Universal Slashes Promoters’ Fees by 50%

Universal Music Group, the world’s largest music company, this week slashed fees paid to independent record promoters by half--a radical move that could save the company nearly $25 million a year and pave the way for other record giants to follow suit.

The action by Universal Music, owned by media conglomerate Vivendi Universal, comes as lawmakers and federal agencies are trying to determine whether current independent promotion tactics violate payola laws, which bar radio stations from playing songs in exchange for money or anything valuable without identifying the transaction.

Independent promoters typically charge record labels to pitch their songs to broadcasters in hopes of getting radio airplay. The practice was invented to insulate record labels from making direct payments to stations but still allow companies to influence airplay.

Record companies have complained to the Federal Communications Commission and lawmakers about giant radio conglomerates using their muscle to ratchet up promotion prices. Sources said Universal Music Group--which consists of the Interscope, Def Jam, MCA, Universal Records and Lost Highway labels--pays more than $50 million annually to independent promoters to pitch songs by such stars as No Doubt, Ashante, Mary J. Blige and Nellie to radio stations.

Universal declined to comment. But sources at the company said its labels notified promoters Tuesday that they are slashing promotion payments 50% to about $200,000 a song. Universal’s labels also plan to reduce the number of radio stations nationwide for which promoters will be able to collect fees for pitching their songs, sources said.