New York State Attorney General Elliott Spitzer, held a news conference Monday in New York regarding his office’s “payola” investigation involving Sony BMG Music Entertainment. Spitzer announced that Sony had agreed to stop providing lavish gifts, free trips and other giveaways in exchange for airtime for its artists on radio stations, under the terms of a settlement with the New York attorney general’s office. The settlement also includes a $10 million penalty to be paid by Sony.
One of the world’s largest record companies, Sony BMG Music Entertainment is home to 21 labels including Arista, Columbia, Epic, J Records, Jive, LaFace, RCA, and So So Def .
Major fallout is expected from the settlement, with industry insiders predicting dismissals of some top executives and even criminal charges ahead. Spitzer also called for the Federal Communications Commission (FCC) to conduct further review. According to the New York Times, the Sony BMG settlement is expected to establish a blueprint for agreements that Mr. Spitzer will probably seek with three other major record companies, Vivendi Universal, the Warner Music Group and the EMI Group – along with the radio companies whose employees have accepted gifts in exchange for playing songs. Mr. Spitzer’s investigators have served subpoenas on several radio companies, including Clear Channel Communications and Emmis Communications.
Sony BMG could not be reached for comment on the settlement.