How successful would a nightclub be if it didn't play music?

That was one of the questions facing Australia's Copyright Tribunal last year when it had to decide on setting a new royalty rate for nightclubs to pay for using recorded music.

That was one of the questions facing Australia's Copyright Tribunal last year when it had to decide on setting a new royalty rate for nightclubs to pay for using recorded music.

The tribunal looked at the rates paid to copyright owners by nightclubs as diverse as the 1,800-capacity Home in central Sydney-billed as "Sydney's home of music"-through to a part-time nightclub attached to a rural community's golf club.

Presented with hard evidence of the value nightclub customers placed on music, the tribunal promptly increased the royalty rate-by a cool 1,400%.

That's one clear indicator of how the value of music to commercial third parties is underrated. And new research by PricewaterhouseCoopers indicates that, with more effective collection methods and establishment of fairer rates worldwide, the recording industry could more than double its current annual performance rights income of $1 billion.

Businesses from broadcasters to restaurants play recorded music to attract customers, improve productivity and drive commercial growth. In most countries they obtain a license to do so from collecting societies, acting on behalf of artists and record companies-but the price for the rights the societies license are generally set by government agencies, courts or tribunals.

Unfortunately, those bodies' decisions are...

Click here for the full opinion piece, including why Thorpe believes it is time to take a broader view on the establishment of rates, how this can be achieved where there is no "well-functioning market to determine that value" and more.

Jeremy Thorpe is a partner and leads PricewaterhouseCoopers' Australian economics team. He is a co-author with Diana Wei (manager) and Rob Tyson (senior consultant) of the recent report "Valuing the Use of Recorded Music."