Australian Record Labels' Lawsuit to Increase Radio Royalties to Reach High Court in May
Australian Record Labels' Lawsuit to Increase Radio Royalties to Reach High Court in May

Collecting society the Phonographic Performance Company of Australia (PPCA) has failed in its High Court challenge to remove a long-standing cap which limits to 1% the royalty rate commercial radio pays to play its recordings.

The full bench of the High Court today found the contested cap was constitutionally valid and should stay intact.

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Following the decision, the PPCA pointed out that the issue of whether the cap is "fair" or "just" was not addressed, and the society has vowed to push on.

The case is a blockbuster for Australia's music industry, one which pits labels against radio, and has many millions of dollars at stake. When the PPCA launch its audacious legal action in 2010, the collecting society was essentially testing the country's constitution.

The cap was enacted in 1969 with the Copyright Act, and is mentioned in section 152(8). According to the document, Australia's commercial radio stations are required to pay to artists and labels no more than 1% of a broadcaster's gross income. In the same section, the Copyright Act caps the copyright fees paid by the government-funded Australian Broadcasting Corporation (ABC) on a rate of 0.5 cent per head of population - a figure which translates to about $100,000 Australian ($104,000). The PPCA says this figure also doesn't give a fair return, and must be adjusted. On today's result, the High Court didn't agree.

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When the PPCA launched its action, the society said that the commercial radio sector earned revenue of up to a billion dollars a year, but the price cap means that the sector in total paid just Australian $4 million ($4.16 million) for all the recordings played each year across the market's 260-plus commercial radio stations. Trade body Commercial Radio Australia disputed the claims. CRA CEO Joan Warner accused the PPCA of misrepresenting the amount it pays in copyright fees and countered with an accusation of greed.

Though the PPCA never announced the cash it targeted from radio, it is understood the society was keen to follow the template of APRA's composer tariff, which slides from 0.5% to 3.5% of station revenue depending on each broadcaster's level of music usage. A figure of Australian $15 million ($15.6 million) would be close to the mark.

In future, the PPCA will now focus its efforts on lobbying politicians to change the legislation.

"We will now appeal to all Members of Parliament to support artists and make the necessary change to the Copyright Act," comments PPCA chief executive Dan Rosen following today's judgment. "There is no economic, social or moral justification for this price cap. It was examined by two independent reviews commissioned by Government, one in 1995 (Simpson Review) and the other in 2001 (Ergas Review). Both concluded that the cap was unjustified and should be repealed, as did a review by the Attorney-General's Department in 2005."

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The legislation, notes Rosen, is "simply outdated and unjust and has allowed a situation where artists and labels have, for far too long, subsidised the commercial radio industry." He adds, "The existence of this anachronistic price cap has seen Australia fall well behind other countries such as New Zealand, Canada and the U.K. where artists and labels receive significantly more from radio broadcasters. Music is vital to driving radio industry profits and there should be fair return".

CRA didn't comment on today's outcome.