Warner Music owns Madonna's Maverick label

New York State Attorney General Eliot Spitzer said Warner Music Group Corp had agreed to settle the state probe into so-called "pay-to-play" practices.

Warner Music also agreed to stop paying stations to secure airplay and disclose all "items of value" given, he added.

The $5m (�2.9m) will be used to fund music education projects.

Improper practices

In August, US regulator the Federal Communications Commission (FCC) launched an investigation into "pay-for-play" practices - also known as payola - in the music industry.

It followed an inquiry into improper practices by Sony BMG, which saw the record company agree to pay a settlement of $10m (�5.8m) in July.

The FCC investigation was prompted by Mr Spitzer, who also led the probe into Sony BMG.

Mr Spitzer said Warner Music - behind record labels such as Maverick, Lava and Atlantic - had issued a statement acknowledging its "improper conduct".

In the statement, Warner Music said: "The reforms we have agreed to with the Attorney General are consistent with the internal reforms that our new management team implemented earlier this year."

Mr Spitzer said the financial benefits reaped by radio stations included direct bribes, airfares, electronic equipment, tickets to concerts and radio contest giveaways.