FCC Opens Payola Probe

As reported in today’s Variety, "The Federal Communications Commission will investigate Sony BMG’s recent settlement with New York state authorities over the conglom’s radio promotion practices to see if any federal payola laws were violated, commission chairman Kevin J. Martin said Monday.""

Promising "swift action" if regulators determine laws were broken by either Sony BMG or other record companies, Martin said in a statement, "The commission will not tolerate noncompliance. While payola may not be a widespread practice in the broadcasting industry, to the extent it is going on, it must stop."

"Earlier this year, the office of New York Attorney General Eliot Spitzer turned up evidence of pay- for-play deals between Sony BMG and area radio stations involving cash and free trips given to DJs. In late July, Spitzer slapped the record company with a $10 million fine, ordered it to alter its radio promo practices and hire a compliance officer."

HYPEBOT: Some insiders believe that powerful heads may role as both the NY and FCC investigations move to other major labels.  It’s curious, however, that no radio execs have yet been named as targets of the investigation Even though several radio groups were asked to provide information for the probe.

Indy labels are dancing in the streets at all of this news. But we’re betting that their joy is short lived as the marketplace and radio programmers stick with the main stream and mass-marketed and the majors find new ways to circumvent the rules.