Senate Plans Record Industry Payola Probe
Claiming that payola is “alive and well and worse than ever” in the recording industry, Sen. Albert Gore Jr. (D-Tenn.) on Wednesday announced a congressional investigation into alleged illicit practices used to promote records.
“The cumulative evidence is overwhelming that this practice has gotten completely out of hand and has come to dominate some portions of the industry in their decisions as to what records got on the air and which ones didn’t,” Gore told a news conference.
The Senate thus joins federal, California and New York law enforcement agencies in what has become a virtual stampede to investigate allegations of organized crime’s influence in the $4-billion-a-year U.S. recording industry.
To Conduct Interviews
After citing recent news reports alleging widespread use of payola by independent record promoters, several of whom supposedly have links to organized crime, Gore said that staff investigators for the Senate Permanent Subcommittee on Investigations will begin conducting interviews this week with record company and radio station executives, promoters and disc jockeys. “Our goal is not to establish the basis for criminal prosecution,” Gore said, “but to determine whether or not current laws are working and whether changes are necessary.”
Not since the celebrated payola investigation of the 1950s has the record business had such scrutiny by government investigators. At that time, evidence was developed that disc jockeys were being paid directly by record companies to play certain records, and Congress enacted a law to curtail the practice. In recent years, the companies have turned increasingly to independent promoters as a means of getting more air play for their records.
Now, federal prosecutors supervising grand jury investigations in New York and Los Angeles have issued subpoenas to most of the major U.S. record companies asking for documents concerning the companies’ use of independent promoters, The Times has learned. However, law enforcement sources cautioned that the inquiries are very preliminary and no indictments are expected soon.
Spokesmen for Warner Communications, CBS Records and RCA Records--the three largest record manufacturers and distributors--confirmed that their companies have been served with subpoenas by the office of Rudolph W. Giuliani, U.S. attorney in Manhattan, requesting all documents pertaining to independent promotion dating back to January, 1978.
Data Subpoenaed in L.A.
A spokesman for Capitol-EMI confirmed that the company’s records regarding independent promotion were subpoenaed last month by the Los Angeles grand jury and that the company had already complied by turning over several boxes of documents. Law enforcement sources say the grand jury in Los Angeles issued a similar subpoena to MCA Records in February and that Los Angeles investigators recently have had discussions with CBS executives.
On Tuesday, CBS Chairman Thomas Wyman issued a statement voicing support for CBS Records Group President Walter Yetnikoff in response to an “NBC Nightly News” report Monday alleging that CBS was the industry’s heaviest user of independent promotion and that Yetnikoff recently was instrumental in blocking an attempted investigation of independent promotion by the Recording Industry Assn. of America, a trade group of the major record companies.
Although Wyman’s statement did not specifically dispute the NBC report, it contended that, after an “intensive” internal investigation, the company had “no reason to believe that CBS people have been involved in condoning or participating in the activities suggested.”
The current investigations are believed to center on a group of powerful independent promoters commonly referred to in the record industry as “the Network.” As first reported by The Times in 1983, some industry executives believe that members of the so-called “Network"--which comprises only a handful of the estimated 200 independent promoters around the country--have gained undue influence at key radio stations and have the power to keep some records off the air.
Record companies have used outside promoters as an adjunct to their own promotion staffs in attempts to get their records played on the most influential pop radio stations. In recent years, the companies have become increasingly dependent on the promoters, who are estimated to receive $60 million or more annually from record firms.
Crime Ties Charged
After an NBC News report last month alleging that several prominent independent promoters had ties to well-known East Coast organized crime figures, all the major U.S. record companies announced that they were either discontinuing or cutting back substantially their use of independents.
Law enforcement sources contacted this week by The Times said that, although payola is now part of their investigations, their focus remains primarily on suspected organized crime infiltration into the sale of “cut-out,” or out-of-date, records and on widespread allegations of record counterfeiting.
A federal official close to the New York investigation said that it is looking at a “bigger picture” of suspected Mafia involvement in the record business.
Payola is “part of the picture,” he said, but New York investigators are more interested in the record companies’ relationships with certain promoters than the promoters’ dealings with radio programmers. More than cash, cocaine and prostitutes given to radio programmers in exchange for air time, investigators are looking into suspected “kickbacks” from promoters to record executives, he said.
In Los Angeles, a federal grand jury initially believed to have been impaneled to investigate suspected organized crime involvement in the cut-out record market has been expanded to look into activities of certain independent promoters and their relationships to the record companies. A spokesman for the Justice Department’s Organized Crime Strike Force in Los Angeles refused to comment on the investigation.
Payola Hard to Prove
Authorities contacted by The Times said that any investigation may take months or years because of the difficulty in proving payola allegations.
In 1984, the House subcommittee on oversight and investigations, headed by Rep. John D. Dingell (D-Mich.), conducted a preliminary investigation into suspected payola practices. Subcommittee staff members later recommended against a full investigation, citing a lack of hard evidence that any laws were being violated.
At his news conference Wednesday, Gore said that the House investigation had encountered difficulty because witnesses, including record industry executives, were reluctant to speak publicly about illegal record promotion practices.
Some potential witnesses, he said, feared physical retaliation, and others refused to break an alleged “conspiracy of silence” in the industry.
Penny Pagano reported from Washington and William K. Knoedelseder Jr. from Los Angeles.