Warner Music Group is coughing up $5 million to settle payola allegations brought by New York State Attorney General Eliot Spitzer.
At a press conference Tuesday, Spitzer released company documents detailing extensive "pay-for-play" practices, in which Warner Music offered radio station employees lavish vacations, laptops, iPods, Super Bowl tickets and other pricey perks to play music by bands like Green Day, My Chemical Romance and R.E.M.--a direct violation of state and federal law.
"Warner Music has illegally provided radio stations with financial benefits to obtain airplay and boost the chart position of its songs," Spitzer said in a statement, adding that the nation's third-largest record company would "abandon the industry-wide practice of providing radio stations and their employees with financial incentives and promotional items in exchange for airplay."
This is the second major payola payout Spitzer has secured.
Earlier this year, Spitzer helped solve the mystery of just why Jennifer Lopez "hits" may have been receiving heavy airplay on some stations despite declining record sales when he busted Sony BMG for payola violations.
The second-largest record company agreed in June to pay $10 million to the state of New York in a blockbuster settlement that rocked the music industry. Like that earlier settlement, the Warner Music money will be distributed to not-for-profit groups by Rockefeller Philanthropy Advisors.
In a statement, Warner Music said, "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."
Warner's hand was caught in the cookie jar. Spitzer obtained reams of incriminating evidence against the company, including an email written by a staffer describing a Cincinnati radio director as "a whore" willing to sell airplay for gifts. A Buffalo programmer was flown to Miami and given a computer and tickets to events to increase the spins of Warner Music artists.
The company also purchased advertising on Carson Daly and Ryan Seacrest's syndicated countdown shows on Clear Channel stations in exchange for more airplay.
Outright pay-for-play was thought to be finished after strict legislation was enacted following scandals in the late 1950s, but Spitzer has characterized the practice as still "pervasive."
Record companies routinely hire independent record promotion companies to secure airplay for their artists in the increasingly competitive corporate-owned radio environment, but outright gifts tied to radio "adds" are prohibited under a 1960 federal law.
Spitzer, a Democrat who has already announced his candidacy in the 2006 New York gubernatorial race, is still gunning for the two other major record companies, Universal Music Group and EMI Group, as well as such radio behemoths as Clear Channel Communications, Infinity Broadcasting and Entercom Communications.
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