Commercial radio hit with 38% royalty hike

The Phonographic Performance Company of Australia (PPCA) has acknowledged the Copyright Tribunal of Australia’s determination setting a new commercial radio sound recording broadcast licence rate of 0.55 per cent of gross industry revenue.

The decision lifts the rate from 0.4 per cent, representing a 38 per cent increase in royalties paid by commercial radio broadcasters for the broadcast of sound recordings. The new rate will be backdated to 1 July 2023.

The ruling follows the collapse of a long-standing industry agreement and subsequent proceedings brought by PPCA after negotiations with Commercial Radio & Audio (CRA) failed to reach a new deal.

Tribunal recognises market changes

In its determination, the Tribunal cited changes in the broadcasting and music landscape, including the growth of digital radio services and the expanded scope of PPCA’s repertoire.

However, it also reinforced concerns about the statutory one per cent cap on radio broadcast royalties, which PPCA argues artificially limits the value of sound recordings.

“The one per cent cap has always shaped how the parties negotiate, what they think is possible, and the rates that have actually been paid,” the Tribunal stated, noting that removing it from consideration would risk producing outcomes “detached from commercial reality”.

The Tribunal also highlighted that no equivalent cap applies to musical works, but said the sound recording cap remains a “permanent fixture” when assessing reasonableness.

PPCA pushes for legislative reform

PPCA chief executive officer Annabelle Herd said the decision demonstrates why legislative change is now required.

“We have secured more royalties for local artists, but the Tribunal’s ruling proves definitively that we cannot negotiate a fair market rate for artists while the statutory one per cent cap remains in place,” Herd said.

“The Tribunal’s reasoning makes it clear that the cap was a decisive factor throughout the decision and has constricted Australian artists’ ability to receive broadcast royalties comparable to other markets.”

Herd added that while the Tribunal accepted arguments that radio’s promotional value has declined and that use of recorded music has expanded, the cap limited how far the rate could move.

Impact on artists and next steps

Under PPCA’s distribution policy, royalties collected from commercial radio are split evenly, with 50 per cent paid directly to Australian featured artists and 50 per cent to registered record companies or rights holders.

PPCA said it will continue engaging with government, parliament and industry stakeholders to push for the removal of the statutory cap and broader reform of sound recording royalty settings.

“Our job is to fight for fair compensation for artists when their work is commercialised,” Herd said.

“PPCA will always pursue appropriate legal avenues to ensure artists and rights holders receive fair value.”

CRA Responds to ruling

Commercial Radio & Audio (CRA) said it acknowledged the Tribunal’s determination and welcomed the decision to reject PPCA’s approach to the application of the statutory cap.

CRA said PPCA had sought a rate of one per cent for most stations, a 150 per cent increase on the long-standing industry rate of 0.4 per cent, which was “wholly rejected” by the Tribunal.

Instead, the Tribunal determined a rate of 0.55 per cent of industry revenue and confirmed that this figure reflects the present value of the broadcast right.

“Taking into account the matters above, I consider it appropriate to increase the rate to 0.55% to reflect the present value of the broadcast right… this represents a reasonable and proportionate revision,” the Tribunal stated.

CRA added that despite achieving an increase that the Tribunal explicitly found reflects present value, and which sits well below the one per cent cap, PPCA continues to push for the cap’s removal “when there is nothing to suggest the removal of the cap would increase the rate," a spokeperson said

Top Image: Annabelle Herd 

Keep on top of the most important media, marketing, and agency news each day with the Mediaweek Morning Report – delivered for free every morning to your inbox.