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FBI agents and federal prosecutors are looking into whether millions of dollars worth of CDs have been diverted and sold, cheating artists out of royalties and ripping off big music corporations.
The concerns have prompted Time Warner Inc., the world’s largest media and entertainment company, to examine its own music distribution business.
Industry insiders say the questions center on whether unscrupulous employees have been misdirecting newly manufactured CDs and selling them for cash. The problem is a distribution system that lacks adequate controls and perhaps is littered with pockets of corruption.
“. . . everyone’s getting in on the party,” said Lee Hasin, a retired music producer and former owner of Lancer Music Inc. of Philadelphia.
