December 4, 2005
Hitmakers Implicated in 'Pay for Play' Plans
By Charles Duhigg, Times Staff Writer
When Sony BMG Music Entertainment, the nation's second-largest record company, settled with New York Atty. Gen. Eliot Spitzer in July and agreed to pay $10 million for engaging in "pay-for-play" practices, Spitzer said such corruption reached "the very top of the industry."
Documents released by Spitzer charged that bribing radio programmers with plasma TVs, vacations and laptop computers in exchange for airplay was not only commonplace at Sony BMG, but also had "been tolerated and facilitated by senior executives."
Investigators identified one such executive by title: the executive vice president of promotion at Sony Music's Columbia Records. Spitzer stopped short of naming names.
But an inquiry by The Times has found that Spitzer was told that the trail led to two of the company's highest-ranking executives and some of the most powerful men in music: the Columbia vice president, Charlie Walk, and his boss, Sony Music Label Group U.S. Chief Executive Don Ienner.
Two sources interviewed by The Times said they'd told Spitzer's investigators that Ienner and Walk tolerated and condoned pay-for-play, which is generically referred to as "payola." A third source with firsthand knowledge of the investigation confirmed this.
In response to questions from The Times, Paul Gardephe, a lawyer who negotiated with Spitzer on behalf of Sony BMG, said in a statement: "There is absolutely no evidence that Ienner or Walk knew of any payola activities. If the attorney general's office had such proof, the settlement would have been dramatically different."
A spokesman for Sony BMG said: "After a long, in-depth investigation by the attorney general's office, this whole matter was resolved months ago. It's unfortunate that malicious gossip and false allegations by anonymous sources are now being used to damage the reputations of good and honest people."
Through their lawyers, Ienner and Walk declined to answer questions for this article. Attorneys for both men denied that either one condoned or participated in pay-for-play.
Sony BMG agreed to settle with Spitzer without affirming or denying his allegations, but acknowledged in settlement documents that "some of its employees pursued improper promotion practices."
However, according to three former Sony BMG executives and a fourth source with firsthand knowledge of the investigation, in the months leading up to the settlement, investigators made clear to representatives of Sony BMG that evidence showed that Ienner and Walk knew about pay-for-play.
Two sources said that documents collected by Spitzer indicated that Ienner and Walk were aware of and condoned pay-for-play. The source with firsthand knowledge of the investigation, who has seen the documents, also said the same thing.
Two sources also said that Spitzer's investigators would have named Ienner, Walk and other Sony BMG executives in the body of a complaint if one were brought against the company — not as individual defendants, but as managers who knew about pay-for-play. The source with firsthand knowledge of the investigation confirmed this.
When Sony BMG decided to settle, Spitzer's office agreed to the company's request that documents released by the attorney general not name any Sony BMG employees.
Ienner and Walk are two of the most powerful people in the music industry.
Ienner oversees one of the world's largest music organizations and has been instrumental in building the careers of stars such as Mariah Carey and Lauryn Hill.
Until last week, Walk, a longtime Ienner lieutenant, had managed the promotion departments where Spitzer found evidence that Sony BMG had improperly given radio programmers a Las Vegas trip.
On Friday, Sony Music announced that Ienner had made promotions, including making Walk president of Epic Records, another of its divisions.
The men oversee labels that shipped more than $1 billion worth of albums last year by artists such as Bruce Springsteen, Aerosmith, the Dixie Chicks and Beyoncé Knowles.
In all, The Times interviewed seven former and current associates of Ienner and Walk who confirmed what sources say Spitzer's investigators had discovered. These sources — two current and five former Sony Music or Sony BMG employees — said that during the last decade they observed conversations in which one or both men acknowledged or condoned exchanging improper gifts for increased airplay of certain songs.
All seven sources worked alongside Ienner and Walk when the executives were in their current positions or in previous leadership roles at Sony-owned Columbia Records. Two of those sources left the company after clashing with Ienner or Walk; four sources describe themselves as friends of one or both executives.
Many people interviewed for this article requested anonymity because they feared incriminating themselves or jeopardizing their jobs within the insular music industry.
All seven sources echoed Spitzer's depiction of Sony Music as a place where pay-for-play was a prevalent practice that was discreetly discussed.
The message was veiled, but clear. As one source put it, when conversations regarding pay-for-play arose, "Donnie would tell you: 'Do whatever it takes. Get the song played.' "
Other former colleagues disagreed. Tony Anderson worked with Ienner at Arista Records in the 1980s and at Columbia Records in the mid-1990s.
Pay-for-play "is the kind of thing that Don was not a fan of nor supportive of," Anderson said. "When people would discuss improper practices, I'd hear him say, 'You must be out of your mind. We're not doing those kinds of things.' "
Representatives of Spitzer's office would not discuss their investigation, nor why neither Ienner nor Walk were charged. When asked at a July news conference why his investigators did not name any Sony BMG executives, Spitzer said his staff focused on improving corporate practices rather than targeting specific individuals.
"The first effort is to change the way business is done," he said.
Legal experts said it would have been difficult for Spitzer to win convictions of individual Sony BMG executives.
"These things seldom go to trial because they are so hard to prove," said Harry Cole, a communications attorney who has argued before the U.S. Supreme Court.
The only Sony BMG executive fired in the wake of the investigation, Joel Klaiman, was accused of asking a San Diego radio programmer to provide a false name and social security number in exchange for a television.
Through his attorney, Klaiman denied the allegations.
Last month, Warner Music Group became the second music company to settle pay-for-play claims with Spitzer, agreeing to pay a $5-million fine.
Spitzer continues to investigate the two other major r
― BeeOK (boo radley), Monday, 5 December 2005 04:04 (twenty years ago)