Fresh from spanking insurance broker Marsh & McLennan (NYSE:MMC) in a move that is bound to have a rippling -- if not crippling -- effect on the insurance sector, New York Attorney General Eliot Spitzer is turning up the volume on the music industry.
The Wall Street Journal on Friday wrote that Spitzer is spitting fire at the major record labels by requesting information from Time Warner (NYSE:TWX), Sony (NYSE:SNE), Vivendi (NYSE:V), and EMI (NASDAQ:EMIPY) on their promotional practices.
Payola seems like such a dirty and dated word, conjuring classic rock images of cash envelopes being exchanged for radio airplay, but it would be naive to think that it all went away.
I was in a band signed to Sony's Columbia Records label just over a dozen years ago, and while every impression I got from Sony was professional, our own management company always seemed to be paying an independent promoter to break us into new markets or have us fly us out for a free gig at a radio station that would miraculously move us up in the play list rotation. While we were too busy writing, recording, and rehearsing to catch all of the marketing nuances, it certainly didn't feel like a very wholesome business.
The shame here is that the allegations are hitting the music and radio industries at the worst possible time. This is like a fifth hurricane swirling toward Florida when you consider that the record labels have had to go through massive layoffs as a result of MP3 swapping piracy and a decline in CD sales over the past four years before inching higher in 2004.
Radio stations are in a better state right now, but nearly a million listeners will be migrating to Sirius (NASDAQ:SIRI) and XM Satellite Radio (NASDAQ:XMSR) this quarter, and that will only accelerate as many of the celebrities of free radio like Howard Stern and Opie & Anthony switch over to satellite radio broadcasts exclusively.
If the pre-recorded music and radio industries aren't familiar with Spitzer, they may want to consult last year's mutual fund sector for a glimpse at his handiwork. Mr. Clean is an understatement for what Spitzer can do. Sectors that feel that the song remains the same may soon find themselves whistling a new tune.
Feeling retro? How has the music industry changed over the years? Did you grow up in the 1980s and live to tell the tale? All this and more in the I Survived the 80s discussion board. Only on Fool.com.
Fool contributor Rick Munarriz really was signed to Sony, though his band Paris By Air was promptly dropped after a pair of Billboard Dance Chart singles. He doesn't own shares in any of the companies mentioned in this story.
