EMI Announces Payola Settlement, Pays $3.75 Mill
State Attorney General Elliot Spitzer announced a settlement with EMI Music North America to stop the company's payola practices.
EMI, the U.S.'s third largest record company, is home to labels like Virgin Records, Capitol Records, EMI Christian Music Group and S Curve Records; and artists like Jermaine Dupri, his So So Def roster, Guerrilla Black, Chingy and Dilated Peoples.
Upon probing Spitzer uncovered that EMI offered illegal financial compensation to radio stations in exchange for airplay. The investigation revealed that EMI bribed radio station employees with concert tickets, video games and hotel and airfare expenses. The company also resorted to independent promoters as a channel for illegal payments to radio stations and orchestrated call-in campaigns to boost the airplay of certain songs.
"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 in a statement. "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."
Spitzer secured emails and received sworn testimony from EMI executives who confessed to practicing pay-for-play. During the probe, a Capitol production manager testified that the company paid for production costs when radio stations put concerts together and would also pay bills and other expenses in exchange for airplay.
In a similar instance, a Virgin executive testified that radio station employees "might say, 'I'm thinking of adding your' [record] . 'Do you think you can take care of lighting for my show, production for my show, or T-shirts' or something like that."
Under the settlement, EMI must immediately stop any payola practice and enforce reforms throughout the company. The company must also stop using independent promoters and hire a compliance officer to oversea promotion practices and install an internal system to detect any future abuses. EMI must also make a $3.75 million payment to be distributed through the Rockerfeller Philanthropy Advisors, to New YorkState to finance non-profit organizations for music education and appreciation programs.
This marks the fourth settlement Spitzer has forced in nearly a year. Just last month, Universal Music Group settled for $12 million after having its cards pulled on payola practices. Last July, Sony BMG settled for $10 million after details of its payola practices were uncovered. Only four months later, Warner Music Group paid $5 million in settlement when Spitzer's probe found evidence of payola.
EMI, the U.S.'s third largest record company, is home to labels like Virgin Records, Capitol Records, EMI Christian Music Group and S Curve Records; and artists like Jermaine Dupri, his So So Def roster, Guerrilla Black, Chingy and Dilated Peoples.
Upon probing Spitzer uncovered that EMI offered illegal financial compensation to radio stations in exchange for airplay. The investigation revealed that EMI bribed radio station employees with concert tickets, video games and hotel and airfare expenses. The company also resorted to independent promoters as a channel for illegal payments to radio stations and orchestrated call-in campaigns to boost the airplay of certain songs.
"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 in a statement. "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."
Spitzer secured emails and received sworn testimony from EMI executives who confessed to practicing pay-for-play. During the probe, a Capitol production manager testified that the company paid for production costs when radio stations put concerts together and would also pay bills and other expenses in exchange for airplay.
In a similar instance, a Virgin executive testified that radio station employees "might say, 'I'm thinking of adding your' [record] . 'Do you think you can take care of lighting for my show, production for my show, or T-shirts' or something like that."
Under the settlement, EMI must immediately stop any payola practice and enforce reforms throughout the company. The company must also stop using independent promoters and hire a compliance officer to oversea promotion practices and install an internal system to detect any future abuses. EMI must also make a $3.75 million payment to be distributed through the Rockerfeller Philanthropy Advisors, to New YorkState to finance non-profit organizations for music education and appreciation programs.
This marks the fourth settlement Spitzer has forced in nearly a year. Just last month, Universal Music Group settled for $12 million after having its cards pulled on payola practices. Last July, Sony BMG settled for $10 million after details of its payola practices were uncovered. Only four months later, Warner Music Group paid $5 million in settlement when Spitzer's probe found evidence of payola.
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