CBS Records, saying it was angered by an April 10 Rolling Stone article that it accused of promoting a 10-record bootleg Bob Dylan anthology, "Ten of Swords," has withdrawn all advertising from the biweekly magazine.

Rolling Stone, saying the move was really prompted by its coverage of the widening payola scandal among independent record promoters, has responded by suspending coverage of most CBS artists.

"When they run what they insist is a news story about a pirated criminal record, stolen from one of the most creative artists of our time, and contain within that story a review of the contents of that album -- which is bad enough -- but also a favorable review, it's really bad," said Bob Altschuler, CBS corporate spokesman, in an interview yesterday. As a result, he added, CBS has "withdrawn our cooperation -- advertising, concert tickets, review copies of records."

So what, responded Rolling Stone publisher Jann Wenner: "Everybody wants to get their records covered and profiles [of their artists], and wherever we have a discretion and a choice, and all things being equal, we'll choose another company besides CBS."

Wenner also said that CBS' insistence that it was responding solely to the article about the Dylan bootleg, "Ten of Swords," is "totally and completely untrue."

"They're just saying that to make themselves look like they've got some shred of dignity," Wenner said. "The truth is, they object to the report that we ran saying [CBS Records President] Walter Yetnikoff was instrumental in shutting down a Record Industry Association of America investigation of independent promoters."

"That's inaccurate," said Altschuler of Wenner's charge. "In order for the RIAA to go ahead with an investigation, there had to be unanimity amongst the record companies." Several labels chose not to vote for it, he said, but "none of those was CBS Records. We were a proponent of the investigation, but the vote never took place . . .

"Regardless of anything Rolling Stone might say, there is absolutely no connection to anything else. The action was taken totally, completely and exclusively because of the review of the bootleg album . . . Wenner's throwing in a red herring because he doesn't have a defense."

Said Wenner: "There's no possible way they can fault Rolling Stone's coverage and support of Bob Dylan over the years. That's a total smoke screen. They should be as embarrassed about that lie as for their attempts to influence our coverage."

Besides the payola stories, the most recent issue of Rolling Stone carries a photocopy of an internal CBS memo outlining company policy on explicit lyrics dealing with sex, violence and substance abuse, and suggests that CBS is pressuring artists to alter their lyrics to preclude the use of warning labels.

"Rolling Stone is one of the standard-bearers for the music world," Altschuler said. "We respect them for their role and their importance. Since they are so influential, since they are so widely read by people interested in music, they exercise an enormous influence on that audience. And because they do understand the record business very well, they should have been as outraged at the release of this package as we."

The Rolling Stone article did note CBS' objections, and Dylan's as well. "That should have been enough to discourage them from playing up the existence of the album," added Altschuler. "It is a crime committed by the perpetrators of that album; it is a crime to be stocking it in a record store. We are doing everything that we can to track down the criminals who put this album out and put them in jail."

At this point neither side seems inclined toward conciliation. Wenner said he has called CBS but that his calls have not been returned. He added that his magazine will probably continue to cover such acts as Bruce Springsteen, Michael Jackson and the Rolling Stones. "That's not where it hurts. They don't need our reviews to sell those records. It's the new artists that are going to get hurt."

CBS, Wenner claimed, was attempting to treat Rolling Stone as a trade publication rather than a consumer magazine. "They feel we're a trade magazine and should be under their control," he said, "and to prove their point, they're going to withdraw their advertising. Unfortunately, the advertising of the entire record business is 1.2 percent of Rolling Stone's annual revenues," of which CBS accounts for perhaps 10 percent of that figure.

CBS was one of Rolling Stone's first corporate advertisers (issue No. 8), and at various times has advanced funds against future advertising. But while record advertising was a significant part of Rolling Stone's advertising 10 years ago, it is no longer. "If it was 50 percent of our advertising, I might not be sitting here talking about journalistic freedom so lightly," Wenner admitted.

This is not the first time CBS has pulled its advertising from Rolling Stone, Wenner said, adding that MCA at one time also pulled its ads.

After next week, MCA may be inclined to do so again. Asked what other coverage the magazine was planning of the independent promotion scandal, Wenner said, "The next issue has a got a great piece about MCA Records."