WMG Settles With Spitzer

Warner Music Group has become the second major label group to agree to settle a far-reaching payola investigation and will pay $5 million that will be distributed to fund music programs, New York Attorney General Eliot Spitzer announced November 22nd.

Sony BMG was the first to throw in the towel, agreeing to a $10 million settlement with the New York A.G. in July.

“Unfortunately, other companies continue to engage” in the practices of paying off radio stations for airplay of their artists, Spitzer said. “I applaud Warner’s decision to halt this conduct, cooperate fully with my office, and adopt new business practices.”

Spitzer chose to launch a civil investigation rather than a criminal one because criminal laws governing pay-for-play are more specific and difficult to violate than civil laws.

In addition to Sony and WMG, Spitzer has requested documents from EMI Group and Universal Music Group.

“The reforms we have agreed to with the attorney general are consistent with the internal reforms that our new management team implemented earlier this year,” WMG spokesman Will Tanous said.

“We consider this to have been a valuable process. From our perspective, radio cannot be too consumer-driven. The music that people hear on the radio always should represent the highest quality the industry has to offer.”

Spitzer, a 2006 gubernatorial candidate in New York, said the settlement with Sony and Warner should benefit artists and consumers, who can expect a wider range of acts on the airwaves based on “artistic merits.”

“Artists, especially new artists and lesser known artists who did not have major backing, should find a more open environment to have their music heard and hopefully succeed,” Spitzer said.

The investigation hasn’t escaped notice of the Federal Communications Commission, which has its own set of rules governing such behavior, and one commissioner was quick to insist his agency act on the evidence turned up in Spitzer’s investigation.

“Attorney general Eliot Spitzer has once again achieved a breakthrough in the effort to combat payola and protect consumers from misleading broadcasts,” FCC Commissioner David Adelstein said in a statement. “The settlement with Warner Music Group adds more dirt to the mountain of evidence that payola is pervasive in the music business.

“This agreement once again raises serious concerns that not only has New York State law been violated, but Federal law under the FCC’s jurisdiction.”

The FCC launched its own investigation August 8th in response to the Sony BMG settlement.

Shortly after Spitzer announced the investigation last year, several radio companies including Clear Channel and Infinity announced they were cutting ties with independent record promoters, which were largely viewed as the worst “pay-for-play” offenders.

Clear Channel Communications immediately issued a statement saying an internal investigation was already under way and discipline would be swift for any improper behavior by radio station execs. The company added at that time that it didn’t expect to be subpoenaed.

Other radio groups named in Spitzer’s report include Entercom Communications, Archway Broadcasting Group and Albany Broadcasting Group.