Australia Preps 38% Commercial Radio Recordings Royalty Hike

The Yarra River in Southbank, Australia. Photo Credit: Pierre-Henry Soria

Following a multiyear rate-setting showdown, Australia’s commercial radio broadcasters will begin paying nearly 40% more for the use of recordings.

Australia’s Copyright Tribunal finalized this licensing-rate hike in a mid-December decision, and the Phonographic Performance Company of Australia (PPCA) today “acknowledged” the development.

At a glance, “acknowledge” might not seem an appropriately enthusiastic verb; a double-digit rate jump is, after all, significant. But the major-label-led PPCA had been pushing for a comparatively sweeping licensing-scheme overhaul.

As reiterated in the Tribunal’s approximately 42,000-word decision, the PPCA and the broadcaster rep Commercial Radio & Audio Limited (CRA) had last hammered out a licensing deal, including a fee of 0.4% (totaling $4 million in 2023) of commercial stations’ cumulative gross revenue, closer to the turn of the century.

(Even the journey to 0.4%, including from around 0.2% in the 1980s, required years to complete.)

With much having changed in the interim, 2022 saw the PPCA terminate the licensing agreement (later shifting to a temporary pact under the existing terms) and dive into the rate-setting rumble.

Unfortunately for the music community, one key licensing element has been looming large since 1969: Australia’s 1% fee cap for the use of recordings on traditional radio (excluding simulcasts).

Like the States’ AM/FM licensing model, this system ties back to radio’s hitmaking heyday. Also as in the U.S., Australian broadcasters are rather content to maintain the status quo – or, here, the 1% limit.

The Copyright Tribunal in its decision directly mentioned the lack of a stateside terrestrial radio royalty for recordings.

“Of course it will be recalled that the United States has no broadcast right for sound recordings,” the Tribunal penned, “so if it were included in the comparison tables, its rate would be lower than Australia at zero. The evidence also suggested that Japan had a lower rate than the current Australian rate.”

In the end, despite facing considerable criticism, the cap factored heavily into the present rate-setting process. Among different things, the PPCA had been looking to implement a broadcaster-specific (not radio-space-wide) sliding royalty rate tied to music-usage percentages and topping out at 1%.

Unsurprisingly, given the above-noted word count, the Tribunal spilled plenty of ink when explaining the decision to settle on 0.55% across the board. First, in terms of the main reasons for the boost, “the promotional value of radio…has plainly diminished since 2000.”

Second, “the discount applied to reflect the then-lower proportion of protected works is no longer appropriate,” per the Tribunal. Stated briefly, “protected works” refer to recordings that generate broadcast royalties in Australia; whether a recording fits the bill “depends on it having one or more ‘connecting factors’ to Australia or to one of the other Schedule 3 Countries.”

With its lack of AM/FM recorded royalties, the U.S. “is not one of the Schedule 3 Countries,” which have substantially increased in quantity from the 80s, the Tribunal pointed out.

All these angles tie back to the 0.55% gross-revenue license rate itself, up 37.5% from the existing 0.4% fee and expected to include retroactive compensation for the interim-agreement period. In a statement, PPCA head Annabelle Herd didn’t hesitate to take aim at the 1% cap.

“We have secured more royalties for local artists,” Herd said in part, “but the Tribunal’s ruling proves definitively that we cannot negotiate a fair market rate for artists while the statutory 1 per cent cap remains in place. It is now up to Government and the Parliament to lift this deeply unfair and arbitrary cap.

“This decision follows many months of engagement and, ultimately, the refusal to meaningfully negotiate an updated rate in circumstances where the market has changed significantly since the original agreement was struck,” continued the PPCA CEO of five years.

“Our job, first and foremost, is to use every avenue we can to fight for fair compensation for artists when their work is commercialised. PPCA will always pursue appropriate legal avenues to ensure artists and rights holders receive fair value when their recordings are commercially exploited,” Herd concluded.