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FCC Launches Payola Investigation

FCC Chairman Kevin Martin has launched an investigation into payola.

The move was prompted by a settlement between Sony/BMG and New York State over payments to stations for playing Sony/BMG artists, but Martin said it could extend beyond those companies.

Martin said in the statement:

"I am very concerned about the activities that led the New York Attorney General to investigate Sony BMG Music Entertainment and ultimately resulted in a settlement agreement with that company. 

"The FCC has longstanding rules prohibiting payola. These rules serve the important purpose of ensuring that the listening public knows when someone is seeking to influence them.  Broadcasters must comply with these rules.  The Commission will not tolerate non-compliance. While payola may not be a widespread practice in the broadcasting industry, to the extent it is going on, it must stop. 

"I have directed the Enforcement Bureau to review the settlement agreement reached by Sony BMG and the New York Attorney General and investigate any incidents in which the agreement discloses evidence of payola rule violations.  If the Bureau determines violations of the payola rules have occurred, the Commission will take swift action. 

"In addition, if the Bureau is presented with evidence of payola rule violations outside of the Sony BMG Music Entertainment settlement, it is to thoroughly investigate those complaints as well."

FCC Commissioner Jonathan Adelstein praised the move. Adelstein has made examining payola and plugola on radio and TV a priority. He also called for an FCC investigation into Sony BMG almost immediately after the settlement was announced with New York Attorney General Eliot Spitzer.In that settlement, Sony's BMG Music Entertainment agreed to pay $10 million and not to pay money or provide "expensive gifts to radio stations and their employees in return for 'airplay' for the company's songs."

Adelstein said Monday: "I believe this payola scandal may represent the most widespread and flagrant violation of any FCC rules in the history of American broadcasting.Mr. Spitzer’s office has collected a mountain of evidence on the potentially illegal promotion practices of not only Sony BMG, but also other major record companies, independent promoters and several of the largest radio station groups. "