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WMG settles payola probe

Warner's agrees to $5 mil settlement

Warner Music Group has agreed to pay $5 million to settle a payola probe by New York Attorney General Eliot Spitzer — making Warner the second major music label to settle.

Sony BMG agreed last summer to pony up $10 million and stop bribing radio stations to play its artists — a practice Spitzer said is pervasive.

“I applaud Warner’s decision to halt this conduct, cooperate fully with my office and adopt new business practices,” he said in a statement.

The money Warner Music will pay in the civil settlement will be distributed by the Rockefeller Philanthropy Advisors to New York State to fund music programs.

“We were pleased to work cooperatively with the attorney general in resolving these promotion issues,” WMG said in a statement.

“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. 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 Democrat running for governor in 2006, has been a crusader against corruption on Wall Street and across a number of industries.

“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,” he said.

A 1960 federal law and related state laws bar record companies from offering undisclosed financial incentives in exchange for airplay.

In the 1950s and ’60s, most payola involved direct payments of cash to DJs. Today, according to Spitzer’s office, payola is in the form of bribes to radio programmers, including airfare, iPods, tickets to sporting events and concerts, as well as payments to radio stations for expenses and for use in contests.

Spitzer also said companies have hired “independent promoters” to act as conduits for payments to radio stations and pay for “spin programs” to increase airplay of some recordings.

In July, federal regulators began taking a closer look at the scandal that led to the settlement with Sony. Federal Communications Commission chairman Kevin Martin promised swift action against anyone violating rules against “pay-for-play” in the music industry.

“The settlement with Warner Music Group adds more dirt to the mountain of evidence that payola is rampant in the music business,” said one of the FCC’s Democratic commissioners, Jonathan Adelstein, on Tuesday.

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