NY Issues Scathing Report As UMG Settles Payola Probe For $12M.

Universal Music has settled it’s portion of a payola probe by NY Attorney General Eliot Spitzer for $12 million which will distributed to charities.   This leaves only Sony BMG the only major label group who has not settled with the state.  An FCC investigation of the same charges is ongoing.

In a stinging accounting of Universal’s promotional practices and the greed of many radio programmers, the State noted that Spitzer’s investigation had determined that Universal and its labels offered all kinds of inducements to radio stations to airplay for recordings including songs by Nick Lachey, Ashlee Simpson, Brian McKnight, Big Tymers, and Lindsay Lohan.

Universal’s pay-for-play strategy included:

• Outright bribes to radio station programmers, including electronics, vacations, airfare, hotel accommodations and tickets to sporting events and concerts;
• Payments to radio stations to cover operational expenses and contest giveaways;
• Retention of middlemen, known as independent promoters (or "indies"), as conduits for illegal payments to radio stations;
• Payments for "spin programs" and "time buys," airplay under the guise of advertising.

For example in a email from a senior Motown Records Group executive to a promotion employee regarding airplay of a song by the artists Dream:

"This is embarrassing and a total lack of accountability. We have gotten ripped off beyond belief… That’s almost $300,000 dollars and they are looking for some heads..bad bad bad. I don’t want one invoice processed for indys, stations etc until their end of the deal is held up…"

And radio was not afraid to encourage the practice.

…the program director at WBEE (Rochester, NY) asked Uni-South to pay for a $2,500 laptop computer for the station in exchange for the station adding two songs, one by Joe Nichols and the other by McHayes. At Uni-South’s request, the station provided a false letter stating that the computer had been sent as part of a promotion, even though the station simply retained the computer for its own use.

Such continuing revelations can only feed upon the public’s growing disenchantment with broadcast radio and the distrust of the major record labels.

Read the full statement from the Attorney Gerneral’s office here.