CBS RADIO SETTLES
SPITZER LAWSUIT

CBS Radio has settled the ongoing music industry payola probe conducted by N.Y. State Attorney General Eliot Spitzer for $2 million.

That follows the announcements of settlements with all four major record groups, including UMG ($12 million), Sony BMG ($10 million), WMG ($5 million) and EMI ($3.75 million).

The announcement comes on the heels of the New York State Supreme Court’s ruling sustaining Spitzer’s lawsuit against radio conglomerate Entercom.

Formerly Infinity Broadcasting, CBS Radio is the third largest radio conglomerate in the country, operating approximately 178 stations nationwide, with stations in Rochester, Buffalo and New York City, putting the case under Spitzer’s jurisdiction.

Spitzer's investigation revealed that certain stations owned by CBS Radio openly solicited “illegal financial benefits, expensive vacation packages, gift cards and other valuable items from record labels in exchange for playing the labels' songs.” The stations also received funds from independent promoters upon agreeing to add certain songs to the stations' playlists. The indies would pay the stations with money received from the record labels to secure "adds."

Well, dunh.

"The sale of a station's valuable air time to the highest bidder violates state and federal laws and robs consumers of their right to know why the songs they hear on the radio are being broadcast," Spitzer said. "Our settlement with CBS Radio represents a significant milestone in our effort to reform the music industry for the benefit of the listening public."

During the investigation, Spitzer's office obtained e-mails and sworn testimony from CBS Radio employees who admitted trading airplay for promotional benefits as part of their business model.

Among the findings: From 1999 through 2003, employees at Rochester radio stations WPXY, WZNE and WCMF were required to provide regular memos or spreadsheets to station management summarizing the money garnered in exchange for playlist adds.

Some CBS Radio stations accepted payola for songs that station managers acknowledged would not have otherwise been placed on the playlist. In June, 2003, WPXY added Nick Lashey’s "Shut Up" and Smashmouth’s "You Are My #1" in exchange for "flyaways,” airplane trips to be used for contest prizes.

During the same period, the music director for stations WPXY and WZNE sold blocks of advertising time to labels for the purpose of playing portions of the song to improve its position on the music charts. Spins, whether purchased or not, are detected the same way by radio monitoring services.

Under the settlement, CBS Radio has agreed to: undertake company-wide reforms, including the immediate cessation of receiving payments and other inducements from record labels in exchange for airplay; discontinue using independent promoters as a pass-through for securing airplay; hire a compliance officer to monitor promotion practices; and implement an internal system to detect any future abuses.

CBS Radio will also pay $2 million, through the Rockefeller Philanthropy Advisors, to New York State not-for-profit entities to fund music education and appreciation programs.

For more info, as well as evidence compiled in the investigation, click here.