Spitzer launches music industry probe

NEW YORK (NY Times/ WS Journal) - EMI Group PLC, the world's third-largest music company, confirmed yesterday it faced a New York probe into how music companies influence what songs are played on the radio.
"We are cooperating fully with this inquiry, which is at a preliminary stage," EMI said in a statement.

A report in the New York Times said New York Attorney General Eliot Spitzer, who has already taken on the investment banking, mutual funds and insurance sectors, has served subpoenas against Universal Music Group, Sony BMG Music, EMI and Warner Music.

EMI, the only publicly traded, standalone music company among the four majors, was down four pence at 216p at 1455 GMT, having earlier hit a low of 208p.
The British record company said in the statement it had a strict, long-standing policy against unlawful radio promotion practices. "EMI has no reason to believe that there will be a material financial impact on the company," it added.

Spitzer has requested information on the companies' relationships with independent consultants who serve as middlemen between music companies and radio stations, according to the Wall Street Journal.

US law forbids music companies from making undisclosed payments in exchange for airplay. "This seems to be a very small niche part of the market," said Investec analyst Kingsley Wilson earlier yesterday. "I suspect it's a case of they'll put something out (saying) 'we thoroughly believe we haven't done anything wrong', an investigation will ensue, and some agreement will be reached." Spitzer has targeted the music industry before, securing $50 million (US dollars) in unpaid royalties to thousands of artists such as David Bowie and Dolly Parton in May.