Following the publication of a story in the German news magazine Der Spiegel, music station Viva came under scrutiny on suspicion of payola or perhaps better said ‘videola’. The Landesmedienanstalt (office for media regulation) of Northrhine Westphalia (NRW) asked the music station to elaborate on the items in the report.

The basic essence of the story is that Viva had a hidden deal with the German branch of Universal Music regarding the pre selection of releases by their new artists. The supposed agreement meant that Viva provided Universal with upfront information about which artists video clip the station would probably broadcast even before the record company produced the video. This measure would help avoid expenses for the production of video clips. In exchange Universal would pay agreed TV advertising fees of about 18.000 Euro per artist plus overwrite fees of 20 Cents per copy sold. The deal according to Der Spiegel covers 50 releases and had an estimated worth of about 900.000 Euro.

Both sides denied that the deal took place but nevertheless the story also revealed that the rest of the industry was aware of what kind of business was going on. Viva had already tried before to set up a deal for newcomers and as part of this offered a business case that refers to the market share of record sales in Germany. The negotiations went as far as even the Bundesverband Phono (the German branch of the IFPI) holding a conference regarding this topic at the Viva headquarters in Cologne at the beginning of this summer.

What had been not reported in Der Spiegel was that 2 major companies sympathized with the model while two refused the offer. According to insiders it was the head of Sony Music Germany, Balthasar Schramm, who is also a lawyer, who mentioned that the deal might cause problems with the German media law. Well informed sources say that talks had already taken place for almost the last 2 years while Spiegel reported that Viva CEO Dieter Gorny together with Universal boss Tim Renner developed the idea when they met each other in September 2002.

The agreement between Viva and Universal is supposed to have been done last autumn, when high-ranking decision takers of both companies met each other in Berlin. At this meeting it was the case, that as well as Gorny, Viva CFO Christian Gisy and the former sales director Martina Bruder discussed details of the deal together with Joachim Kirschstein, head of Universal marketing and two other MDs (Polydor and Motor). Later on Viva program director Stefan Kauertz joined the discussion and ventured mixed feelings regarding the deal.

However, the examination by the Landesrundfunkanstalt NRW revealed that in this particular case, no media law had been offended. The pre selection of not yet produced video clips is something that is not against current law. And even if this were the case, the likely sanction of the Landesrundfunkanstalt would in the first step be only a query. Only if something similar occurred a second time, the media authority might ask for a fine or in the worst case the withdrawal of the broadcasting license.

Although all parties have no legal consequences to fear, the article at least meant that the record industry is again suspected of being a very strange business. Even before this the image of the industry was more or less poor. That the Bundesverband Phono is also involved makes it no easier for the lobby organisations, whether in the official administration or among politicians in Berlin or elsewhere. Especially in these days, when the record industry wants to create awareness for copyright infringements by consumers or to have the VAT decreased on records. Also consumers could see this as an example that’ from their point of view. record companies often do not take the law as seriously as they expect consumers to, giving another excuse for copying music.