Sony BMG Music Entertainment Settled Probe

The company agreed to pay $10 million US and stop bribing radio stations to feature its artists and admitted that some of its employees had engaged in "wrong and improper" practices.

Sony BMG Music Entertainment, the second-largest music company in the U.S., was expected to agree to a settlement with New York Atty. Gen. Eliot Spitzer in a payola investigation, on Monday, according to several sources familiar with the talks.

Spitzer has launched an investigation on whether music corporations were skirting payola laws by hiring intermediaries to influence which songs were heard on public airwaves. In his opinion, "payola drives promotion" and "limits the diversity of music that is on-air. It limits the access of artists to airtime, and hence their capacity to succeed."

Sony BMG is one of four record companies that have drawn Spitzer's attention, and were subpoenaed last fall as part of his inquiry. Universal Music Group, Warner Music Group and EMI Group were also requested copies of billing records, contracts, e-mails and other details.

Last year, Infinity Broadcasting Corp., the second-largest radio broadcaster in the U.S, fired a programmer suspected of accepting gift certificates from an independent promoter, and announced that it would sever its ties with independent promoters. The record companies pay independent promoters to persuade radio programmers to spin particular songs.

Taking into account that the independent promoters pay radio stations annual fees, sometimes more than $100,000, in exchange for advance copies of the stations' play lists, they might influence a radio station's choice of songs.

Sony BMG, which distributes artists like Aretha Franklin, Beyonce Knowles, Britney Spear or Aerosmith, was expected to make a settlement and admit some inappropriate conduct in its radio promotion practices and to agree to discontinue use of certain independent promoters, according to sources that preferred to remain anonymous, who also mentioned that Sony BMG might pay fines that could exceed $10 million.

Spitzer's investigation proved that Sony BMG made efforts to win more airplay, including outright bribes of cash and electronics to radio stations and paying for contest giveaways for listeners. the company has also used middlemen known as independent promoters to funnel cash to radio stations.

In one case, an employee of Sony BMG's Epic label, who was trying to promote the group Audioslave to a station was qouted as having said: "WHAT DO I HAVE TO DO TO GET AUDIOSLAVE ON WKSS THIS WEEK?!!? Whatever you can dream up, I can make it happen."

After the settlement, Eliot Spitzer praised Sony BMG Music enetertainment executives for fully co-operating with the inquiry.