Apparently disturbed with the adverse publicity earlier this week emanating from the decision not to pursue this case, New York’s Aspiring Governor fought back yesterday by announcing that he is continuing to protect all of us from that sordid business practice of payola — i.e., radio stations owners accepting money from promoters to pay certain types of noise — er, I mean, music — over the airwaves. this NY Times article reports that Mr. Spitzer has reached a $5 million settlement with Warner Music Group Corp. for offering trips, gifts and agreements to cover operating costs in exchange for increased airplay for certain songs. Here is an earlier post on Mr. Spitzer’s payola investigation.
By the way, the Wall Street Journal ($) article on the settlement included the following quote from Mr. Spitzer: “I never like to presume what an investigation will show or conclude.” Oh, really?
Although certainly an effective vehicle for his gubernatorial campaign, Spitzer’s payola investigation is simply another example of his misguided approach to regulating business (Larry Ribstein has been at the forefront of making this point). As with his many other forays, Spitzer has used the leverage of a criminal investigation to force the type of business regulations that he deems appropriate. But Spitzer’s regulations are not developed under any legislative process and are not even reviewable under the normal administrative process for business regulations. In short, Spitzer’s approach is regulation through force rather than the rule of law, without regard to whether the regulations that he is imposing are more costly to the public than the supposed wrongs that the regulations are supposed to correct.
Houston's Clear Thinkers
Longtime Houston attorney Tom Kirkendall's observations on developments in law, business, medicine, culture, sports, and other matters of general interest to the Houston business, professional, and academic communities.
My colleague Bob Donnelly, who is a music attorney in NYC was the one who not only took this issue to Spitzer, but also led Spitzer to $55 million in royalties which the 5 majors were holding in suspension accounts for “artists who have changed their addresses.”
They kept $55 million because an artist changed their address and never notified them…now that money id finally going t the artists.
Jay, that’s a good result when royalty owners recover their wrongfully withheld property. But a question for you — Why was it necessary for Spitzer to intervene for the royalty owners to recover their money? It would seem that civil litigation would have been a more efficient — and potentially more profitable — way for the royalty owners to recover their wrongfully withheld property.
Spitzer’s payola settlement
Joshua Wright, one of several guestbloggers holding forth at Larry Ribstein’s, argues that big record labels like Warner and Sony actually have reason to be glad that the New York attorney general is punishing them for participating in costly song-prom…
Spitzer’s payola settlement
Joshua Wright, one of several guestbloggers holding forth at Larry Ribstein’s, argues that big record labels like Warner and Sony actually have reason to be glad that the New York attorney general is punishing them for participating in costly song-prom…