Removal of the long-standing 1% cap on copyright fees for sound recordings broadcast on air will put the sustainability of local regional radio stations at risk and may undermine attempts to increase financial support for Australian music artists, the commercial radio industry has warned.
Senator David Pocock has introduced a private member’s bill seeking amendments to the Copyright Act that would remove the cap, which limits the amount multinational record labels, represented by the PPCA, can charge Australian radio stations for the right to broadcast their music.
Ford Ennals, the chief executive officer of industry body Commercial Radio & Audio (CRA), said rather than increasing financial support for Australian artists, as promised, the proposed removal of the cap could backfire by simply directing more money to the record labels while simultaneously undermining the health of the radio industry, which provides a major platform for Australian artists.
“Unlike the $30 million in APRA royalties that go directly from the radio industry to artists each year, the PPCA fees go directly to multinational record labels – and there is zero visibility of how much is ultimately distributed to artists,” he said.
“Increasing fees to global record labels, which boast revenues many times the size of the entire Australian radio industry, is simply not the best way to support local musicians.”
Ennals said the cap was established to provide a safeguard for local radio to ensure that fees collected by the PPCA did not rise to unsustainable levels.
“There are 260 commercial radio stations in Australia, 220 of these serve communities in regional and remote areas, providing hyper local news, entertainment, information and emergency warnings to listeners free of charge,” he said.
“Without a cap, there is nothing to stop the PPCA and its members from increasing fees to levels that threaten the viability and quality of local radio services.
“The PPCA itself has already flagged publicly that it wants to see fees increase by up to 900% to as high as 4% of gross industry revenue – a level that combined with existing APRA royalties would be unprecedented in any major jurisdiction. As the rate is calculated on revenue, such an increase would cost the local radio industry millions of dollars more a year, with no consideration regarding an individual station’s profitability or viability.”
Ennals said the current PPCA rate of 0.4% was also calibrated to balance the impact of legislated content quotas, under which Australian radio stations must play up to 25% Australian music.
As songs from many countries, including the US, do not attract royalties, it costs local stations more to play Australian music. Without the cap, the radio industry would be forced by legislation to play Australian artists without any limit on the amount that the record labels could charge for broadcasting those songs, CRA has said.
Every year, the Australian commercial radio industry pays royalties and fees totalling about $37 million to Australian music artists. About $30 million goes directly to artists through APRA royalties, with a further $2.5 million paid to PPCA for the right to simulcast music online. Unlike the $4.4 million PPCA broadcast fee, neither of the other fees are capped.
The radio industry also provides significant indirect support to the Australian music as a free platform for 2.7 million Australian songs played each year, through support for new and emerging artists, and through the sponsorship and promotion of events.
A recent report by Deloitte estimated the Australian commercial radio industry contributes $1.1 billion to the national economy each year, including $320 million to regional Australia.
Ennals said no one, least of all the Australian commercial radio industry, disputes that Australian musicians, songwriters and composers deserve more support, particularly during the current cost-of-living challenges.
“However, increasing the financial burden on radio stations with a fee increase that mainly benefits global record labels is not fair or equitable. It risks harming Australian music by harming the valuable platform that is Australian radio," he said.
"Simply asking the record labels to improve the distribution of the existing PPCA fees could have the same effect as a rate increase.”
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