Eliot Spitzer, the New York State attorney general, has recently taken on a procession of corporate powers from Wall Street analysts to mutual funds to insurance brokers. Now he is casting his eyes on the music industry, particularly its practices for influencing what songs are heard on the public airwaves.
According to several people involved, investigators in Mr. Spitzer’s office have served subpoenas on the four major record corporations – the Universal Music Group, Sony BMG Music Entertainment, the EMI Group and the Warner Music Group – seeking copies of contracts, billing records and other information detailing their ties to independent middlemen who pitch new songs to radio programmers in New York State.
The inquiry encompasses all the major radio formats and is not aiming at any individual record promoter, these people said. Mr. Spitzer and representatives for the record companies declined to comment.
The major record labels have paid middlemen for decades, though the practice has long been derided as a way to skirt a federal statute – known as the payola law – outlawing bribes to radio broadcasters.
Broadcasters are prohibited from taking cash or anything of value in exchange for playing a specific song, unless they disclose the transaction to listeners. But in a practice that is common in the industry, independent promoters pay radio stations annual fees – often exceeding $100,000 – not, they say, to play specific songs, but to obtain advance copies of the stations’ playlists. The promoters then bill record labels for each new song that is played; the total tab costs the record industry tens of millions of dollars each year.
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