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"Aggressive promotion of products is one of the hallmarks of our economy. We expect it and respect it when done creatively and legally. But the efforts outlined in the Assurance clearly crossed the line and must be curtailed.”
——NY AG Eliot Spitzer

SONY BMG ADMITS WRONGDOING, AGREES TO PAY $10 MILLION FINE AND CLEAN UP ITS ACT

NY AG Spitzer Fires the First Volley in His Crusade to Clean Up the Music Industry
And the total is… $10 million. As predicted in several Saturday reports, Sony BMG Music has agreed to pay a $10 million fine and promised to stop using pay-for-play tactics as part of an ongoing investigation by New York Attorney General Eliot Spitzer.

Said Spitzer in a statement that appeared on the attorney general’s official site Monday morning in conjunction with the press conference, "Our investigation shows that contrary to listener expectations that songs are selected for airplay based on artistic merit and popularity, air time is often determined by undisclosed payments to radio stations and their employees. This agreement is a model for breaking the pervasive influence of bribes in the industry… Aggressive promotion of products is one of the hallmarks of our economy. We expect it and respect it when done creatively and legally. But the efforts outlined in the Assurance clearly crossed the line and must be curtailed.”

Spitzer’s revelations were followed immediately thereafter by a brief statement from Sony BMG: “Despite federal and state laws prohibiting unacknowledged payment by record labels to radio stations for airing of music, such direct and indirect forms of what has been described generically as 'payola' for spins has continued to be an unfortunately prevalent aspect of radio promotion. SONY BMG acknowledges that various employees pursued some radio promotion practices on behalf off the company that were wrong and improper, and apologizes for such conduct. SONY BMG looks forward to defining a new, higher standard in radio promotion.”

According to the statement from Spitzer’s office, Sony BMG admitted to “improper conduct” in attempting to influence airplay and pledged “to abide by a higher standard.” While the days of hookers and blow are long gone, Spitzer’s office said it turned up numerous instances of flyaways and other gifts to programmers, as well as the underwriting of contest giveaways and other payments to stations with the implicit or explicit goal of ramping up spins on SBMG acts. Here are the specific bullet points issued this morning by the attorney general’s office:

"Outright bribes to radio programmers, including expensive vacation packages, electronics and other valuable items;

"Contest giveaways for stations' listening audiences;

"Payments to radio stations to cover operational expenses;

"Retention of middlemen, known as independent promoters, as conduits for illegal payments to radio stations;

"Payments for 'spin programs,' airplay under the guise of advertising."

The entire 43-page assurance is attached to Spitzer’s online release, as are 59 pages of incriminating Sony emails and memos with names blacked out.

More from the release:

“Under the Assurance, SONY BMG, building on guidelines Sony BMG issued earlier this year in response to the AG's investigation, has agreed to stop making payoffs in return for airplay and will fully disclose all items of value provided to radio stations in the future. SONY BMG also has agreed to corporate-wide reforms, including hiring a compliance officer responsible for monitoring promotion practices and developing and implementing an internal accounting system designed to detect future abuses. This is the first time an entertainment company has agreed to such sweeping reforms…

“Spitzer said Sony BMG officials cooperated fully with his investigators and promptly agreed to reforms when the problems were identified. He commended the company for taking steps that should serve as a model for the rest of the industry.

“Spitzer also noted that his office continues its broad investigation of pay-for-play practices in the recorded music industry.”

It remains to be seen where Spitzer’s shoe will drop next, or whether SBMG chief Andy Lack will take any further action in the wake of these revelations.