Universal Music Settles Big Payola Case
By JEFF LEEDS
Published: May 12, 2006
The Universal Music Group, the world's biggest music company, has
agreed to pay $12 million to settle accusations that executives paid
radio programmers to play songs, according to a settlement announced
yesterday. It is the largest settlement yet in an investigation by the
New York attorney general that has shaken the music business.
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Kevin Winter/Getty Images
Universal gave Yankees tickets to get Brian McKnight on the radio.
The office of the attorney general, Eliot Spitzer, said in documents
released yesterday that Universal, a unit of Vivendi, had used a broad
array of illegal "pay for play" tactics to secure airplay for its
music, including bribing programmers with laptop computers, tickets to
sporting events and luxury hotel stays.
Mr. Spitzer's office has been examining whether the four corporations
that dominate the music industry have violated federal or New York
state laws that prohibit payments of cash or anything of value to
radio programmers for airplay unless the transaction is disclosed to
Last year, the authorities settled with Warner Music Group for $5
million and Sony BMG Music Entertainment for $10 million in similar
arrangements. In March, Mr. Spitzer sued one of the nation's biggest
radio broadcasters, Entercom Communications, accusing it of trading
airplay for money, after settlement discussions faltered.
In an interview, Mr. Spitzer said the "uniformity" of record
executives' conduct, reflected in e-mail messages and other documents
uncovered in earlier settlements, "speaks to the understanding in the
industry that radio play is the best way to motivate sales, and folks
would do what needed to be done to get the airtime."
Mr. Spitzer's office is still investigating the smallest of the four
record corporations, the EMI Group, as well as several radio
companies, including Clear Channel Communications and CBS Radio
(formerly Infinity Broadcasting.). The Federal Communications
Commission has also requested documents from the radio companies as
part of a separate inquiry.
Universal said in a statement that it had been working "cooperatively"
with Mr. Spitzer's office and was "pleased to have completed the
process with this agreement." Universal said the reforms it agreed to
are "consistent with" policies it instituted more than a year ago.
As part of the accord, the company agreed to discontinue certain
practices — including providing cash for radio contests, and using
middlemen known as independent promoters to funnel money to stations.
Settlement documents released yesterday offer examples of how
executives at the company's various labels — Interscope Records,
Island Def Jam Music Group, Universal/Motown Records and Universal
South — offered enticements or used other tactics to gain airplay for
their artists' songs. In some cases, the documents say, Universal
tried to disguise payoffs to programmers as gifts to radio contest
The documents say Universal twice paid for hotel accommodations in
Miami for Donnie Michaels, then the program director of WFLY-FM in
Albany, in exchange for his addition of songs by Brian McKnight and
Nick Lachey to his station's playlist. In April 2004, Universal
provided Mr. Michaels — by then a programmer at WHYI-FM in Miami —
with a New York hotel room and New York Yankees tickets. The company
booked the room under a false name and used a false Social Security
number to conceal the transaction, the document states.
In testimony for the attorney general's office, Universal executives
admitted providing hotel rooms, tickets to sports events and concerts
to radio programmers for their personal use. Universal also paid for
radio stations' operating expenses — like a bill for Web site
maintenance — to obtain airplay for acts like the rap duo Big Tymers,
Lindsay Lohan and the late hip-hop performer Aaliyah, according to the
At the same time Universal wooed programmers with gifts to add songs,
the documents say, it also tried to deceive certain stations'
personnel into believing a new song was deserving of more airplay.
Executives at the company sometimes tried to inflate the performance
of a song on the charts monitored by radio programmers by openly
buying airtime on certain stations. And the company hired outside
consultants to manipulate call-in request lines.
In one e-mail message released by Mr. Spitzer's office, a Universal
executive asked an outside company to place "curiosity calls,"
inquiring about a new Ludacris single, to dozens of stations. "Calls
should be 75 percent female, 25 percent male 18-24 years old," the
Even with yesterday's settlement, Universal still faces accusations of
misconduct in the promotion department at its New York-based Universal
In a lawsuit filed in Los Angeles Superior Court last year, two
independent promoters accused Universal of instructing them to submit
false bills so that overdue payments to the promoters could be
processed. As a result, the lawsuit claims, expenses were charged to
certain Universal acts, like the rapper Nelly and the singer Paulina
Rubio, when the promoters had been pushing songs for Lil' Romeo and
The lawsuit also contends that Universal executives pressed certain
radio stations to sever their relationships with the promoters —
including National Music Marketing — and instead work with others,
including the husband of an executive who was then Universal's top
radio promotion official. Universal has denied the accusations.