Last month’s decision by the Copyright Tribunal to hand major labels a huge increase in music royalties raised a temporary flap in some of the newspapers.
But the bad news has yet to filter though to the financial markets, which might want to consider re-rating the earnings forecasts on Coles’ and Woolworths’ liquor divisions.
The decision handed a whopping 1400% increase in the fees the Phonographic Performance Company of Australia (PPCA) can charge to nightclubs and dance parties — an incredible 280 times more than the June quarter CPI rise.
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But it’s not just nightclubs that will be affected. Head to the PPCA’s website and you’ll note that they reserve the right to charge a licence fee to any business that exposes its customers to recorded music. That’s got Clubs NSW, the hotels lobby and the exercise and gym industries very worried.
If you like working out to a bit of Britney Spears, or listening to jazz while you get hair snipped, this decision will affect you. Most cafes, bars and restaurants have a 5-stacker CD player hidden in the back room that spins a mix of favourite CDs. So do small boutiques, hairdressers and fashion retailers. Technically, all these businesses require a PPCA licence. Expect the PPCA to press for a stiff hike in these fees too.
The big bickies come in for the larger pubs and nightclubs – most of which are now owned by Australia’s retail duopoly, Coles and Woolworths. These venues are looking at half-million dollar fee increases and more. Across all the pubs in Woolworths portfolio, that’s a $65 million-plus hit to the bottom line.
And who is the PPCA? Supposedly a non-profit organisation, the PPCA is in fact a puppet of the major labels. Sitting on the PPCA Board are the CEOs of all four Australian major record labels, nominally fierce competitors. Together they represent nearly 80% of the recorded music market.
In the words of Adam Smith, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”