PPCA and CRA battle as hundreds of stations pull the plug on digital

Close to two hundred commercial region radio stations pulled the plug on their digital simulcasts at midnight on Friday, following a 2013 Federal Court decision which requires stations to pay licensing fees on digital simulcasts. Commercial Radio Australia claim the shutdown was driven by “record companies’ insistence on radio paying twice for playing music.”

This move – announced by Commercial Radio Australia (CRA) via a press release –  was, not surprisingly, unpopular with rights organisations PPCA (Phonographic Performance Company Of Australia) who shot out their own statement deriding the move as a decision to “deprive regional listeners of local programming, rather than take up the interim licence scheme negotiated between CRA (on behalf of its members) and PPCA.”

The statement reads in part: “It is disheartening to PPCA to see that, despite the extensive negotiations and considerable concessions made to reach a reasonable and commercial interim arrangement, some of CRA’s members have instead  elected to shut down their internet simulcasting services.”

PPCA also mention that the “High Court confirmed what every other country takes for granted – that the internet simulcast right is a separate right that needs to be paid for by commercial radio.”

“PPCA has never been interested in pursuing anything other than a fair and commercial outcome”, the statement concludes. “Sadly, CRA seems prepared to penalise regional radio listeners while demanding an outcome that is not supported in legal or political processes in Australia or around the world.”

The High Court decision* refers to an August 2013 rejection of an appeal by Commercial Radio Australia to overturn a February Federal Court ruling, which ruled that Internet simulcasts do not fall under the 1968 Copyright Act’s definition of a “broadcast”. The legal battle has been going since 2010.

Both parties seem determined to make the other the villain in the piece, with CEO of CRA Joan Warner stating, “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 perform complex calculations to report on PPCA’s proposed scheme.”

In response, PPCA referred to the fight as “commercial negotiation between the billion dollar commercial radio industry and the thousands of Australian artists and record labels that PPCA represents,” adding: “What PPCA is seeking is no different to every other major Australian sporting code or content industry which has a traditional and digital revenue stream.”

CRA hit back at this, releasing a further statement yesterday with the not-at-all-subtle heading “Regional commercial radio stations put listeners first”, in which Joan Warner claims regional commercial radio stations are “not as the PPCA describes a ’billion dollar commercial radio industry’.  They are locally run, are integral parts of their local communities and provide local news, information and entertainment to communities.

“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.”

Regardless of the reasons for this digital shutdown, there is no denying that this is a very bad state of affairs for the Australian music industry. Hopefully a reasonable compromise can be met, or all stakeholders will be hit hard by this standoff.
* As Joan Warner points out: “The High Court did not hear this case and therefore made no decision on this matter. In 2010, the PPCA took the commercial radio industry to the Federal Court to attempt to change policy that had been in place for 10 years that said radio simulcasts were part of a radio station’s broadcast.  The PPCA lost.  In 2012 the PPCA appealed.  In 2013, the Federal Court of Appeal made no policy comment on whether an internet broadcast was part of a radio broadcast, rather they ruled on the literal meaning of the determination.  The PPCA won the appeal. 

CRA then sought special leave to appeal to the High Court.  The High Court did not grant special leave to appeal.  In the third quarter of 2013, the PPCA initiated legal action in the Copyright Tribunal which is where the current legal matter continues.”

**Further comment from the PPCA:

It was CRA who took this matter to the High Court seeking to overturn the unanimous decision of the Full Federal Court.  In its application for special leave to appeal, CRA put arguments to the High Court as to why it thought that it did not need an additional licence to simulcast sound recordings online.  The High Court effectively rejected those arguments when it concluded that “an appeal to this Court would enjoy insufficient prospects of success to warrant a grant of special leave in this matter” ([2013] HCATrans 187).  This amounts to a confirmation that in the High Court’s view, the Full Federal Court got it right.