Case put to rest to the tune of $3.75 mil
For Eliot Spitzer, it’s game over with the record companies — and now, perhaps, come the radio stations.
The New York state attorney general disclosed Thursday that he had settled with EMI North America, the last of the major record companies his office has been investigating for alleged payola practices, for some $3.75 million.
Under the terms of the agreement, EMI will donate the money to a charity known as the Rockefeller Philanthropy Advisors as well as pay the attorney general’s legal fees.
Diskery has also agreed to discontinue many of the practices alleged in Spitzer’s report, which EMI says it had effectively done long ago.
EMI also agreed to impose business reforms meant to guard against the re-emergence of alleged payola.
News marks the end of a long and embarrassing chapter for the music biz. Since 2004, when Spitzer first announced he was investigating the record companies, the industry has been caught in a state of anxiety and trying spin control. Details about the alleged practices — with staffers horse-trading for airplay in clever circumventions of the existing laws against payola — threw the biz into a harsh light.
“When a record label engages in an elaborate scheme to purchase air time for its artists, it violates state and federal law and presents consumers with a skewed picture of the country’s proclaimed ‘best’ and ‘most popular’ music,” Spitzer said.
The allegations against EMI were similar to those levied at other companies.
Filings released by Spitzer’s office detailed how EMI, often through so-called independent producers, sought to trade artist appearances, trips and swag in exchange for airplay.
In some cases, the attorney general’s office alleged, record company reps sought not only to win airplay but “spin commitments,” a pledge to play a song a particular number of times.
Many of the artists Spitzer said the EMI practices benefited are among the company’s biggest artists to emerge over the last few years, including Coldplay and Norah Jones.
EMI did not admit, confirm or deny wrongdoing as part of its settlement. In a statement, the company said that “it is pleased to have resolved these radio promotion matters with the New York state attorney general with this agreement. In addition to voluntarily adopting strict policies last year, we have been working cooperatively with the attorney general to reinforce these policies.”
The EMI settlement is the smallest — more than $1 million less than the reported second smallest, that of Warner Music Group, and a fraction of the reported $12 million Universal Music Group forked over.
Settlement amounts are usually determined by a complicated set of factors that include the extent of alleged wrongdoing, the size of the company and the effectiveness of negotiators. EMI is the country’s third-largest diskery.
All told, Spitzer has extracted more than $30 million from the record companies in his investigation.
In announcing the resolution of the final large-scale investigation against the record companies, Spitzer said, “We’re pleased that our investigation of payola in the music industry has resulted in significant business practice reforms that will help generate more diverse airplay.”
But the resolution now paves the way for Spitzer to tackle radio stations, which some experts feel are his larger target.
The attorney general has already filed suit against Entercom, the fifth-largest radio conglom, and has subpoenaed larger firms including CBS and Clear Channel. Many of the allegations in the various settlement documents over the last few months implicate the stations by outlining their alleged acceptance of gifts.
Spitzer has assembled a pile of evidence in the course of his investigations against the record companies, and music insiders say that one condition of the settlements may be cooperation in the battle against radio congloms. Clauses about cooperation are also written into the settlement.
A spokesperson at the attorney general’s office declined to comment on the ongoing investigations.