The Australian commercial radio industry has argued against lifting the one per cent cap on licence fees paid to sound recording copyright owners, in its submission to the Federal Government. Commercial radio currently pays about $18 million in copyright fees.
In its submission, Commercial Radio Australia, the industry group representing the commercial radio broadcasting industry, argues that rising costs and increased competition mean the industry does not have the economic capacity to absorb any additional costs from increased copyright fees, if the cap was removed or amended.
Currently, licence fees are collected by the Phonographic Performance Company of Australia (PPCA) on behalf of record companies and performers. The Attorney General’s Department announced a review of a legislative cap on PPCA fees in February this year. The existing cap limits copyright fees paid by commercial and community broadcasters to PPCA to a maximum of one per cent of gross revenues.
The radio submission says: “According to the Australian Broadcasting Authority’s (ABA) broadcasting financial results, industry revenue grew by 21.7% between 1999 and 2003 but was outpaced by growth in expenses at 26.1% and all copyright fees at 24.6%.”
The submission says in 2002/03, over 26% of commercial radio stations were unprofitable, largely in regional areas, and that if copyright costs were increased, the viability of many more regional stations, would be forced out of business or have to relocate resources away from certain types of programming like news and current affairs. It also argues that the one per cent cap provides certainty as far as copyright fees are concerned.
In its submission, Commercial Radio Australia says that with the $400 million roll-out of digital radio across Australia about to take place, any additional costs or expenses from a change to the copyright cap, might discourage broadcasters from investing in the technology.
The submission argues that the current market rate of 0.4 per cent of gross industry revenue, which has been negotiated between Commercial Radio Australia and PPCA over many years, is well below one per cent. It also says that the PPCA would continue to seek massive fee increases at every review opportunity if the law is changed.
“The one per cent cap is an economically sound and desirable form of regulation which ensures that PPCA does not abuse its monopoly power in the bilateral bargaining process with Commercial Radio Australia.”
The submission shows that fees paid by the commercial radio industry to PPCA have actually increased every year over the past 18 years, even with the existence of the one percent cap. Latest figures available from the ABA show that the radio industry paid around $18 million in copyright fees in 2002/03.
The submission argues that the one per cent cap is not responsible for any economic loss for Australian musicians. It says that new digital technologies, competing entertainment products and structural changes taking place within the recorded music industry have all contributed to a drop in sales of recorded music in recent years.