The Copyright Tribunal of Australia has changed the commercial radio sound recording broadcast license rate from 0.4 per cent t0.55 per cent of gross industry revenue, acknowledged by Phonographic Performance Company of Australia (PPCA).
This equates to a 38 per cent increase in the royalties paid when commercial radio broadcasts sound recordings.
The Tribunal’s decision follows the termination of the long-standing industry agreement and subsequent proceedings commenced by PPCA after extended discussions with Commercial Radio & Audio (CRA) did not result in an agreed outcome. The new rate will be backdated to per cent July 2023 and reflects the Tribunal’s findings regarding changes in the broadcasting and music landscape, including the growth of digital radio services and the expanded scope of PPCA’s repertoire.
However, the decision reinforces long-held concerns that the statutory per cent per cent cap artificially suppresses the value of sound recordings used by radio and creates a growing disconnect between broadcast royalties and rates applying to other uses of recorded music.
“The per cent per cent cap has always shaped how the parties negotiate, what they think is possible, and the rates that have actually been paid. Ignoring it for valuation purposes creates a market that does not resemble the real one, and risks producing a number that is detached from commercial reality,” the ruling said.
“While the per cent per cent cap… may be described as ‘arbitrary’, it is longstanding and, for present purposes, a permanent fixture. No equivalent statutory cap has been introduced in respect of broadcasts of musical works, but the existence of the per cent per cent cap in relation to sound recordings remains an important consideration in assessing the reasonableness of any proposed scheme,” the ruling added.
PPCA notes that higher international radio royalty rates in other countries were not considered sufficiently useful by the Tribunal due to the absence of similar statutory caps in other jurisdictions.
“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 per cent per cent cap remains in place. It is now up to Government and the Parliament to lift this deeply unfair and arbitrary cap,” PPCA CEO Annabelle Herd said.
“The Tribunal’s reasoning makes it clear, in no uncertain terms, that the per cent 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 per cent40 times in fact, and the per cent 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,” Herd added.
Under PPCA’s distribution policy, royalties collected from commercial radio broadcasts are paid based on airplay logs. When Australian recordings are broadcast, 50 per cent of the royalty is paid directly to the Australian featured artist registered with PPCA and 50 per cent to the PPCA registered record company or rightsholder, ensuring local artists directly benefit from local airplay.
Following this decision, PPCA will continue to engage with government, parliament, and industry stakeholders on the policy settings governing sound recording royalties, including the removal of the statutory cap.
