Annabelle Herd. Credit: PPCA
Commercial radio broadcasters are now required to pay more to play recorded music following a Copyright Tribunal of Australia determination.
The new broadcast licence rate is 0.55% of gross industry revenue, up from 0.4%. This is a 38% increase in royalties paid when commercial radio broadcasts use sound recordings.
This statutory cap applies only to sound recordings and not musical works.
This has been backdated to July 1, 2023 and follows failed negotiations between Phonographic Performance Company of Australia (PPCA) and Commercial Radio & Audio (CRA).
While the PPCA has been receptive towards an increase, the decision has cemented concerns about a statutory 1% cap that both sides said artificially limits the value of sound recordings.
The Tribunal's decision recognised the cap's impact, stating it has always shaped how the parties negotiate, what they think is possible and the rates that have actually been paid.
The decision noted that ignoring the cap for valuation purposes would create a market disconnected from commercial reality, creating what the Tribunal described as "a permanent fixture" in the negotiating landscape.
PPCA chief executive officer Annabelle Herd acknowledged the increase while calling for government intervention to remove the cap.
“We have secured more royalties for local artists, 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,” Herd said.
“It is now up to the Government and the Parliament to lift this deeply unfair and arbitrary cap.
“The Tribunal’s reasoning makes it clear, in no uncertain terms, that the 1 per cent cap was a decisive factor throughout the decision and has constricted Australian artists’ ability to receive sound recording broadcast royalties comparable to other markets.
"Caps are referenced repeatedly throughout the decision, at least 140 times in fact, and the 1 per cent cap is described as a fixed and enduring part of the landscape.
“While the Tribunal accepted a number of PPCA’s arguments, including that commercial radio’s promotional value has materially declined and that the use of recorded music by the sector has expanded, the existence of the cap necessarily limited how far the rate could move.
“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. 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.”
A CRA spokesperson told AdNews they welcomed the decision to reject the PPCA’s approach to the application of the 1% statutory cap and the significant increase the PPCA was seeking.
"PPCA sought a rate of 1% for most stations, a 150% increase on the long-standing industry rate of 0.4%. This was wholly rejected by the Tribunal, which instead determined a rate of 0.55% of industry revenue," the spokesperson said.
"Critically, the Tribunal confirmed that the rate of 0.55% reflects the present value of the broadcast right.
"Despite achieving a rate increase that the Tribunal explicitly determined reflects present value and which sits well below the 1% cap - PPCA continues to agitate for the cap’s removal, when there is nothing to suggest the removal of the cap would increase the rate.
The Tribunal found that higher international radio royalty rates in comparable markets were not sufficiently useful benchmarks due to the absence of similar statutory caps in other jurisdictions.
However, the cap fundamentally limited the rate adjustment possible.
Under PPCA's distribution policy, royalties from commercial radio are allocated based on airplay logs.
For Australian recordings, 50% goes directly to featured artists registered with PPCA, with the remaining 50% paid to registered record companies or rights holders.
PPCA will continue to work with government, parliament and industry stakeholders on policy settings for sound recording royalties, focusing on the removal of the statutory cap.
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