Entertainment Law Reporter
June 2006 Volume 28 Number 1

EMI Music settles New York Attorney General’s “payola” investigation

EMI Music has agreed “to end its pervasive ‘pay-for-play’ practices” in order to settle a payola investigation conducted by New York State Attorney General Eliot Spitzer. EMI owns Virgin Records America, Capitol Records, EMI Christian Music Group and S Curve Records, and is one of the four major record companies in America; its parent, The EMI Group, is the third largest music label in the world.

Spitzer’s investigation determined that EMI provided illegal financial benefits to obtain airplay and boost the chart position of its artists by bribing radio station employees with concert tickets, video games, and hotel and airfare expenses; provided financial inducements to radio stations to assist with overhead costs; used independent promoters as conduits for the illegal payments to radio stations; and engaged in fraudulent call-in campaigns to increase the airplay of particular songs. EMI artists who benefited from the payola scheme included the Rolling Stones, Coldplay, Norah Jones, and the band Gorillaz.

The Attorney General’s office obtained emails and sworn testimony from EMI executives who admitted providing radio station programmers with items of value in exchange for airplay.

In the settlement, EMI agreed to stop paying radio stations or their employees airplay. It agreed to stop using independent promoters to get airplay. It agreed to hire a compliance officer to monitor the company’s promotion practices. And it agreed to implement an internal system to detect any future abuses.

EMI also will make a $3.75 million payment to New York State not-for-profit entities to fund music education and appreciation programs. The money will be distributed through the Rockefeller Philanthropy Advisors.

Spitzer’s probe of payola in the music industry previously resulted in settlements with Sony BMG, Warner and Universal, and a lawsuit against Entercom Communications Corp.

The 41-page settlement agreement is available at EMI Settlement; and internal EMI  documents supporting Spitzer’s assertions are available at EMI Exhibits.