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-----Forwarded Message-----

> From: Steve Hoffman <steve AT goodnote.com>
> To: BLUES-L AT LISTS.NETSPACE.ORG
> Subject: NBC: Look out record industry, Spitzer's gonna get ya
> Date: 22 Oct 2004 00:00:46 -0400
> 
> Elliot Spitzer, the high sheriff of New York State (aka the Attorney
> General), an aggressive fighter against corporate greed and corruption,
> has set his sights on the sleezy plug-o-la practices of today's music
> industry.  The following is reprinted verbatim from the Oct. 22 NY Times
> (posted on its website as of midnight):
> 
>     Record Labels Said to Be Next on Spitzer List for Scrutiny
>     By JEFF LEEDS
> 
>     Published: October 22, 2004
> 
> 
>     Eliot Spitzer, the New York State attorney general, has recently
>     taken on a procession of corporate powers from Wall Street analysts
>     to mutual funds to insurance brokers. Now he is casting his eyes on
>     the music industry, particularly its practices for influencing what
>     songs are heard on the public airwaves.
> 
>     According to several people involved, investigators in Mr. Spitzer's
>     office have served subpoenas on the four major record corporations -
>     the Universal Music Group, Sony BMG Music Entertainment, the EMI
>     Group and the Warner Music Group - seeking copies of contracts,
>     billing records and other information detailing their ties to
>     independent middlemen who pitch new songs to radio programmers in
>     New York State.
> 
>     The inquiry encompasses all the major radio formats and is not
>     aiming at any individual record promoter, these people said. Mr.
>     Spitzer and representatives for the record companies declined to
>     comment.
> 
>     The major record labels have paid middlemen for decades, though the
>     practice has long been derided as a way to skirt a federal statute -
>     known as the payola law - outlawing bribes to 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. 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.
> 
>     The new scrutiny comes at an inconvenient time for the major record
>     companies, which have been pressing federal and state law
>     enforcement officials to shut pirate CD manufacturers and the
>     unimpeded flow of copyrighted music online.
> 
>     The statute involved is a federal one and the case would not seem to
>     fit neatly into Mr. Spitzer's jurisdiction, but state attorneys
>     general typically have wide latitude to investigate issues involving
>     consumers and businesses in their states.
> 
>     In this instance, Mr. Spitzer might proceed on the ground that
>     broadcasters' dealings with middlemen severely limit the
>     opportunities available to those artists who cannot afford to hire them.
> 
>     These promoters flourished throughout the 1980's and most of the
>     1990's, but their influence began to weaken after Congress
>     deregulated the radio industry in 1996, allowing for an extensive
>     consolidation that tilted the balance of power to a handful of newly
>     created broadcasting mammoths.
> 
>     With their newfound power, some big chains, including Clear Channel
>     Communications, at first tried to tap a bigger share of the labels'
>     promotional dollars, and designated specific independent promoters
>     to be the exclusive representatives for particular stations.
> 
>     Promotion prices continued to rise, but at the same time the
>     consultants had less influence over airplay, record executives say.
> 
>     In 2002, the industry's lobbying organization, the Recording
>     Industry Association of America, called on the government to
>     strengthen anti-payola laws and examine questionable practices,
>     including independent promotion. (Association officials are
>     considering whether to provide new comments and information to the
>     Federal Communications Commission as part of that agency's review of
>     radio promotion, people in the music industry have said.)
> 
>     Cox Radio, and later Clear Channel, said they would not renew their
>     contracts with any promoters.
> 
>     Since the big companies severed their ties to the practice, record
>     labels - suffering from piracy and other financial woes - have
>     sharply scaled back payments to the middlemen, and by some estimates
>     pay them as little as $30 million annually.
> 
>     One promoter, who spoke on condition of anonymity, said Mr.
>     Spitzer's investigators "are not going to find anything; they're 20
>     years too late."
> 
>     But questionable practices persist in a variety of markets and music
>     formats.
> 
>     In the late 1990's, the Justice Department began a broad
>     investigation of payola that eventually encompassed dozens of Latin
>     and urban- music radio stations across the nation. It won
>     convictions against two top executives at Fonovisa, the biggest
>     independent record label in the Spanish-language market, and a top
>     radio executive. No cases have been brought in the urban-music
>     category. Unlike the promoters in the rock and pop fields who
>     receive payments as stations add a song to their playlist, many
>     urban-music consultants receive initial lump sums to finance the
>     marketing of a new single, and distribute the money as they see fit.
> 
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