Industry Focus / State Attorney General Eliot Spitzer today announced a settlement with UMG Recording Inc., ("Universal") the world's largest record label company, to end its pervasive "pay-for-play" practices. Under terms of the settlement, Universal, a subsidiary of Vivendi Universal which owns Island Def Jam, Interscope, Universal Motown Recordings Group, Uni-South, Universal Nashville and Verve, has agreed to stop making payments and providing expensive gifts to radio stations and their employees in return for "airplay" of particular artists' songs.
Radio airplay is the single most effective driver of music sales. The more airplay a song receives, the higher it climbs on published charts that purport to reflect the song's popularity, and the more likely consumers are to buy it. Payola undermines the integrity of the music recording and broadcasting industries.
"Consumers have a right not to be misled about the way in which the music they hear on the radio is selected," Spitzer said. "Pay-for-play makes a mockery of claims that only the 'best' or 'most popular' music is broadcast."
Spitzer's investigation determined that Universal and its record labels offered a series of inducements to radio stations and their employees to obtain airplay, or "spins" of recordings by the company's artists, including songs by Nick Lachey, Ashlee Simpson, Brian McKnight, Big Tymers, and Lindsay Lohan.
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