 2004: "Gave a jessica trip to wkse to secure Jessica spins and switchfoot." That would be Jessica Simpson, for whom Sony laid on big bucks in the last couple of years to turn her into something she's clearly not: a star.

And then there's the story of a guy named Dave Universal, who was fired from Buffalo's WKSE in January when there was word that Spitzer was investigating him. Universal (likely a stage name) claimed he did nothing his station didn't know about. That was probably true, but the DJ got trips to Miami and Yankee tickets, among other gifts, in exchange for playing Sony records. From a Sony internal memo on Sept. 8, 2004: "Two weeks ago it cost us over 4000.00 to get Franz [Ferdinand] on WKSE."

Franz Ferdinand, Jessica Simpson, J-Lo, Good Charlotte, etc. Not exactly The Who, Carly Simon, Aretha Franklin or The Kinks. The "classic" is certainly gone from rock.

The question now is: Who will take the fall at Sony for all this? It's not like payola is new. The government investigated record companies and radio stations in the late 1950s and again in the mid 1970s. (When we were in high school, we used to laugh about how often The Three Degrees' "When Will I See You Again?" was played on WABC. We were young and naοve!)

Spitzer is said to be close friends with Sony's new CEO, Andrew Lack, who publicly welcomed the new investigations earlier this year when they were announced. Did Lack anticipate using Spitzer's results to clean house? Stay tuned …
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Old 07-25-05, 10:20 PM
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For those who like there news from the source: NYAG's press release

Includes a couple of PDFs of the actual settlement doc and the internal emails and communication with stations. It's pretty interesting dirt. Setting up fake contests to launder payments thru "listeners", paying not just for spins but for "listener requests" (from the right demo of course). Bands, songs, stations, DJs and PDs are all named.
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Old 07-26-05, 10:39 AM
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Given that there is no "victim" in this "crime," I don't see why the government should be getting involved.

The $10 million will be distributed to not-for-profit entities and earmarked for music education programs, Spitzer said.
So that's what this is really about: social engineering and the redistribution of wealth.

What did these "not-for-profit entities" and "music education programs" do to deserve that money? Nothing.
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Old 07-26-05, 01:28 PM
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Originally Posted by grundle
Given that there is no "victim" in this "crime," I don't see why the government should be getting involved.


So that's what this is really about: social engineering and the redistribution of wealth.

What did these "not-for-profit entities" and "music education programs" do to deserve that money? Nothing.
I'd hardly say there were no victims. What about the artists that were being hurt by getting less spins due to Sony bribing DJs to play their crappy artists, crappy songs over and over? What about the public being forced to listen to the same crap over and over?

As for the money, where else should it go? Sony deserved to be punished for their actions which affected radio listeners and made it even harder for up and coming artists to make it big

At least by some of the money going to music education they're penalty will give back to future muscians who would have otherwise been hurt by sony's practices when they tried to make it had they not been stopped and punished.

Last edited by Josh Hinkle; 07-26-05 at 02:12 PM.
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Old 07-26-05, 02:54 PM
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I have no problem with them paying a radio station like that. Who cares? I don't even listen to the radio anymore. Why should I let anyone... a station, a DJ, a programming director, or a record label choose what my ears hear?
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Old 07-26-05, 03:05 PM
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And now there are 500 new listings on Monster.com for Independent-Promoter-Promoters.
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Old 07-26-05, 03:10 PM
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Originally Posted by nightwing82
I don't even listen to the radio anymore. Why should I let anyone... a station, a DJ, a programming director, or a record label choose what my ears hear?
A good radio station where the DJ's have freedom to play what they want, is a great way to find new bands. Especially for those without time to search out new stuff as they can just turn it on in the car.

That said, I don't listen to the radio anymore either as that experience is not possible anymore aside from college radio, and the one here sucks.
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Old 07-26-05, 03:17 PM
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There is nothing illegal about payola, as long as it is disclosed to the listeners. Since radio stations are licensed by the FCC to use a public asset, they have to follow FCC rules, which includes sponsorship disclosure.

The settlement states that "contests" were rigged in order to launder payments to the station. If these rigged contests were broadcast or advertised in any way, that is also an FCC violation.
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Old 07-26-05, 03:59 PM
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Exactly, and this wasn't announced by the DJs, thus the disclosure rule was violated and they had no grounds to appeal the suit and thus settled.
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Old 07-26-05, 05:26 PM
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I hate to say this, but in this day and age I have to say, "Who cares?" Between MTV and ClearChannel disctating the pop/rock landscape, and the prepackaged nature of many of today's acts, is payola really that big of a deal anymore?
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Old 07-26-05, 07:02 PM
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Originally Posted by Josh Hinkle
I'd hardly say there were no victims. What about the artists that were being hurt by getting less spins due to Sony bribing DJs to play their crappy artists, crappy songs over and over?
Not playing someone's music on the radio doesn't make them a victim.

Originally Posted by Josh Hinkle
What about the public being forced to listen to the same crap over and over?
No one can "force" you to listen to the radio.

Originally Posted by Josh Hinkle
As for the money, where else should it go?
The money should not "go" anywhere.
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Old 07-26-05, 09:26 PM
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Originally Posted by grundle
Not playing someone's music on the radio doesn't make them a victim.
It's essentially a monopoly situation where the big acts on a big label where using unfair practices to force out the competition, in this case up and coming acts.

Originally Posted by grundle
No one can "force" you to listen to the radio.
No but they can unfairly dilute what people can hear when turning on the radio by limiting the song list through the aforementioned unfair monopoly-like tactics.

But any rate, I've seen enough of you posts in the politics forum to no that we'll never agree on anything, so best to just agree to disagree and through you on my ignore list with the rest of the wackos.
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Old 07-26-05, 10:52 PM
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Some of this should go to Fiona Apple, including giving a copy of her still unreleased (AFAIK) album to everyone ever forced to listen J.Lo, Jessica Simpson, Ashlee Simpson, Celine Dion, Hillary Duff, any recent Mariah Carey, do I need to go on?

It's a social crime if you ask me, maybe not something the courts should be involved in, but something anybody who cares anything about the arts should call for the persons' responsible heads.
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Old 07-27-05, 10:02 AM
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Originally Posted by Josh Hinkle
It's essentially a monopoly situation where the big acts on a big label where using unfair practices to force out the competition, in this case up and coming acts.



No but they can unfairly dilute what people can hear when turning on the radio by limiting the song list through the aforementioned unfair monopoly-like tactics.

But any rate, I've seen enough of you posts in the politics forum to no that we'll never agree on anything, so best to just agree to disagree and through you on my ignore list with the rest of the wackos.
How can you disagree with me if I'm on your ignore list?
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Old 07-27-05, 03:26 PM
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I don't see what the fuss over payola is. These are privately owned and operated radio stations that should be able to do anything they want with their airtime as long as they don't violate decency standards.

"Unfair practices" by the big labels??? If you've got the resources, then it should be your prerogative to use them as you please.

Question, would this be illegal with satellite radio as well?
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Old 07-27-05, 06:10 PM
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[QUOTE=Fokker's Feint]I don't see what the fuss over payola is. These are privately owned and operated radio stations that should be able to do anything they want with their airtime as long as they don't violate decency standards.
[QUOTE]

Yes. You don't see.

It's not their airtime. It's my airtime. They don't own the airwaves -- the people of the United States do. So maybe we should have some say when they use them illicitly.
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Old 07-27-05, 06:44 PM
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Originally Posted by Fokker's Feint
I don't see what the fuss over payola is. These are privately owned and operated radio stations that should be able to do anything they want with their airtime as long as they don't violate decency standards.

"Unfair practices" by the big labels??? If you've got the resources, then it should be your prerogative to use them as you please.

Question, would this be illegal with satellite radio as well?
First, yes they are privately owned radio stations but they USE *public* airwaves.

Second, satellite radio is not regulated by the FCC.
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Old 07-27-05, 09:36 PM
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Originally Posted by stevevt
It's not their airtime. It's my airtime. They don't own the airwaves -- the people of the United States do. So maybe we should have some say when they use them illicitly.
Oh please....if you pay for the spectrum then it should be yours to do with it as you please (within the standards of decency).

How is this any different than one business using their deeper pockets to buy more advertising than another? Do you guys bitch about Outback being able to advertise more frequently than your local steakhouse?

If people could look beyond their dislike of the "big bad music industry establishment" they should be able to see that payola bans are asinine.
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Old 07-28-05, 10:23 AM
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Originally Posted by Fokker's Feint
Oh please....if you pay for the spectrum then it should be yours to do with it as you please (within the standards of decency).

How is this any different than one business using their deeper pockets to buy more advertising than another? Do you guys bitch about Outback being able to advertise more frequently than your local steakhouse?

If people could look beyond their dislike of the "big bad music industry establishment" they should be able to see that payola bans are asinine.

We pay for that spectrum, it is call taxes.

They can buy advertising, as this is the way stations make most of their money, just like on TV.

People can not look past the big bad music industry, and this is another reason for that.
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Old 07-28-05, 11:51 AM
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Exactly, airplay isn't advertising. They can buy all the ads for their artists they want.

They can't sneakily bribe stations to play their songs more. It's pretty much an anti-trust issue. Just like MS being banned from putting Internet Explorer on new computers etc.
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Old 07-28-05, 03:37 PM
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Originally Posted by Cusm
We pay for that spectrum, it is call taxes.
Incorrect. The spectrum is there regardless of whether we pay taxes or not. Of course I do recognize that the government (and by extension technically "the people") does regulate the spectrum.


Originally Posted by Josh Hinkle
It's pretty much an anti-trust issue. Just like MS being banned from putting Internet Explorer on new computers etc.
Bad analogy. This is not one huge dominant company like Microsoft. The music industry is an oligopoly, but it's just a fact of life that bigger companies have more of a competitive advantage. There's a reason mom and pops fold when Wal-Mart/Target comes into town.

I just don't understand why this has been made illegal other than to quell the public outcries that erupted in the 50s. You can make the case that it "harms" smaller labels, but hey, like I said before it's a fact of life that companies with deeper pockets will find it easier to promote their products.

Let me give you guys another example. Supermarkets routinely make a decision regarding the placement of products in the aisle based on how much of a price concession they get from the manufacturer. So if the maker of Cheerios is willing to supply the cereal at a lower price, then the supermarket gives them prime real estate right on the middle of the shelf, whereas your organic cereals get pushed toward the bottom and out of eyesight. So in essence, Cheerios is paying the supermarket for greater exposure. Where is the outcry over this????
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Old 07-28-05, 03:41 PM
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And before anyone says it, yes I know that the government "owns" the spectrum but not the cereal aisle. But the underlying argument remains the same.
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Old 07-28-05, 04:03 PM
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I think it's a flawed analogy as the payola practice can cause artists to not get any play time, rather than just less prominent playtime like the cereal.

But I'm all for it regardless of legality, there needs to be more protection in the fair distribution of art than cereal.
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Old 07-28-05, 04:18 PM
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I hear you Josh and I do understand the "sneakiness" or "deception" factor is what turns so many people off about payola. But I just accept the fact that a lot of what we're exposed to across a number of mediums (including cereal shopping ) is not as "pure" as you would expect it to be. Am a little too jaded or what?
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