Additional Comments by Senator Paul Scarr
1.1The assessment of the consequences of removing the existing caps under section 152 of the Copyright Act 1968 is extremely complicated and highly contested.
1.2The Committee received strong submissions from both sides of the debate, including from peak bodies, stakeholder groups and industry participants.
1.3The contested nature of the debate is perhaps best evidenced by the passionate submissions made by recording artists, on the one hand, and working members of commercial radio, on the other hand.
1.4In their open letter, annexed to the submission from the PPCA, over 500 recording artists said:
So much work goes into the creation of a sound recording.We spend countless hours in the studio recording, refining, mixing, and mastering, to create a track we are proud to release into the world.
Our art is our property, and it is the result of investing time, money and talent.It’s made to be shared, but it has value, and we should be paid fairly for it.
The Government – any government – has no place deciding the value of music.It didn’t back in 1968 when these Radio Caps were put in place, and it still doesn’t today.We are in the business of music.We as creators should have the right to negotiate a fair market rate for our works, not have that rate dictated by Parliament.
Radio is still an important part of this business and forms part of our income streams.With the industry still recovering from the pandemic, and the cost-of-living crisis, it’s never been more important to get our earnings right.For the past 55 years, our pay has been constrained by legislation while the radio sector has built profitable businesses on the back of our work.
It’s unfair.
Please pass this Bill.[1]
1.5In their open letter, annexed to the submission from CRA, working members at dozens of Australian commercial radio stations said:
Those of us in Australian commercial radio can attest to the following – we are dedicated to this industry because we love radio. We love the role it plays in our communities. We love informing, entertaining, and connecting with our listeners. Commercial radio is more immediate and more personal than any other medium. As politicians and public figures, you would appreciate that calling in to the local radio station in any region is the quickest, most direct way to talk to constituents.
We are an adaptable and resilient industry but the pressures on radio continue to mount. Like any commercial industry we feel the pain of economic cycles and the cost-of-living crisis. We face increasing competition from other mediums, particularly international streaming services, which do not operate under the same strict regulatory conditions as radio.
Commercial radio loves Australian music. We recognise that we play an important role in the promotion of local talent and we consider this a privilege. We also very much want to see Australian musicians, songwriters, and artists paid fairly. But radio is already paying a fair amount to play the music required to meet the legislated quotas.
Every year we pay almost $40 million in fees to APRA and PPCA. If the 1% cap on PPCA fees were scrapped, then it would threaten the sustainability of our stations. This in turn would hurt Australian music and Australian communities. We believe the solution lies not in scrapping the 1% cap, but instead taking a close look at how those fees are distributed.
We may not have the same rockstar name recognition as the Australian artists whose music we play. But we are the local voices of our communities. We are the station managers, the announcers, the sales teams, the panel operators, the engineers, the newsreaders, the journalists, the content directors, the music directors, the producers, the cleaners, the content makers, the marketing teams, the traffic coordinators.
Please keep the cap in place to keep our industry alive.[2]
1.6The competing positions put to the Committee underline the importance of the Senate carefully considering all of the issues raised by this Bill.
1.7During the course of this inquiry, the Committee was provided very useful background to the introduction of the current licensing regime applying to the broadcast of sound recordings.
1.8In its answer to a question on notice I asked with respect to the origin of the caps, the ABC quoted at length from the second reading speech of the then Attorney-General.It is worthwhile repeating:
Honourable members will therefore appreciate that any alteration in the existing copyright law will affect substantial economic interests which have been built up on the basis of that law. The interests affected will be the interests of both producers and users of material protected by copyright.
The present Bill recognises that there are changes in the use of copyright material which have been brought about by changes in technology and the Government has been concerned to see that authors receive due payment for the use of their material. At the same time the Government recognises that existing practices and existing relationships in industries which depend upon copyright material cannot be ignored.
In framing this Bill, the Government has had due regard to interests which are often conflicting interests. In many cases, it has not been possible to satisfy completely all parties. Nevertheless, I hope that this Bill will be widely accepted as a reasonable compromise in cases where there are conflicting interests. [Hansard – Thursday 16 May 1968 House of Representatives at 1527] …
Honourable members will be aware that the provisions of the 1967 Bill relating to copyright in sound recordings were, in some respects, the subject of much controversy. The provisions in the present Bill represent an attempt to reach a reasonable compromise between the conflicting claims of record manufacturers and of broadcasting organisations.
While neither party would, I think, regard the present provisions as entirely satisfactory from its point of view, my understanding is that each is prepared to accept these provisions as a workable compromise. In the circumstances I do not therefore think it necessary to traverse the whole of the controversy that centred on the provisions of the 1967 Bill relating to broadcasting rights in records. [Hansard – Thursday 16 May 1968 House of Representatives at 1532]…
These limits [referring to the caps] have been fixed to allay the fears expressed by both the commercial broadcasting stations and the Australian Broadcasting Commission that the payment for the broadcasting of records could impose a substantial financial burden on them… [Hansard – Thursday 16 May 1968 House of Representatives at 1533].[3]
1.9The intensity of the political debate at the time is brought to life in commentary provided by Professor J.A.L. Sterling who has been described as ‘a colossal figure in the advocacy and teaching of copyright law and policy’.[4]Professor Sterling advocated for the interests of the recording industry and was intimately involved in the process leading up to the final resolution of the political debate reflected in the current legislative regime.In a book commemorating the 40th anniversary of the Copyright Act 1968, Professor Sterling provides the following description (in compelling terms which perhaps provide an insight into why he was so highly regarded):
In May 1967, the Attorney General published the Copyright Bill.The record performing right was retained.A fierce controversy broke out.The Government of the day was a coalition of the Liberal Party and the Country Party.
The radio stations opposed retention of the right [the copyright in the broadcast of sound recordings] – but the unexpected development was that the small country radio stations providing programs to lonely homesteads and farms of settlements in the outback went to their Country Party MPs and said that payment of royalties for the broadcasting of records would mean that in many cases they would have to terminate their programmes, removing the services and the entertainment to large numbers of persons in the country areas.
While the Liberal Party wished to retain the right, the Country Party opposed the right’s retention, and said it would leave the Government if the Liberals insisted on retaining the right. This would have meant an election, and thus the issue had created a political crisis.
At the invitation of the Australian record industry I returned to Australia in October 1967.After meetings with the industry I went to Canberra and the Attorney-General received me in his rooms here in Old Parliament House.The first thing he said was: “Mr Sterling, you told me this was not a political issue and now the Government is about to fall because of it.” I made such apology as one could in such circumstances.“You had better stay here in Canberra and see my people in the Department”, said Mr Bowen.That was all: we did not speak again.
I settled down in the old Hotel Canberra near Parliament House and commenced a series of meetings with Lindsay Curtis [the relevant officer of the Attorney-General’s Department] and industry representatives.I did not meet any representatives of those opposed to the retention of the right.The pattern was that we would meet Lindsay Curtis and put a proposal on behalf of the industry.Lindsay would convey this to the “other side” and we would meet again in a few days to consider the reply:this process continued for some weeks.
Finally, it was announced that the Government would amend the Bill to specify, inter alia the general rules on the maximum royalties payable for broadcasting of records by commercial and non-commercial stations.Thus the matter was resolved, and the right was retained in the 1968 Copyright Act and remains there still, with the provisions on maximum royalties…[5]
1.10There is additional background to provide in relation to the origin of the cap on the licence fee payable by the ABC; namely, 0.5 cents per head of population.In its answer to my question on notice, the ABC stated:
At this time licence payments to APRA (the Australasian Performing Right Association) (the collecting society for musical works) were calculated based on population. It is likely that this informed using population as the basis for the calculation of the cap. It is correct that there were no equivalent ‘gross earnings’ on which to base the calculation of a licence fee as there were for the commercial broadcasters.
While not publicly documented, in October 1967 in correspondence between the ABC and the Postmaster General and a representative of the Commonwealth Attorney General’s Department prior to the Bill being enacted in May 1968, the ABC proposed the cap of 0.5 cents per head of population.[6]
1.11Hence, in relation to the imposition of the cap, the current licensing regime is the result of a heavily negotiated political process where the starting positions were as follows: (a) on behalf of the recording industry, introduction of the new form of copyright (for broadcast of a sound recording) with no cap; and (b) on behalf of commercial radio, resistance to introduction of the new form of copyright.The result?A compromise; namely, introduction of a new form of copyright with a cap.Accordingly, the Bill being considered by this Committee would seek to undo a compromise position which was negotiated and then enacted over 50 years ago.
1.12Under the current legislation, there are two caps.The commercial radio cap which prevents broadcasters from paying more than 1% of their gross earning in licence fees for the broadcast of sound recordings.Then there is the cap that applies to the ABC; namely, $0.005 (half a cent) multiplied by the estimated population of Australia (i.e. a population of 26 million equates to $130,000).These license fees are collected by PPCA.
1.13It should be noted that there is also the copyright in the underlying musical works which covers the written lyrics and musical scores. This is not the subject of a cap.It is collected by APRA AMCOS.[7]
1.14Under the current system with capped license fees for the broadcast of sound recordings and uncapped license fees for the copyright in underlying musical works, the commercial radio industry pays approximately $40 million in licensing fees which is approximately 5% of industry revenue.[8]
1.15CRA provided further details in an answer to a question on notice with respect to the license fees the commercial radio industry currently pays:
APRA (songwriters and composers)
The industry pays around $30 million per year in copyright fees to APRA. This covers a much larger repertoire of songs than PPCA’s licence.It also covers a much broader suite of rights than PPCA’s licence, including simulcast, online and limited podcast rights. These fees are paid on a station-by-station basis.The same rates apply to metro and regional.Stations have individual licences with APRA, under a uniform template.
PPCA (simulcast)
The industry pays around $2.3 million per year in simulcast fees to PPCA. These cover simulcast only (i.e. online transmission at the same time as the broadcast). The fees are calculated either on the basis of a percentage of revenue or a rate per stream (the station chooses).The same rates apply to metro and regional, although the minimum annual fee is less for smaller population areas.Stations have individual licences with PPCA, under a uniform template.
PPCA (broadcast)
The commercial radio industry pays around $4.4 million to PPCA in broadcast fees. PPCA’s repertoire is much less than APRA’s repertoire (we believe it’s approximately half).The industry average is 0.4%, though individual stations pay different amounts. Stations pay individually, under a template agreement. Unlike the APRA licence, there are no online, podcast or simulcast rights in the PPCA licence. The same rates apply to metro and regional.[9]
1.16The ABC paid approximately $130,000 in license fees for the broadcast of sound recordings and ‘millions of dollars per year to use sound recordings on its services’, including TV, radio and online.[10] The ABC claimed confidentiality with respect to the specific amount.
1.17The question then arises as to what would be paid by the commercial radio industry and the ABC if the caps were removed?
1.18In its submission the PPCA argued:
Removing the caps will not automatically force radio broadcasters to pay more, it will simply allow PPCA to negotiate, or the Copyright Tribunal to determine, fair market rates for the use of sound recordings, as is the case will all other PPCA licenses for sound recordings.[11]
1.19Theoretically, this is correct. However, the PPCA commissioned analysis by a research firm, Mandala which was lodged as supplementary information which requires careful analysis (the “Mandala Report”).[12] It is noted that in the time available, the Majority Report was not able to consider this analysis in depth.Accordingly, I provide the following observations:
The Mandala Report assumes (for the sake of analysis) that radio broadcasters would pay sound recording royalties at the same rate as for musical works; namely 3.6%;[13]
Record labels would receive an additional $4.2 million for Australian repertoire sound recordings[14]and international record labels would receive an additional $19.2 million for protected international repertoire (US artists do not have protected copyright);[15]
Based on the above, record labels would receive approximately an additional $23.4 million);
Australian artists would receive approximately an additional $4.8 million;[16] and
Commercial radio broadcasting profit would decrease by approximately $29 million with approximately 16% of that amount ($4.8 million) flowing to Australian artists (although it should be noted that some artists self- record or independently record).[17]
1.20On the basis of its analysis, the Mandala Report argues:
Removing the radio caps could increase music income of the most played artists by 78%;
Removing radio caps could double the number of new Australian artists played on the radio for the first time;
Radio companies are well resourced and capable of paying higher rates. Profit margins would ‘marginally reduce’ from 13% to 11%;
The ABC would pay approximately 0.3% of its annual budget of $1.3 billion (an increase from $130,000 per annum to $3.9 million per annum).[18]
1.21CRA provided additional information to the Committee to argue that the commercial radio sector does not have the capacity to absorb material increases in copyright licensing fees.CRA raised the following issues:
Commercial radio advertising revenue and earnings have dropped significantly over the past few years;
Publicly available financial data shows declining revenue and profit, together with significant cost cutting within networks;
Significant impairments on asset values have been incurred – large networks have had to write down their asset values substantially;
Copyright fees impose a substantial burden on the industry. As a proportion of profit, copyright fees have increased significantly over the last few years and now sit around 15%; and
Existential challenges faced by commercial radio industry – the commercial radio industry continues to face challenges in addressing the decline in advertising revenue and the need to adapt to a changing landscape.[19]
1.22Commercial radio industry revenue has materially declined over the past few years.Between 2019 and 2023 there has been a fall of approximately $92 million in metro advertising revenue (representing a 12% fall).In the same period there has been a fall of approximately $69 million in regional revenue (representing a 17% fall).[20]
1.23The published financial information for ARN Media Limited (‘ARN’) and Southern Cross Austereo Australia (‘SCA’) (both public companies listed on the ASX and subject to rigorous reporting obligations), reflect the challenging circumstances facing the commercial radio industry.
1.24In the last two financial years, both ARN and SCA suffered substantial impairment losses and a number of deteriorating financial metrics. This provides strong evidence of the challenging market conditions faced by commercial radio.
1.25For the year ending 31 December 2023, ARN reported an impairment loss of $103.7 million in relation to that part of its business which includes its metropolitan and regional radio network.[21]
1.26In comparing its performance to the previous financial year, ARN noted that a range of material financial indicators had deteriorated:
Total revenue was down 2%;
Total EBITDA was down 17%;
Metro revenue was down 5%; and
Regional revenue was down 3%.[22]
1.27Cost savings of $10 million were identified by ARN, including reductions in headcount.[23]
1.28The challenges faced by ARN were also evidenced in SCA’s recent financial results. For the year ended 30 June 2022, SCA recorded an impairment loss of $251 million.[24]
1.29In its most recent financial update to the market for the six months ending 31 December 2023, SCA observed: ‘ad markets remain challenging’.[25]
1.30A comparison to the corresponding six-month period ending 31 December 2022, indicated:
EBITDA was down by 59% since the 30 June 2019 financial year.[27]
1.31In its commentary, SCA stated:
‘local SME advertisers showing resilience amid economic uncertainties…while national advertisers facing challenges’; and
‘strategic cost review has identified approximately $30 million of annualised costs savings with approximately $20 million being realised in financial year 2024…aim for further cost reduction in financial year 2025 and beyond…’[28]
1.32When considering the issue of financial performance, it should also be noted that there is authority for the proposition that a party’s capacity to pay is not relevant to a determination by the Copyright Tribunal.In answers to questions on notice, the Australian Copyright Council referred to a case brought by the PPCA (the so-called Nightclubs case) and commented:
A party’s capacity to pay was specifically referred to in the ‘judicial estimation’ approach articulated in the Nightclubs case in determining a section 154 application on whether a proposed licensing scheme is reasonable in all the circumstances.However, the Full Tribunal also in the Nightclubs case noted that:
If it be the fact that the right to play recorded music has the valued claimed by the Society, the fact that many nightclubs presently operating cannot afford to pay for that privilege is not a reason for them to be subsidised by those whom the Society represents.Ultimately, market forces will operate.[29]
1.33Analysis of the Bill is further complicated by the existing minimum mandatory amounts of Australian music content required to be played depending upon the radio format.
1.34In its submission, CRA argued:
Radio remains a key platform for promoting Australian artists. Under the Commercial Radio Code of Practice, radio stations must play a mandated minimum amount of Australian music. The proportion of music that must be Australian depends on the format of the station, with top music use categories playing a minimum of 25% Australian music. A portion of this music must be new Australian music. There is currently no other platform that has a mandated amount of Australian music.[30]
1.35In response to a question taken on notice, CRA estimated that 43% of all commercial radio stations are required to play 25% or 20% Australian music during peak listening hours.[31]
1.36CRA argue that the mandated content quota and the cap on copyright fees currently work in tandem for the benefit of all concerned parties and stakeholders. They should be considered mutually dependent for the survival of radio broadcasting as a platform for aspiring Australian musicians and artists.CRA also argued that if the cap is removed so should the minimum content obligation.
1.37From its perspective, Broadcast Operations Group described to the Committee the relationship the fee cap has with the content mandate:
the cap is an important counterbalance to the obligation that radio must play Australian music through a quota arrangement (i.e. the obligation to play up to 25% of Australian music in prime-time hours). The cap ensures the record labels cannot exploit a power imbalance by charging exorbitant fees for music the radio stations are required to play.[32]
1.38The linking of the cap to the minimum content requirements was strongly contested by PPCA and other stakeholders.However, the Committee received evidence that if the cap was removed, then broadcasters would have to consider their options to either: (a) change formats to decrease minimum Australian content requirements; or (b) increase the quantity of music not subject to the sound broadcasting copyright licensing regime, particularly US sound recordings.
1.39ARN submitted:
ARN believes any meaningful increase in fees – let alone the scale demanded by the record labels – would have a corresponding impact [on] all commercial radio operators and, for some, could lead to station closures, particularly in regional areas.
Another option, which has already been taken up by some network operators, is changing formats to reduce costs by reducing the music content that must be paid for.Stations could reduce the music being played, but in turn, this would reduce the royalties and exposure for Australian musicians – again an unintended effect.[33]
1.40 SCA submitted:
If music licensing costs were to increase further, as the PPCA intends, SCA and other commercial radio broadcasters would almost certainly review their music formats and the Australian music quotas in the Code of Practice with a view to reducing their operating costs by reducing the amount of Australian music on commercial radio.This would defeat the purpose of the Bill…As commercial radio is bound to play Australian music, it is only fair that the record industry is under a corresponding obligation regarding the amount that it can charge.[34]
1.41Regional radio is part of the fabric of the Australian community. The importance of regional radio is well summarised in the Majority Report.The potential impact on regional radio is canvassed in paragraphs 2.79 to 2.86 of the Majority Report.
1.42There are many regional radio stations which are not owned by major networks.In a response to a question taken on notice, CRA advised that there were 85 privately owned commercial radio networks not owned by the major networks.[35]
1.43Concerns have been raised by regional radio stations across the country. Below are some further examples.
1.44The Midwest Radio Network, broadcasting to Central New South Wales locations such as Lithgow, Bathurst, Oberon and the Blue Mountains submitted:
The proposed removal of the cap would elevate the operational costs of already marginally viable radio services, hindering our ability to comply with legislated content requirements without compromising our staffing and operational effectiveness. Our stations invest significantly in essential but costly aspects, such as employment overheads, broadcast equipment, and studio upgrades, all of which are essential to fulfill our obligations and provide valuable community services.[36]
1.45Similarly, regional radio broadcaster West Coast Radio Pty Ltd, which covers a population of 120,000 people in Western Australia, submitted to the Committee their view that:
Our network simply could not survive under these circumstances. Our stations thrive on our local focus. The business is not viable without it. Many redundancies would be necessary, removing local news coverage and severely diluting local content to the point that we are no longer relevant to our loyal listeners. It is vital to the sustainability of the Australian commercial radio industry and particularly regional radio networks that the 1% cap is retained. Without it, there would be a loss of local knowledge and local jobs and an impact to local businesses.[37]
1.46The Broadcast Operations Group, branded as the Super Radio Network, operates 42 radio stations across New South Wales, Queensland and the Northern Territory. They also added to these warnings and provided their own perspective:
We already face incredible financial pressures as a regional radio network with streaming and other broadcast media evolving rapidly in recent years. The proposed Bill would only increase this pressure on our network, particularly given we are a regional network.[38]
1.47Regional commercial radio stations are not the only stakeholders who have raised substantial concerns. The Media, Entertainment & Arts Alliance submitted:
a substantial increase in licence fees needs to be weighed up against the effect that such an action will have on local and regional radio as well as the current requirements to play Australian content on those platforms.[39]
1.48Given its importance, the potential impact of this Bill on regional radio needs to be very carefully considered by the Senate.
1.49There are miscellaneous matters which warrant comment.
1.50In its submission, PPCA referred to previous reviews which had been conducted and submitted that six separate reviews had recommended removal of the cap.[40] However, this was strongly contested by CRA who submitted that:
No previous inquiry has properly reviewed and recommended repeal of the 1% cap.[41]
1.51Further:
The commercial radio industry made no written submissions in relation to the 1% cap in any of these reviews, so the various Committees did not conduct a full analysis of the issues…[42]
1.52There are local content licence conditions attached to broadcast licences.These content licence conditions are important and benefit the local community.Many of the regional broadcasters referred to these obligations in their submissions.They treat these obligations very seriously and take pride in the connection they have with their local communities.
1.53In relation to this issue, CRA submitted:
Each licence area has unique quota requirements that they must meet. Regional commercial radio broadcasting licensees are subject to the licence conditions set out in the Broadcasting Services (Regional Commercial Radio – Material of Local Significance) Licence Condition 2014 (Local Content Licence Condition). The Local Content Licence Condition, in combination with the Broadcasting (Hours of Local Content) Declaration No. 1 of 2017 (Declaration), imposes different time requirements depending on the potential audience numbers in the licence area... no one else has the unique style of local content obligations that local radio has, and we urge the Committee to take this into account in its assessment of the Bill.
The Government of the day determined that the diversity of the Australian regional commercial radio broadcasting landscape means that a “one size fits all” approach would not be appropriate and the required minimum amount of material of local significance should be determined by reference to the characteristics and circumstances of a licence. CRA emphatically agrees with this comment. As also noted in the explanatory statement, when commenting on consultation with stakeholders:
The parties agreed that the Declaration provided a practical and achievable framework for the smaller licences and avoided imposing an excessively high compliance burden.
In other words, the lower time requirement for the smallest stations (of which there are only 8) reflects the commercial reality for stations of that size.For those stations, where ongoing commercial viability is a daily struggle, an obligation to provide 30 minutes of hyper local content a day imposes as significant a cost burden as the three hour obligation imposes on regional stations…Those smaller stations should not be forgotten in terms of the significant cost burden that passage of the Bill would impose upon them.[43]
1.54The important role of local radio in emergencies needs to be carefully considered by the Senate.As submitted by the CRA:
…the role that radio plays in emergencies is particularly important when Australians are listening to their radios while driving.
The Connecting Communities Report 2023 provides the following statistics: 1. commercial radio broadcast approximately 2,100 hours of emergency service content in 2022; and 2. almost three in five Australians, being 58% of Australians, have listened to commercial radio to obtain access to emergency broadcasts.
The Connecting Communities Report 2023 said:
During emergency events, commercial radio is often relied on for information and updates. A recent example includes the Shoalhaven and Highlands floods of early 2022, in which commercial radio stations 2ST and Power FM provided ongoing updates on weather conditions, road closures, river levels and evacuation warnings and orders. They were able to collaborate with community members, local Councillors and MPs, and Government and emergency bodies such as the Bureau of Meteorology and SES to provide up-to-date emergency information during the crisis to local residents.[44]
1.55The Report also provides many examples of how radio has provided support during other times of emergency, including for the Black Saturday Bushfires in 2009; the Great Ocean Road fires in 2015; the Queensland/New South Wales floods in 2022 and Cyclone Yasi in 2011.[45]
1.56It is noted that there is a current case before the Copyright Tribunal. The current rate of 0.4% has been in place since 1 July 2000.A hearing is scheduled for May 2025.This raises the issue of whether the Senate should wait for the current proceedings to be finalised so that it has the benefit of the most recent updated decision of the Copyright Tribunal, taking into account the current state of the market, prior to deciding whether or not there needs to be any amendment to the current legislative regime.
1.57Concerns were raised that removal of the cap may place the jobs of journalists at risk, including in regional areas.Mr Paul Davies of the Media, Entertainment and Arts Alliance provided evidence that:
10,000 journalists have been lost in the last 10 years. Our principal concern, from a membership point of view, is the security of employment for our members. That arises from a much more basic public interest concern in that we have a community which is properly informed and which has access to local journalism and reporting, and therefore enabling the proper functioning of our democracy, and every trend points in the wrong direction in that sector.[46]
1.58From the commercial radio perspective, Capital Radio Network submitted as follows:
Unlike most news providers, the CRN is committed to providing local news content in all of its broadcast areas.Whilst most newsrooms were shrinking their resources, CRN under a cadetship program, assisted by the Federal Government recently hired three regionally based cadet journalists to ensure the provisions of local news services…Another example where higher, uncapped fees paid to record labels inhibit our ability to function, hire staff, and operate as a business within regional communities. [47]
1.59Similarly, ACE radio, a family-owned company with 21 mainly regionally based radio stations submitted:
Should the legislation change to increase the copyright fees payable to PPCA, ACE Radio Network would have to review its operating costs in line with new fees that will be imposed upon us.Such a review could lead to redundancies of broadcast talent and, therefore, the ability to properly serve the communities in which we broadcast. [48]
1.60In this context, the decline in regional newspapers also needs to be considered.CRA submitted:
More than 100 local and regional newspapers closed throughout Australia in the decade to 2019, which resulted in 21 local government areas having been left without coverage by a local newspaper, including 16 local government areas in regional Australia.In many places, radio was the only remaining source of local information.[49]
1.61CRA also commented upon the gathering of evidence as part of the NewsMAP programme and submitted:
The Government is currently gathering evidence on the current state of the media industry in its NewsMAP program. CRA members are engaging in this process.
The Consultation Paper states that: ‘a holistic approach is needed to respond to the interlinked social, economic and technological drivers shaping news and journalism in Australia.’
CRA wholly supports this approach and is providing evidence to this inquiry. CRA does not support a further inquiry while NewsMAP is taking place.[50]
1.62The ABC provided commentary as to whether there would be a ‘free market’ if the Bill were passed by the Senate.In particular, the ABC referred to the role of PPCA.In this regard it submitted:
If one objective of the Bill is to allow "free market negotiations " as stated on this Senate Inquiry's website consideration must be given to whether a "free market" will in fact be achieved through lifting the cap.
Negotiating with a collecting society is collective bargaining. It is impossible for the ABC to negotiate a licence with each of the copyright owners for every sound recording it wishes to use on the ABC every day to achieve its broad remit; one of the reasons a public digital media organisation like the ABC is granted a statutory radio cap and other statutory licences is to obtain administrative efficiency.
Where the ABC does not have a statutory right, for practical reasons and to reduce administrative costs, the ABC is effectively required to go down the path of licensing that copyright with a collecting society. However, in that respect it cannot be truly said that there is competition in the marketplace to ensure a "free market" price is achieved.
This is recognised by the ACCC which has stated: ‘Collecting societies play a very important role in effectively enforcing the rights of copyright owners and facilitating access to copyright material for the benefit of copyright users. On the other hand, collecting societies may also raise competition concerns as they bring together the rights of parties who might otherwise compete with each other. This is an area of potential tension between copyright law and competition policy…’
If the radio cap is lifted, there is also the potential for Copyright Tribunal proceedings to divert further resources and money of the ABC away from its functions should the parties be unable to reach agreement…[51]
1.63The Special Broadcasting Service (SBS) provides multicultural and multilingual broadcasting and media services to the Australian people.The Senate should pay close attention to the concern raised by SBS; namely:
The removal of the cap, and the transition to an unrestricted [Copyright] Tribunal discretion may result in an overall increase in the amount of royalties paid. It is foreseeable that this may in turn put upward pressure on the rates able to be negotiated by SBS… If this were to occur, SBS would be required to divert funds away from the production and delivery of public service content in order to fund any increase in royalty payments, to the detriment of SBS’s audiences and our ability to fulfil our Charter.[52]
1.64The position of community radio stations needs to be carefully considered.In their submission to the Committee, the Community Broadcasting Association of Australia stated:
Community broadcasting is run by community for community.The sector is powered by 900 paid staff and 18,000 volunteers across Australia…Any increase in the cost of license fees is likely to have significant financial consequences for individual community stations that could threaten their ability to operate…[53]
1.65In answer to a question on notice that I asked, the Attorney-General’s Department advised:
If a decision was made to repeal subsections 152(8) and (11) of the Copyright Act 1968 (Cth) (Copyright Act), this could potentially trigger the need to consider consequential amendments. While it appears unlikely that direct consequential amendments apart from subsections 152(9) and (10) would be required, section 152 exists in the context of various remunerated and unremunerated exceptions and provisions in relation to broadcasting in the Copyright Act. Accordingly, the Attorney-General’s Department would need to consider the need for consequential amendments in detail, if a decision was made to amend or repeal the caps.[54]
1.66Hence, if the Senate were minded to pass the Bill, there should be time provided for the Attorney-General’s Department to consider any consequential amendments flowing from the principal amendments to the Copyright Act provided for in the Bill.
1.67This Bill raises a range of extremely complicated questions. The length of these Additional Comments reflects that fact.Further, the importance of this issue to, on the one hand, recording artists and, on the other hand, working members of the radio industry is very clear.
1.68On its face, the Bill only engages with the removal of the cap upon license fees charged for the right to broadcast sound recordings and the benefits which would flow from the removal of the cap.However, the other side of the equation needs to be considered, including:
(a)the obligation upon 43% of commercial radio operators to play 25% or 20% of Australian music content and how this mandate would impact upon any negotiation where there is no cap (i.e. in my view, the cap should not be considered in isolation from these mandated content requirements because they necessarily form part of the negotiating background);
(b)the economic state of the commercial radio market and the challenges it faces;
(c)the possible response of the commercial radio sector to removal of the cap, including any unintended consequences arising from radio stations considering how to respond to the potential imposition of material additional expenses (e.g. the changing of format and content); and
(d)the importance of regional radio stations, including with respect to the provision of local content, emergency information and local news services.
1.69For the reasons stated in the Majority Report (as amplified in these Additional Comments), I agree with the recommendation contained in the Majority Report that the Senate does not pass the Bill.
1.70Further, any cost-benefit analysis examining the impacts of the removal of caps on licence fees for radio broadcasting must include (and specifically address) the many issues raised during this inquiry.This is a very complicated issue.There are reasons why the current system has continued for over 50 years.
Senator Paul Scarr
Deputy Chair
Footnotes
[1]Phonographic Performance Company of Australia, Submission 35, annex.
[2]Commercial Radio and Audio supplementary submission, 4 December 2023, attachment 2.
[3]Answer by ABC to questions on notice asked by Senator Paul Scarr on 7 March 2024 in relation to radio cap history provided by the ABC on 4 April 2024, pp. 1-2.
[4]Queen Mary University of London, J.A.L. Sterling – In Memoriam, 3 December 2020, https://www.qmul.ac.uk/qmipri/news/2020/items/jal-sterling---in-memoriam.html (accessed on 19 June 2024).
[5]Reproduced as chapter 3 of “The Copyright Act 1968: Its Passing and Achievements”, in Fitzgerald, Brian and Benedict Atkinson eds. Copyright Future Copyright Freedom: Marking the 40th Anniversary of Australia’s Copyright Act 1968, Sydney: Sydney University Press, 2011.
[6]Answer by ABC to questions on notice asked by Senator Paul Scarr on 7 March 2024 in relation to radio cap history, provided by the ABC on 4 April 2024, p. 2.
[7]Refer to the submission of the Attorney-General’s Department for a very useful overview, Submission 27, pp. 3–7.
[8]Refer to the submission of CRA, Submission 28, p. 2.
[9]CRA, answer to written question on notice, 7 March 2024 (received 3 April 2024), p. 5.
[10]Australian Broadcasting Corporation, Submission 9, pp. 3–4.
[11]Phonographic Performance Company of Australia, Submission 35, p. 3.
[12]Phonographic Performance Company of Australia, report on 'Economic impact of removing radio caps for sound recordings', received 5 June 2024.
[13]Phonographic Performance Company of Australia, report on 'Economic impact of removing radio caps for sound recordings', received 5 June 2024, p. 4.
[14]Phonographic Performance Company of Australia, report on 'Economic impact of removing radio caps for sound recordings', received 5 June 2024, p. 19.
[15]Phonographic Performance Company of Australia, report on 'Economic impact of removing radio caps for sound recordings', received 5 June 2024, p. 19.
[16]Phonographic Performance Company of Australia, report on 'Economic impact of removing radio caps for sound recordings', received 5 June 2024, p. 15.
[17]Phonographic Performance Company of Australia, report on 'Economic impact of removing radio caps for sound recordings', received 5 June 2024, p. 26.
[18]Phonographic Performance Company of Australia, report on 'Economic impact of removing radio caps for sound recordings', received 5 June 2024, p. 4.
[19]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, p. 1.
[20]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, p. 2.
[21]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, p. 4.
[22]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, p. 3.
[23]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, p. 3.
[24]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, p. 4.
[25]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, p. 4.
[26]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, pp. 3–4.
[27]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, p. 4.
[28]Additional information provided by Commercial Radio and Audio ‘Commercial Radio Industry Financial Information’, 4 June 2024, p. 4.
[29]Copyright Council of Australia, answers to questions on notice, 4 April 2024, p. 5.
[30]Commercial Radio and Audio, Submission 28, p. 6.
[31]Commercial Radio and Audio, answer to question on notice, p. 3.
[32]Broadcast Operations Group, Submission 55, p. 1.
[33]ARN Media, Submission 6, p .3.
[34]SCA, Submission 4, p. 3.
[35]CRA, answers to question on notice, 3 April 2024, p. 7.
[36]Midwest Radio Network, Submission 53, p. 1.
[37]West Coast Radio Pty Ltd, Submission 54, p. 2.
[38]Broadcast Operations Group, Submission 55, p. 1.
[39]Media, Entertainment & Arts Alliance, Submission 5, p. 1.
[40]PPCA, Submission 35, p. 7.
[41]Commercial Radio and Audio Supplementary Submission 1, Submission 28.1, p. 1.
[42]Commercial Radio and Audio Supplementary Submission 1, Submission 28.1, p.2.
[43]CRA, answer to written question on notice, 7 March 2024 (received 3 April 2024).
[44]CRA, answer to written question on notice, 7 March 2024 (received 3 April 2024), pp. 8–9.
[45]Commercial Radio and Audio, answer to written question on notice, 7 March 2024 (received 3 April 2024), pp. 8–9.
[46]Public Hearing, Committee Hansard, 7 March 2024, p. 45.
[47]Capital Radio Network, Submission 7, p. 3.
[48]ACE Radio, Submission 8, p. 4.
[49]Commercial Radio and Audio, answer to written question on notice, 7 March 2024 (received 3 April 2024), p. 3.
[50]Commercial Radio and Audio, answer to written question on notice, 7 March 2024 (received 3 April 2024).
[51]ABC, Submission 9, p. 7.
[52]Special Broadcasting Service (SBS), Submission 24, p. 1.
[53]Community Broadcasting Association of Australia, Submission 34, p. 3.
[54]Attorney-General's Department, answer to spoken question on notice, 7 March 2024 (received 24 April 2024).
An inquiry into the Copyright Legislation Amendment (Fair Pay for Radio Play) Bill 2023.
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