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Sony Agrees to Stop Payola 450

Posted by timothy
from the restoring-radio-virginity dept.
dsginter writes "Sony BMG Music just reached agreement with New York Attorney General. Sony spokesman John McKay admitted that the practice was 'wrong and improper' but the company engaged in the activity anyway. They were fined $10 million and have agreed to obstain from the practice in the future. Is this the first step toward getting our airwaves back or is this just a slap on the wrist?"
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Sony Agrees to Stop Payola

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  • by Three Headed Man (765841) <dieter_chen.yahoo@com> on Tuesday July 26, 2005 @06:25AM (#13163618)
    The Recording Industry Association of America will never stop something as profitable as payola without the threat of jail. Period.
  • Worth it? (Score:5, Insightful)

    by Linus Torvaalds (876626) on Tuesday July 26, 2005 @06:32AM (#13163639)

    They were fined $10 million and have agreed to obstain from the practice in the future. Is this the first step toward getting our airwaves back or is this just a slap on the wrist?"

    With music industry profits of billions each year, I'm sure they made much more than $10m from doing so. They'll carry on with the payola until it stops being profitable for them to do it.

    Don't forget it's not just direct profits that payola causes. Payola is a large factor in preventing independent musicians from getting adequate airplay, so it actually supresses the competition and reinforces the RIAA cartel's position. That alone has to be worth way more than $10m.

  • by gunpowda (825571) on Tuesday July 26, 2005 @06:33AM (#13163641)
    Is this the first step toward getting our airwaves back or is this just a slap on the wrist?

    A Salon feature [salon.com] from earlier this year offers some more information on the practice, and a tentative answer to the question posed in this summary:

    "...radio playlists are unlikely to improve anytime soon. While [promoters] are often seen as dubious, they did have a knack for getting new acts their break on FM radio...station programmers may soon become even less adventurous in choosing which songs get tapped for rotation on FM stations' heavily guarded playlists.

    The indie promotion fallout could be especially tough on smaller, independently owned record labels...The short-term effect is not good for independent music."

  • by richie2000 (159732) <rickard.olsson@gmail.com> on Tuesday July 26, 2005 @06:33AM (#13163642) Homepage Journal
    Companies in the recording industry depend heavily on airplay for their artists. It boosts sales by encouraging listeners to buy their music and helps them climb the charts, which are based on airplay.
    Spitzer said Sony BMG's efforts to win more airplay took many forms, including outright bribes of cash and electronics to radio stations and paying for contest giveaways for listeners. In other cases, he said, Sony BMG used middlemen known as independent promoters to funnel cash to radio stations.

    So if a regular Joe spreads the word about a new song and induces many thousands of random people listen to it for free it's theft, but if a radio DJ does the exact same thing he gets paid? Riiight.

    Maybe Sony should just have those "independent promoters" run eDonkey clients instead. It'd be much cheaper.

  • Good gesture... (Score:3, Insightful)

    by Strokke (772031) on Tuesday July 26, 2005 @06:34AM (#13163644)
    It's a good gesture to try to stop the corrupt radio business, but it will have very little effect. The corruption runs rampant, from low level DJ's to nationally syndicated shows, however unfortunately most is unknown.

    The bottom line is that having steady radio play is the key to selling albums, and when the the vast fortune of the music industry is at stake, dishonesty is inevitable. A VERY high percentage of Americans discover new music by hearing it on the radio, and a small fine (10 million? Ensuring that their arists get radio play has got to be worth at least 10x that) will do little to discourage the big labels.
  • by el_womble (779715) on Tuesday July 26, 2005 @06:43AM (#13163674) Homepage
    Individual likes music. Buys music. Distributes it to friends and family. Gets caught by the RIAA and gets slapped with a criminal record.

    Record company hates music, loves advertisments. Gets given music. Gives it away for free over an unencrypted medium to anyone who cares to listen. Gets given a huge 'bribe' by record company to keep doing this and the record company is a criminal.

    I know this is an over simplification, but this really is nuts.
  • Re:Worth it? (Score:5, Insightful)

    by antic (29198) on Tuesday July 26, 2005 @06:47AM (#13163686)
    Also, the penalty is tiny given that the label was using "a more formalized, more corporatized structure" to bribe DJs and "employees sought to conceal some payments by using fictitious contest winners to document the transactions" -- they were really going out of their way to achieve this. It wasn't just one renegade, it appears to be more of a company policy to break the law. Sony are interested in "defining a new, higher standard in radio promotion" -- why would anyone trust them?
  • by Three Headed Man (765841) <dieter_chen.yahoo@com> on Tuesday July 26, 2005 @06:50AM (#13163697)
    They're still not going to prison. The laws will never have any meaningful enforcement as things stand now. 10 Million is less than a slap on the wrist.
  • by Anonymous Coward on Tuesday July 26, 2005 @06:51AM (#13163699)
    Why the hell shouldn't sony be allowed to pay for their music to be advertised?!

    Advertising is how the radio makes all of its money; surely payola is one of the least unpleasent methods from the listener POV, you'd be stupid to want the practice to stop.

    And of course, if you really don't like the mainstream/sellout stations, just stop listening to them.
  • by bleh-of-the-huns (17740) on Tuesday July 26, 2005 @07:03AM (#13163735)
    You are correct, and the fact that 10m USD is a joke to Sony, they could probably afford a 10M a day fine for years on end before they notice a hit to their bottom line.
  • by laurensv (601085) on Tuesday July 26, 2005 @07:06AM (#13163745) Homepage
    Maybe some hope for you, from TFA: Jonathan Adelstein, a Democratic member of the Federal Communications Commission, said Spitzer "appears to have found a whole arsenal of smoking guns."
    "We need to investigate each particular instance that Spitzer has uncovered to see if it is a violation of federal law. This is a potentially massive scandal," he said.
    The FCC has power over the nation's radio stations, which are licensed to use public airwaves.

    Maybe if the FCC starts hurting the radios some of them will be less inticed to the practice? Maybe not, becasue look what being a DJ offers:
    In one case, an employee of Sony BMG's Epic label was trying to promote the group Audioslave to a station and asked: "WHAT DO I HAVE TO DO TO GET AUDIOSLAVE ON WKSS THIS WEEK?!!? Whatever you can dream up, I can make it happen." In another case in 2004, the promotion department of Sony BMG label Epic Records paid for an extravagant trip to Miami for a Buffalo DJ and three friends in exchange for adding the Franz Ferdinand song "Take Me Out" to the DJ's station's playlist.
  • by eclectro (227083) on Tuesday July 26, 2005 @07:12AM (#13163759)
    Also, they (and their cohorts) have promised to stop payola numerous times in the past only to find another way to pass the money under the table.

    Also, don't forget the other four titans Universal, EMI and Warner are conspicuosly absent from this article.

    And I find it interesting that the last sentence says that the 10 million is "earmarked for not-for profits" which must be code-speak for "this is a tax write off"
  • RIAA-RICO (Score:3, Insightful)

    by gurutc (613652) on Tuesday July 26, 2005 @07:24AM (#13163794)
    Racketeer Influenced and Corrupt Organizations Act... If the recording industry and the radio industry knowingly collude to perpetuate payola, how is it not covered by this act which has some real teeth?
  • by b0r0din (304712) on Tuesday July 26, 2005 @07:27AM (#13163802)
    I would argue that there really is no such thing as independant music being played on most stations. 'Indie promotion' is just another buzzword that makes it sound like it's creative and underground, which is far from the truth. Indie promotion is another word for payola. That's all it is. If there are a few indie promoters that can get some unknown band on the radio, they are very few and far between.

    And as far as station programmers choosing playlists, well I don't know enough about it to make a conclusion, but given the fact that where I live Clear channel owns both 'classic rock' stations and they both play pretty much the same playlist, I doubt the station managers have any control on what Clear Channel wants played. At any specific time I can turn on a Clear Channel station and be guaranteed to hear one of 3 AC/DC songs (who knew they only put out three songs?) or some old Aerosmith song.

    The music industry is stagnating right now. MTV has been useless for several years now, choosing to focus on reality television rather than music videos or innovative sound. Mom and pop radio stations have been bought out by the one or two monopolies left in broadcasting.

    And anyone that can tell me Lil' Jon is a musician with a straight face deserves a frickin Oscar. It's almost as if two music executives sat in a room together and made a bet that they could make millions off of a bum with no talent just from pure marketing hype alone.

    I think if there's anything that can make a big difference, it's a media-centered site like Apple's iTunes that has things like music videos, sampling, playlists, online radio stations. I can listen to more new bands in a week through iTunes than I ever heard introduced as a new band on a radio, in all the years I've been alive.
  • by jonadab (583620) on Tuesday July 26, 2005 @07:31AM (#13163818) Homepage Journal
    > I was trying to figure out why payola bothers Americans.

    It bothers people who would like to listen to the radio, because they're frustrated with the level of (ostensible) quality of the music played on most of the available stations. Those of us who gave up on radio decades ago don't care so much.
  • by a_nonamiss (743253) on Tuesday July 26, 2005 @07:39AM (#13163845)
    Unfortunately, in the US, companies are NOT treated with similar rights as people. For exactly the reason you stated above (who do you punish?) corporations are often given MUCH more leeway to vio;ate the law than individuals. The sentence against Bernie Ebbers (Worldcom CEO) two weeks ago was a rare victory for the little guy, but in reality this was a sentence against one man for crimes that were orchestrated and carried out with cooperation and knowlege of hundreds if not thousands of people.

    Using this same logic companies every day spew out unfathomable amounts of illegal toxins. If they are caught, they pay a fine, (which they have already budgeted for) ratchet back their emissions, wait for a little while until the EPA gets off their backs, then resume their polluting. A factory farm here in Ohio (Buckeye Egg Farm) [greenlink.org] did this for over ten years amidst hundreds of complaints and clear violations of environmental laws before they were finally ordered to shut down operations. An individual in the US could not knowingly violate the law, all the while reaping huge profits, only to be told to stop after 10 years of activity. Corporations are given too much criminal protection.
  • by niktemadur (793971) on Tuesday July 26, 2005 @07:42AM (#13163859)
    Why exactly should this be illegal?

    That's an interesting question. Here's my two cents: The concept of collusion between two separate industries to manipulate the marketplace to their benefit.
    Sony Bertelsmann bumps the competition out of the way, and the radio industry gets to line its' pockets by the simple action of excluding independent record companies, filling their playlist with Sony Bertelsmann acts.

    Imagine this: Microsoft buys out all nationwide software retailers so that there's only Windows apps in their shelves. No Linux, no OSX, no nothing, only Windows. Sure, you can get your Linux apps through the Internet, or by driving to a mom-and-pop store across town. But it's still an unfair competitive edge, brought about by Microsoft's humongous resources that will only get bigger in this manner, and so it spirals ever deeper.

    The law, in theory, is there to protect the small guy from the bloated business monster with resources to burn in the pursuit of absolute control over everything.
    Inevitably, after a corporation grows to a certain bloated size, it seeks power for power's sake, which historically has proven to be detrimental to society at large. They might think they are playing a clever game of chess on a grand scale, but they are actually waging warfare against a community that does not have the resources to fight back. Just look at Wal-Mart. And what did Akio Morita say back in the day? "Business is warfare".

    Personally, I believe a basic mechanism to keep civilization running smoothly is to avoid allowing too much to accumulate in too few hands, and radio is no exception.

    I can think of many other arguments of why something like payola is wrong, but these are my thoughts on why it should be and remain illegal.
  • by strider44 (650833) on Tuesday July 26, 2005 @07:53AM (#13163893)
    [source [www.rte.ie]]

    Considering it had a profit of €32 million Q1 this year, but lets be generous considering that was down from other quarters and put it at an even €100 mil for a quarter. That means that they'd make about $500 mill a year.

    They would only last 50 days before their entire profit for the year would be used up. 10 mil is a *lot* of money to *anyone*.
  • by Bertie (87778) on Tuesday July 26, 2005 @07:58AM (#13163909)
    Radiohead seem to have done quite nicely.
  • by irokie (697424) on Tuesday July 26, 2005 @07:59AM (#13163918) Homepage
    some would argue that the goal of record companies shouldn't be to make money, but to produce good music.
    some would argue that the goal of any company should be just like it is in all their mission statements... to strive for excellence in their chosen field.

    if you're good at what you do, the money should look after itself... look at google. they don't have a corporate culture that's all about money, sure, they've got people who make sure that they are making some money, but they focus more on making innovative products and actually enjoying the work that they do, and they're raking in the cash.
  • by Anonymous Coward on Tuesday July 26, 2005 @08:11AM (#13163950)
    You don't understand it because it's not meant for you. You are not in Madonna's target demographic. You are not cool. You do not spend fuckloads of money on trendy shit. Get it? The world does not revolve around you, it revolves around tweens.

    Let the healing begin.

  • by morgan_greywolf (835522) on Tuesday July 26, 2005 @08:14AM (#13163957) Homepage Journal
    Maybe if the FCC starts hurting the radios some of them will be less inticed to the practice?

    How? It wasn't the radio stations that were breaking the law, it was Sony. Unfortunately, there's nothing illegal about taking bribes to play songs...only offering bribes to play songs.

  • by FlippyBoy (43225) <devinsky@gmail.com> on Tuesday July 26, 2005 @08:19AM (#13163980)

    If you don't like what the station plays, listen to another.


    what if all the stations in your area all play the same music?
  • by sbma44 (694130) on Tuesday July 26, 2005 @08:21AM (#13163986)

    Why exactly should this be illegal?

    Because, your declaration that it's "lame" notwithstanding, there are a limited number of available channels in a given market. Given that, it's not unreasonable to insist that channel owners refrain from committing a fraud against their audience. They exist to serve the public; not the other way around.

    Put it another way: we don't allow people to sell placebos as headache remedies. Ending up with a headache isn't the worst thing in the world, although it might distract someone from buying aspirin. And folks could probably figure out for themselves that the product isn't very good, if they could find enough time to critically evaluate it. But despite this, there just isn't a very compelling reason for allowing such quacks and con-men to continue preying upon people.

    I think you need to consider why we utilize the free market. It isn't some sort of pagan deity to be satisfied as an end unto itself; it's a means to an end.

  • by Zordak (123132) on Tuesday July 26, 2005 @08:24AM (#13164010) Homepage Journal
    Actually, the legal department is just a variable in the formula in this case (the quality of legal representation goes to probability of getting caught and fined). It's the bean counters that budgeted for this, and if they hadn't, they'd get fired. This is a case of profitable breach. We make $X billion dollars from doing this at the price of a $10M fine. It's obscenely profitable. There's no way this fine will curb the practice.

    As an aside, the next time you sneer in disgust at a greedy tort lawyer (the sneer is very deserved in some cases) and think about calling for sweeping reform of our "broken" tort system, remember that manufacturers do the same thing with product safety. Probability that it will hurt somebody times what it will cost us when it does. If that's less than the savings from making an unsafe product, they make the unsafe product. The reason they don't like lawyers (and especially juries) is because they're an uncontrolled element to the damages variable. Huge jury awards hurt them (and can actually drive changes in unsafe behavior) because they can't accurately budget for them. They have such a love affair with capped awards and forced arbitration because it makes it easier for them to lock down that variable and accurately measure the benefit of hurting people.

  • by brainburger (792239) on Tuesday July 26, 2005 @08:27AM (#13164025)
    It's funny that the music industry will actually pay out money sneakily to get airplay via the radio and tv, to boost sales, but for some reason airplay via p2p services can only damage their sales.
    Of course p2p could result in the listeners having a permanent copy, but so can radio and tv.
    - And then there are all the streamripping and peercasting options to grey-out the difference even more.
  • by Alien Being (18488) on Tuesday July 26, 2005 @08:34AM (#13164070)
    "Imagine if they said, "this next Madonna song was sponsored by EMI."

    That would make the music show a defacto advertisement. People would tune out in droves. By hiding the money, they can make an ad seem like a music show.

    Listeners don't like being lied to, and given that the airwaves belong to them, they have a right to honesty.

    Honest artists and producers don't like it because it's anticompetetive. Implicit in the deal that "you will play *our* music more" is the undeniable fact that "you will play *their* music less".

    What amazes me, is that they've been getting away with the "new payola" for so long now. I think it's fair to say that the reason "popular" music sucks so bad is that most of it doesn't become popular on its own merit. Its popularity is engineered in boardrooms.
  • by skidz7 (821427) on Tuesday July 26, 2005 @08:35AM (#13164077)
    "Against a clear backdrop of what is right and what is wrong - what is legal and what is illegal - it is as important now as ever to encourage our fans do the right thing" - Cary Sherman, President of the RIAA Perhaps a good way would be to lead by example....
  • by cdrguru (88047) on Tuesday July 26, 2005 @08:48AM (#13164154) Homepage
    If you "remove" the copyright, then there are no rights for the artist, and no damages. Maybe revoking the contract with the artist and having the copyright revert to the artist. Who will then just sign up with some other promotional company who will continue to pay the radio stations for airplay.

    This works the same way with retail stores. You want your product in the store? Expect to pay a "slotting fee" (bribe) of $50,000 or $100,000 for a large retailer. Just starting out and don't have that much? Sorry, there is no shelf space for your product. I'm sure this works the same way in Europe and Japan as well. Air time, shelf space, whatever - they are valuable commodities which can be sold. And they are.

  • by crazdgamer (846581) on Tuesday July 26, 2005 @09:17AM (#13164308) Journal
    Payola is illegal because you're dealing with public airspace. You'd have to know how what the FCC's main function is to know why payola is unfair.

    Basically, payola wouldn't be illegal on a premium medium like satellite radio (if it is illegal, then it shouldn't be IMO).

    Basically, the FCC grants licenses to stations, and the FCC has pretty much total control over said license. If it doesn't like what the station is doing, the license can be suspended, removed, the station can be fined, etc. "Free market" doesn't exist in public radio per-se. Sure, it's free, but the FCC has so much control over the stations, it's would be hard to say the stations can do whatever they want, because they really can't.

    So, payola is bad because it gives what should be a public resource (radio airwaves) to the highest bidder, effectively shutting out many voices which should not be, since the practice of payola goes against what makes the medium a public one.
  • Re:Excuses (Score:2, Insightful)

    by FullCircle (643323) on Tuesday July 26, 2005 @09:27AM (#13164385)
    And just HOW do the stations know we listen? They don't.

    Have you tried requesting a song in the last 10 years? They don't play it.

    People have largely given up on radio and use CD's, MP3's and satelite radio. Have the radio stations changed? Not a bit.

    This generation of listeners have grown up with bad music. They don't know what it's like not to hear the same, lame songs once or twice an hour.

    There is only supposed to be x amount of paid content per hour on the "public" airwaves. Payola is a way to make better money between advertisements than during advertisements. Buisnesses have no morals so they gladly take it.

    As long as stations and DJ's are paid more than advertising rate to play bad music that labels know listeners won't request, stations won't bother to find out what people want to hear.

    I'm glad to see a company being fined. I just wish that the DJ and station had to pay an equal fine.

  • by S.O.B. (136083) on Tuesday July 26, 2005 @09:34AM (#13164426)
    How? It wasn't the radio stations that were breaking the law, it was Sony. Unfortunately, there's nothing illegal about taking bribes to play songs...only offering bribes to play songs.

    I think that's the point the parent and grandparent posts were trying to make. It should also be illegal to take the bribe. It's illegal to bribe a politician and it's also illegal for a politician to take a bribe (at least in Canada it is).

    If there are consequences for both sides than the crime is less likely to happen again. Especially when the radio stations are much smaller and have more to lose (i.e. their broadcast license).
  • by pete6677 (681676) on Tuesday July 26, 2005 @10:28AM (#13164822)
    Outlawing payola is much like outlawing the bribing of congressmen, in that it can't really be stopped. Sure, outright cash payments are illegal, but there are many other ways to transfer something of value for the purpose of buying influence or exposure. Record labels can always withhold preferred albums from stations who don't play the junk that they want to be played. The music business is so complex that there is no way anyone can ensure that some sort of favor isn't being done to have a certain song played.

    The only way around this problem is for music fans to get their music from other sources (the internet helps greatly) and payola's influence will be a lot less. At the same time, if people voted more, buying off a congressman would have a lot less effect.

    In both cases, it's up to the people to truly solve the problem, the government can't do it for them.
  • by Doc Ruby (173196) on Tuesday July 26, 2005 @10:52AM (#13165020) Homepage Journal
    The story is in English, the summary is in English, the law is in English, this site is in English, your post is in English. All the players involved, including Google, even Sony (their branch under the gun) are in the USA, where English is the official language, the only language spoken by the vast majority of the population, the only language in common of every resident, excluding those very few who speak only 1 other language.

    You're welcome to talk with us, of course, even in English (which you don't misuse too badly - consider capitalization next time you post). And your fact contribution to the discussion is helpful. But as long as you're going to whine about having to look up a word in a language not your native tongue, why don't you link to the definition you found? After all, we're not all from English speaking countries, and could use the help of a fellow second-linguist. Especially when we prefer to debate the payola, rather than some tangential personal agenda about limited vocabularies.
  • by xilet (741528) on Tuesday July 26, 2005 @11:06AM (#13165220)
    Really, english is th eoffical language in the USA? http://en.wikipedia.org/wiki/United_States#Languag e [wikipedia.org]
  • by geekee (591277) on Tuesday July 26, 2005 @01:54PM (#13167513)
    If I ran a radio station, I'd make people pay me to play their music. They sell songs to people who like them because they heard them on the radio. Why should I pay them to play the songs on the radio, to help them make money? I'd pick music that fit the format, of course, to keep listeners happy, but then only those who paid would get airplay. Then there would be no need to waste listener's time playing commercials. Why should it be illegal for me to do this? What happened to freedom in this country?
  • by mickwd (196449) on Tuesday July 26, 2005 @03:18PM (#13168642)
    "In both cases, it's up to the people to truly solve the problem, the government can't do it for them."

    But the whole reason for governments to exist (democratic governments, at least) is to solve the problems of the society they govern. That's why they exist. In order to do what they do, they levy taxes. That's why you pay taxes.

    Yes, most governments may be very inefficient, and often corrupt, but what they are in a democracy is the expression of the way a society that society, rightly or wrongly, thinks it should be governed.

    Put it this way - if the people of a country got together to choose a small group of people to represent their wishes and run the country the way they wish it to be run, what else would they have formed but a government?

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