Indy Promotion sues Universal

Radio Promoters Accuse Universal of Racketeering

Tue Apr 26, 2005 03:01 AM ET

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LOS ANGELES (Reuters) - Two independent music promoters have sued Universal Music Group for $100 million, claiming the record company forced them to submit false invoices so Universal could recoup promotional costs from artists such as rapper Nelly.

The suit raises "pay-for-play" issues similar to those being probed by New York Attorney General Eliot Spitzer in a wide-ranging investigation into whether record companies have broken U.S. law by paying radio stations to play their songs.

The two promoters, National Music Marketing Inc. of Los Angeles and Majestic Promotions Inc. of Atlanta, Georgia, claim they were forced to doctor invoices that then allowed Universal to bill promotional costs to artists whom the promoters never represented.

"What (Universal) was doing was defrauding their artists -- some of their biggest artists," plaintiffs' lawyer David J. Cohen said on Monday.

"I'm sure (rapper) Nelly is not going to be too happy that they were taking money out of his promotion budget to pay for promotions for other artists -- money that he had to pay back from his royalties," Cohen said.

The lawsuit said that when National and Majestic refused to submit fraudulent invoices, Universal fired them and told radio stations not to do business with the promoters.

"They bullied these promoters into submitting false bills," Cohen said. The suit accuses UMG of racketeering, fraud, trade libel and breach of contract.

A spokesman for UMG could not immediately be reached for comment.

Federal law prohibits radio stations from taking bribes to play specific songs unless the transaction is made public. But for decades, record labels have used independent promoters as middlemen to get more air time for their artists.

Each time a song is played, the record labels pay promoters who, in turn, pass along the money indirectly via thousands of dollars they shell out for advance copies of radio station play lists, according to the lawsuit.

In New York, Spitzer has served subpoenas on major record companies including Universal Music Group, Sony BMG Entertainment, the EMI Group and the Warner Music Group.

Cohen said the Attorney General's office has contacted his clients. He said Universal drove National Music Marketing, one of the nation's largest promoters, out of business last year. Majestic was "hanging on by a thread" after being defamed by Universal executives, he added.

Universal Music Group is a unit of French communications company Vivendi Universal (EAUG.PA: Quote, Profile, Research) . Sony BMG is part of Sony Corp. (6758.T: Quote, Profile, Research) The EMI Group Plc (EMI.L: Quote, Profile, Research) is a publicly owned entity and Warmer Music Group is privately held.

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