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U.S. to Revisit Payola Inquiry

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From Associated Press

Federal regulators are taking a closer look at the payola scandal that led to a $10-million settlement by Sony BMG Music Entertainment with the state of New York.

Federal Communications Commission Chairman Kevin J. Martin announced Monday that his agency would review the settlement for any disclosures of payola rule violations.

Martin promised swift action against anyone violating rules against “pay-for-play” in the music industry.

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The FCC “will not tolerate noncompliance,” Martin said in a statement. “While payola may not be a widespread practice in the broadcasting industry, to the extent it is going on, it must stop.”

The agency, which regulates the public airwaves, could fine violators as much as $32,500 per incident.

Last month, Sony BMG agreed to pay $10 million to settle allegations that it bribed radio stations to feature its artists. The company allegedly offered trips, computers and other gifts as well as cash to station employees to feature its artists.

The agreement is part of a wider investigation by New York Atty. Gen. Eliot Spitzer, who has called payola pervasive in the industry.

A 1960 federal law and related state laws prohibit record companies from offering undisclosed financial incentives in exchange for airplay.

FCC Commissioner Jonathan S. Adelstein, who had called for an agency investigation, applauded the move. “I believe this payola scandal may represent the most widespread and flagrant violation of any FCC rules in the history of American broadcasting,” he said.

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“Mr. Spitzer’s office has collected a mountain of evidence on the potentially illegal promotion practices of not only Sony BMG, but also other major record companies, independent promoters and several of the largest radio station groups.”

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