Top record labels are accused of bribing radio stations -- The New York State attorney general investigates unsavory gift-giving practices

By Vanessa Juarez
Updated July 07, 2006 at 04:00 AM EDT

Would Beyoncé be a smash solo success had songs from her 2003 album Dangerously in Love not gotten unrelenting radio play? That question — as well as the bragging rights of other multiplatinum performers like Jessica Simpson, Coldplay, and Jennifer Lopez — is at the center of a scandal rocking the record industry.

In the past year, Sony/BMG (Beyoncé’s label), Universal, and Warner music groups have agreed to pay the state of New York a combined total of $27 million. The violation: bribing radio programmers with cash and gifts like laptops, digital cameras, and Yankees tickets in exchange for playing their artists?a practice known as ”payola.” On June 15, EMI, the world’s third-largest record label, became the latest casualty of this probe to the tune of $3.75 million. Sums up a producer who’s worked with OutKast and didn’t want to be named due to the sensitivity of the issue: ”Money is the DJ.”

Although the country’s four biggest labels have all been reprimanded (see sidebar), the payola scandal may only intensify. New York’s attorney general’s office, which has spearheaded the investigation, is also sniffing around broadcast conglomerates. In fact, it’s already filed a lawsuit against radio giant Entercom, which allegedly helped boost singles from Gwen Stefani, Kanye West, and the Black Eyed Peas, among others. An even more ominous threat comes from the FCC. The agency, which has the power to revoke radio stations’ licenses, launched its own payola investigation last year. In addition, a bill introduced to Congress would increase the penalties and push for license revocation.

At the eye of this maelstrom is the very un — rock & roll New York State attorney general, Eliot Spitzer. The gubernatorial candidate, famous for pursuing corporate corruption with the vigor of another Eliot (Ness), has been bent on exposing unsavory music-business practices. According to reams of evidence collected by Spitzer’s office, record companies have used payola to push a truly varied spectrum of artists — from the Rolling Stones to Lucinda Williams, from Ludacris to Audioslave. Even Lindsay Lohan benefited after her label ponied up a trip to Cancún for a radio station. It’s a promiscuous, industry-wide affair that’s not even particularly discreet. Reads one confiscated e-mail from an Entercom source to a Universal employee: ”Pricing at $2,000 per slot for the 28 spins. Can do a special two for one right now.” Another correspondence, this one from Universal’s Motown, gripes about the inadequate response from radio programmers after the label offered incentives to play the female pop group Dream: ”We have gotten ripped off beyond belief…. That’s almost $300,000 and [our bosses] are looking for some heads…bad bad bad.”

For their part, music insiders aren’t buying into the government’s moral high ground; they accuse Spitzer of making an example of them so that he can win his political race in November. ”This is about [Spitzer] running for governor and trying to create résumé highlights,” says one West Coast programmer. (Spitzer declined to be interviewed for this story.)