The music labels, accustomed to bullying teenagers, appear to have pissed off the wrong man. New York attorney general Eliot "The Blitzer" Spitzer has served up subpoenas to the major labels, as he digs for information on their relationships with promoters who are thought to pay radio stations to play certain songs, according to a report in The New York Times.
The paper states that Universal Music Group, BMG, EMI Group and Warner Music Group have all been asked to turn over contracts and billing records that show their ties to these so-called song middlemen. This method of paying promoters goes around a federal statute most commonly known as the payola law that forbids bribing radio broadcasters.
"Broadcasters are prohibited from taking cash or anything of value in exchange for playing a specific song, unless they disclose the transaction to listeners," the Times reports. "But in a practice that is common in the industry, independent promoters pay radio stations annual fees - often exceeding $100,000 - not, they say, to play specific songs, but to obtain advance copies of the stations' playlists. The promoters then bill record labels for each new song that is played; the total tab costs the record industry tens of millions of dollars each year."
Spitzer is best known for cracking down on financial firms and being a very aggressive attorney general.
His apparent investigation into the music labels comes as they are trying to take the high road by suing thousands of their customers for piracy. Much to the labels' dismay, their most recent sales figures show that revenue is actually on the rise despite still rampant file-trading and a massive increase over the past two years in broadband connections. Myriad music executives this week were seen covering their eyes and ears in a show of solidarity against these sales gains.
Spitzer's investigation shouldn't be too troubling for the labels. It's thought that the payola practice has died down significantly from its glory days many years ago. In addition, the labels have faced a worse attack before when the federal government charged them with and made them pay up for large scale CD price-fixing operations. ®
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