Skip to main content

Adelstein Praises Warner Payola Settlement

FCC Commissioner Jonathan Adelstein Tuesday praised New York State Attorney General Eliot Spitzer's second payola settlement with a major record company in the past few months.

This time it was Warner Music Group (Sony's BMG settled in July). Warner pledged "to abandon the industry-wide practice of providing radio stations and their employees with financial incentives and promotional items in exchange for "airplay" for Warner’s recordings," according to Spitzer's office. The company also agreed to pay $5 million.

Without conceding any of the specific allegations, Warner acknowledged the payola practice was widespread in the industry and accepted general responsibility for its own violations in the following statement: "Warner Music Group Corp.acknowledges that various employees pursued some radio promotion practices on behalf of the company that were wrong and improper, and apologizes for such conduct."

Warner Music went on to pledge to "define a new, higher standard in radio promotion."
Spitzer's investigation found that Warner had bought radio airplay with a variety of incentives, with Spitzer concluding that media consolidation had prompted the evolution of pay for play from outright cash to disk jockeys to an "elaborate corporate payola strategy."
The investigation also found that companies had employed outside vendors to pose as listeners to request songs and boost airplay.
Payoffs to stations included everything from airfare and Super Bowl tickets to TV's, iPods, and even  paying to paint a station's logo on a vehicle, buying some ads, or paying off some of its bills.
"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, as well," said Adelstein in a statement.  "The FCC needs to act on this evidence and conclude as soon as possible the investigation we are now undertaking."

The FCC launched an investigation in the wake of the Sony settlement, with Spitzer turning over his findings to the commission.

Adelstein has been a vocal critic of payola and other deceptive practices.

Just last week, Senator Russ Feingold (D-Wis.) Friday introduced a bill that would increase the penalties for payola, the practice of paying to influence the playing of certain songs, including putting a radio station's license at risk for violating FCC rules prohibiting the practice.

The bill would require "arm's-length transactions between radio stations and record companies that might want to influence playlists, and would require the station's to keep records of those transactions handy for FCC inspection.

"As we have seen in the realm of indecency, multimillion dollar companies do not blink at the current fines of $10,000 per violation," said Feingold in unveiling the bill, "but the prospect of putting a license in jeopardy will get their attention."

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.