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Mar 24, 2005

Commercial radio fires one back

I am responding to Hugo Kelly's piece in today’s Crikey (23 March 05) on radio royalties. It might be useful to Crikey subscribers to have the full facts on a very complex issue.


I am responding to Hugo Kelly’s piece in today’s Crikey (23 March 05) on radio royalties. It might be useful to Crikey subscribers to have the full facts on a very complex issue.

Australia’s 256 commercial radio stations generated a total of $770 million dollars in revenue but a total profit of only $107.7 million in 2002/03 – roughly $420,000 profit per station. This is not the rich industry that PPCA would have you believe. To put this in perspective, consider the fact that each of Australia’s 48 commercial TV stations make on average $10 million dollars in profit. In fact, while commercial radio total revenue grew by 21.7% between 1999 and 2003 it was well outpaced by growth in copyright fees of 24.6% and by growth in expenses at 26.1% .

Commercial radio stations also pay copyright fees to 3 different copyright collecting agencies in relation to the same product: to APRA (for composer’s rights in music), to PPCA (record company and artist’s rights in the finished recording) and AMCOS (for reproducing and using music in audio productions). In total, this industry paid over $18 million dollars in copyright fees in 2002/03. Not just the $2.7 million noted in Hugo Kelly’s piece.

The money that PPCA collects goes to artists represented by PPCA, that is those who “perform” on the recordings. If the performer is a singer/songwriter, they also receive additional composer royalties from APRA when their music is played on the radio. This means singer/songwriters like Paul Kelly, Missy Higgins, Kasey Chambers, Guy Sebastian, Silverchair, to name a few, actually get royalties from both APRA and PPCA.

PPCA’s simplistic comparisons with overseas are totally and deliberately misleading. There is no commonality internationally. Each country adopts its own unique rules on what it will charge radio. It is worth noting though that there are 4 countries in the world (including Australia) where the copyright law limits copyright fees paid to record companies (so Australia is not unique in that sense). These 4 countries represent about 43% of the world market for music.

A glaring omission in particular was the fact that in the market in which the record industry is still the most powerful in the world – the USA – record companies have absolutely no rights to any money when their recordings are played on radio. And in Canada a large number of stations pay just pay just $100 a year in fees to PPCA’s equivalent..

Our station’s program and music directors can confirm that record companies compete vigorously to get them to play their music (including inundating them with CDs) because they know that getting a song on the air is the best way to promote it to the buying public. Airplay is a form of free advertising for record companies. Without airplay, they would not be able to sell as many records. It’s wrong to say that record companies subsidise our stations when the evidence suggests that we provide massive amounts of free advertising for them. Music radio stations (and not all of them are) do acknowledge that music is a valuable part of their programming mix but it is far from the sole reason for their success – stations rely on an overall mix of programming including personalities, talk, news and weather, station promos, competitions and listener interaction.

In addition, just to put the icing on the cake for the Australian record companies, (the big 4 of which are subsidiaries of giant multinationals), Australian record companies have a guaranteed broadcast royalty income stream through Government quotas for Australian music – 25% for music stations. Commercial radio stations, and in particular FM radio stations, exceed this quota regularly so we demonstrably support Australian music and can lay claim to building the careers of most of the Australian artists who have put their names on the PPCA list of supporters . To support the principle of protection through the Government mandated music quotas (which effectively guarantee the record companies a minimum yearly income stream from the royalties from the protected Australian recordings), as the record companies do, but at the same time to object to a sensible brake on the monopoly power of the record company collection society in collecting royalties from radio stations (in the form of the 1% cap), as a form of protectionism, is ludicrous and hypocritical.


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