Aussie Government May Review Rights Cap

Australian labels are stepping up their efforts to get higher performing-rights payments from commercial radio stations Down Under.

The Australian Record Industry Assn. has been talking with the Australian government's Department of Communication, Information, Technology and the Arts about raising the fees commercial stations pay for performing right in sound recordings.

ARIA wants the government to review the 1968 Copyright Act, which capped such fees.

Since 1969, the performing-rights rate has been set at 0.4% of 1% of advertising revenue. In other developed markets, the figure varies from 2% to 4% of advertising revenue, according to ARIA.

"No other copyright legislation in the world has such a cap," ARIA CEO Stephen Peach says. "Nor is there a cap that applies to anything in Australia other than recordings."

ARIA estimates commercial radio pays between $2.5 million Australian ($1.8 million) and $2.8 million Australian ($2 million) annually to ARIA's licensing arm, the Phonographic Performance Co. of Australia. Labels would like to see that figure raised to $16 million Australian ($11.5 million) annually.

The Australian government introduced the performing right in sound recordings in 1968 without consulting the record industry. The radio industry convinced legislators that a fee cap was necessary for its economic survival.

Public broadcaster ABC has its own licensing agreement, which differs from the commercial sector's.

ARIA insists that commercial radio's development since 1968 has radically changed the industry landscape. "Whatever special circumstances existed then don't [exist] now," Peach says.

Label executives point to the large amounts of cash commercial operators pay to obtain Australian licenses as proof that the radio industry is thriving. U.K.-owned DMG Radio alone has spent $481 million Australian ($351 million) on licenses since 2001. Additionally, Australian radio's metropolitan advertising revenue rose to $118.4 million Australian ($86.4 million) in first-quarter 2004, up 16.3% from the same period in 2003, according to financial services company PricewaterhouseCoopers.

MIXED RECEPTION

This is ARIA's third effort since 1980 to boost the fee cap.

"This is the most concerted push yet," Peach says, adding that the government is "receptive" to ARIA's argument that the cap is unfair to artists and labels.

Less receptive is Commercial Radio Australia (CRA), which represents 260 of the country's 263 commercial radio stations.

"You simply cannot compare the impact of different regulatory regimes in different territories," CRA CEO Joan Warner says. "We doubt the government will be fooled. [They will] see there is no reason to have a review, much less to lift the cap.

"What really annoys the radio industry is that record companies continually discount the huge impact radio has on CD purchases," she adds. "They get billions of dollars of free air time, and yet they spend very little of their promotional money on radio."

Label marketing sources claim radio gets 9% of the record industry's annual advertising spend.