EMI Settles Payola Probe for $3.75 Million

EMI Music North America, the third largest recording label in the world, has settled a pay-for-play investigation into radio air time sold or traded to benefit artists including the Rolling Stones, Coldplay and Norah Jones.

The settlement was the latest during more than two years of a "payola" investigation by New York Attorney General Eliot Spitzer.

"When a record label engages in an elaborate scheme to purchase air time for its artists, it violates state and federal law and presents consumers with a skewed picture of the country's proclaimed 'best' and 'most popular' music," Spitzer said.

He said payola also hurts struggling artists who aren't judged on the merits of their music.

Spitzer said the compensation for radio airplay was paid by EMI, which includes Virgin Records America, Capitol Records, EMI Christian Music Group and S Curve Records. One deal included tickets to a Rolling Stones concert in Toronto that were given to a radio program director for his personal use.

The radio executive in Watertown, N.Y., was willing to offer "what it takes for us to get them," according to Spitzer's investigation. In exchange for the tickets, Virgin Records received airplay for the Rolling Stones and The Exies.

EMI is agreeing to reform its practices and to pay $3.75 million to a music charity.

"EMI is pleased to have resolved these radio promotion matters with the New York State Attorney General with this agreement," the company said in a statement, which neither agreed with nor disputed Spitzer's allegations. "In addition to voluntarily adopting strict policies last year, we have been working cooperatively with the attorney general to reinforce these policies."

In May, Universal Music Group Recordings Inc., the world's largest record company, agreed to pay $12 million to settle a payola case that claimed the company provided vacations, electronics and other bribes to increase radio play for their artists. Those bribes and gifts were used to gain airplay for songs by Nick Lachey, Ashlee Simpson, Brian McKnight, Big Tymers, and Lindsay Lohan, Spitzer said.

The penalties will be distributed through the Rockefeller Philanthropy Advisors to nonprofit groups in New York to fund music education and appreciation programs.

Spitzer launched a nationwide investigation into alleged wrongdoing by music and radio companies in 2004. Earlier this year, Spitzer sued Entercom Communications Corp., accusing its executives of running scams to trade cash for airplay.

Entercom has denied the allegations.

Sony's music arm has agreed to pay $10 million to settle with Spitzer, and Warner Music Group Corp. agreed to a $5 million settlement.

Payola is the term coined in the 1950s when early rock music was hit with the scandal. It is a combination of the words "pay" and "Victrola."