PPCA vs the 1% Cap - MusicNSW

42 years ago, the Australian government passed an unusual law that still effects the music industry negatively today. This is Nick O’Byrne from the Australian Independent Record Association (AIR)’s take on why the 1% cap has to go…

As part of the Copyright Act of 1968, the Australian government imposed a 1% cap on commercial radio revenue payable to record labels and recording artists for their music. That same copyright cap also dictated that the ABC pay a mere $0.005 (half a cent) per head of population for all of the music it plays.

This outdated law imposed limitations on commercial negotiations and didn’t take into account any potential changes to the Australian radio landscape in the future, so much has changed since then. The 1% cap is a law that is outdated, a law that in effect provides a subsidy to a billion dollar media industry at the expense of record labels and musicians.

On May 10th, the PPCA will to take to the High Court of Australia on behalf of their members (many of whom are independent) and the Australian recording industry as a whole to challenge the validity of the 1% Cap. We support them 100%. An historic win next month at the High Court will make a significant difference to record labels and musicians Australia-wide. Here’s why.

At the time that the 1% cap was introduced, no-one envisaged the phenomenal growth of commercial radio in Australia. In fact, last year the industry which had grown to include 273 commercial radio stations Australia-wide reported combined revenues of more than a billion dollars over the 2010 calendar year. It is estimated that 70% of that money comes from the FM sector. Commercial radio is an industry that leverages huge sums of money from advertisers due to combined audiences of more than 9 million people.

But people don’t listen to radio for the ads…

None of the powerful Australian commercial FM networks could survive by providing a diet of talk and advertisments without music. A billion dollar industry built on the back of musical content now only pays approximately $4 million dollars a year for the music that they play.

Normally rates paid by users of music (or for that matter, any copyrighted material) are negotiated between the record labels and the users, if they can’t reach agreement the issue will go to theCopyright Tribunal for an independent hearing. The only exception to this process is the broadcast licence fee paid by radio stations for use of sound recordings, where the cap hinders labels by providing a ceiling to all negotiations which favours the users.

Meanwhile, the ABC’s $0.005 ‘per capita’ cap was set long before the ABC grew from a few talk focused stations in major cities into a vast multi-media network of local radio stations, online radio, digital radio, Radio National, Radio Australia, Dig Radio and of course Triple J. Even if we forget about the fact that the ABC must be playing vastly more music than it was in 1969 we could just take into account the increased cost of living (CPI) and see that the cap should have increased 10 times its current level.

The whole situation means that owners of master copyrights are only getting paid one tenth the amount that APRA registered songwriters and publishers are receiving for the same material.

If the PPCA wins their case at the High Court (even though we may not find out the verdict for 6 to 12 months) then they’ll be free to negotiate with Commercial Radio and the ABC (with or without the help of the Copyright Tribunal).

In the end, we’re looking for an independent and fair assessment of the value of music to commercial radio and the ABC, which will lead to fair remuneration for musicians and record labels and bring the Australian industry in line with dozens of countries around the world.

Find out more on AIR here
Find out more on the PPCA here