Sony BMG paid $10M to settle New York's payola investigation (2005)

What happened

Payola — paying a radio station to play a record without disclosing the payment as advertising — is illegal in the United States. In July 2005, after a year-long investigation, then–New York Attorney General Eliot Spitzer announced that Sony BMG Music Entertainment had agreed to pay $10 million and to stop the practice.

Sony BMG was the first major to settle. Spitzer's office said the company and its labels had offered "a series of inducements" to radio stations and their employees to win airplay for its artists.

What the inducements looked like

According to the Attorney General's office, the schemes included:

• Outright bribes to radio programmers — expensive vacation packages, electronics, and other valuable items.
• Contest giveaways funded for stations' listeners in exchange for spins.
• Payments to cover stations' operating expenses.
• Independent promoters used as middlemen to route illegal payments to stations.
• "Spin programs" — paid airplay disguised as advertising.

Internal emails released by the investigation showed staff openly discussing what it would cost to get specific songs played.

The outcome

Sony BMG agreed to stop making payoffs for airplay, to disclose any items of value provided to stations in the future, and to corporate-wide reforms including hiring a compliance officer. The $10 million was directed toward New York non-profit music-education and appreciation programs.

The settlement was the first of several: Warner Music and Universal reached their own payola settlements with New York in the following months, and the FCC later reached related agreements with the major broadcasters. The case stands as a documented admission that pay-for-play had been operating across the industry — at the expense of the artists who couldn't or wouldn't pay to be heard.

Status note: this matter was resolved by settlement. A settlement ends the case without a court verdict on every underlying allegation, but the reforms and payment are a matter of public record via the Attorney General's office.