Spitzer targets music industry in 'payola' inquiry

Eliot Spitzer, New York's combative attorney general who is already involved in a high-profile wrangle with the insurance industry, has now turned his attention to the music world over allegations that inappropriate payments are being made to radio stations to influence which songs they play.

Eliot Spitzer, New York's combative attorney general who is already involved in a high-profile wrangle with the insurance industry, has now turned his attention to the music world over allegations that inappropriate payments are being made to radio stations to influence which songs they play.

Four major music corporations - the US-based Universal Group, Sony, and Warner Music and Britain's EMI - are understood to have received subpoenas from Mr Spitzer requesting information about their ties to the promoters who pitch new songs to radio programmers.

EMI shares dropped 11.5p first thing in London after news of the New York investigation reached the market but they recovered somewhat after a statement from the company, closing down 3p at 217p.

The UK music major admitted it had "received a request from the New York state attorney general for information regarding practices in connection with the promotion of records on New York state radio stations". The other companies declined to make any comment.

In its statement EMI added that: "EMI has no reason to believe that there will be any material financial impact on the company." It said that it had a long-standing, strict written policy "prohibiting unlawful radio promotion practices".

Kingsley Wilson, an analyst at Investec Securities, described Mr Spitzer's move as a "shot across the bows" of the music industry.

Under a US law known as "payola", broadcasters are prohibited from taking cash or anything else of value in exchange for playing a particular song. In practice, promoters do hand over fees to radio stations, but describe them as payments for services such as receiving advance copies of playlists.

Mr Spitzer's office would not comment on his latest offensive, which comes just days after he launched a lawsuit alleging widespread abuses by America's insurance industry. He has also won multimillion-dollar settlements in separate cases against investment banks and fund managers.

The New York Times reported that subpoenas had been issued demanding details of contracts with record promoters. It is not clear whether Mr Spitzer believes it is the music companies, or the promoters, or even the radio stations, that have driven the alleged bribes.

Mr Spitzer has already targeted the music industry this year, securing $50m (£27m) in unpaid royalties to thousands of artists, including David Bowie and Dolly Parton, in May.