Universal Music Group, the world's largest record company, settled a payola investigation with New York Attorney General Eliot Spitzer for $12 million and agreed to stop bribing radio stations to secure airplay for its artists.
''Consumers have a right not to be misled about the way in which the music they hear on the radio is selected," Spitzer said.
''Pay-for-play makes a mockery of claims that only the `best' or `most popular' music is broadcast."
Under the accord, Universal, a unit of Paris-based Vivendi SA, said it will hire a compliance officer to monitor promotion practices and stop using independent promoters as middlemen to deal with radio station programmers.
Spitzer has been investigating the music industry since 2004.
Universal bribed programmers with vacations, tickets to sports events and concerts, and electronics equipment to get music by artists like Nick Lachey, Ashlee Simpson, and Lindsay Lohan on the air, according to Spitzer. Universal owns Island Def Jam, Interscope, Verve, and other labels.
The payola strategy also included paying stations for contest giveaways and other expenses, hiring independent promoters as conduits for illegal payments, and paying for airplay under the guise of advertising, Spitzer said.
Universal executives not only knew about the payments, they demanded accountability from the radio stations, pushing them to ''deliver the bargained-for airplay," Spitzer said.