Radio & Labels In Bitter Dispute As Internet Streams Switched Off

Commercial radio and record labels are in the midst of another bitter battle as a dispute over internet streaming radio royalty fees has prompted regional stations to turn off their free simulcasts, with metro stations threatening do the same.

The radio sector feels like it is being asked to pay twice for music royalties and claims that the frequencies can't afford extra royalties, while the Phonographic Performance Company of Australia Limited [PPCA], which represents the labels, believe the extra fees bring the Australian industry in line with the rest of the world. The shut-off has so far impacted almost 200 stations.

“This is a disservice to regional radio listeners and stations,” Dan Rosen, CEO of PPCA told theMusic.com.au today. “The metropolitan stations and Commercial Radio Australia [CRA] are using them as pawns… This is a political stunt to pressure artists and record labels to drop their bid to be fairly compensated for the use of their content on the internet.”

"This is a political stunt to pressure artists and record labels to drop their bid"

- Dan Rosen

The dispute stems from almost a year ago, when the PPCA claimed a Federal Court victory that allowed them to collect royalties for internet radio simulcasts – that is, radio streamed through the internet – on top of the royalties collected from other radio broadcasts.

Importantly, when the court ruled that a simulcast didn't fit into the definition of “broadcast” it meant that new fees sat outside the '1% cap' for broadcast royalties. The PPCA were therefore free to negotiate their own royalty rates, something they have been fighting to do for years.

In August Commercial Radio Australia's appeal to the high court was rejected and the matter was referred to the copyright tribunal. As part of the tribunal process radio stations were required to apply for an interim license by 31 January. The regional stations did not apply for the interim agreement as they were unprepared to pay the royalty rate if the eventual decision went the way of the PPCA and fees were then back-dated to 1 February.

As such, regional simulcast services were shut off over the weekend.

CRA today confirmed to theMusic that the metro markets were monitoring the situation on a weekly basis and would evaluate the viability of internet streaming if they were forced to pay the new fees. Their argument is that since they don't change to content streaming on the internet they shouldn't pay twice for the music royalties.

"commercial radio stations already pay a fee to the record companies for the music we play"

- Joan Warner

As it stands, commercial radio pays a fee to the composers (APRA), the performers (PPCA) and the Government for the frequency.

“Let's be clear that commercial radio stations already pay a fee to the record companies for the music we play,” said CRA CEO Joan Warner. “In addition, we pay copyright fees to the composers' collecting body [APRA]. Aside from the two lots of copyright fees we already pay for music played, we pay a spectrum licence fee to the Government for our broadcast licence, we are heavily regulated, we have local content requirements and high transmission costs for the broadcasts.”

“Not only would the PPCA's preferred final scheme impose a second and higher fee, it would require local radio businesses to incur significant financial costs to put in place the sophisticated system needed to comply with the PPCA's preferred high cost scheme.”

Warner said, “These radio stations are protecting against the future massive financial liability their services may incur if the PPCA gets the high cost scheme it has repeatedly said it wants and also has payments backdated – which it has also indicated it will pursue. That is why they have had to switch off their simulcast.”

Rosen believes that despite the fact that the simulcast content is unchanged, the platform determines a second fee.

“Simulcast royalty fees are payable in every major territory around the world, so it would be unfair if Australian artists were denied these fees,” he told theMusic. “Artists and labels shouldn't be asked to subsidise radio stations and their wealthy owners.”

“Other content providers – whether it is sporting codes or media companies – charge a fee when their content is used in a different medium. Why should it be different for recorded music?”

He added, “The commercial radio stations want to gain new listeners and open up a new advertising revenue stream without paying anything for the content that attracts those listeners and advertisers. All around the world, including the United States, United Kingdom and Canada, the simulcast right requires a separate licence and that is what our highest courts have confirmed should happen in Australia.”

The lowest fee for the interim license is believed to be $105 per month, but it is understood the fee rises when the number of listeners and episodes are factored into the equation.