Removing Radio Royalty Caps Could Unlock $4.8 Million For Australian Artists: Report

Removing the radio “caps” could unlock a stream of royalties tallying close to $5 million for a single year, according to new research published by the PPCA.

The document, titled “Economic Impact of Removing Radio Caps for Sound Recordings,” lays out a case for the removal of those long-standing limits on royalties, which are paid to rights holders in sound recordings when music is played on radio. 

That sum is fixed at 1% of commercial radio revenue — and has been for over half a century.

As a result, commercial radio pays roughly $4 million in copyright fees for the use of sound recordings, despite earning around $1 billion in advertising revenue, according to PPCA.

The Australian Broadcasting Corporation is part of the problem, the industry reckons. ABC Radio is legislated to pay 0.005c per head of population — amounting to roughly $130,000 per annum.

Scraping the caps, the new document claims, could lead to a potential 78% increase in income for artists whose music is played on radio.

Also, removing those handbrakes would increase reinvestment from record labels, creating opportunities for a new brigade of artists, claims the report.

“Today we are pleased to release an independent economic report that both confirms the exponential benefits of fair compensation for Australian recording artists, while illustrating in no uncertain terms how radio caps have artificially constrained artist income since 1968,” comments Annabelle Herd, CEO of ARIA and PPCA.

“The report shows how a fair rate would deliver additional income for Australian artists, as well as drive increased investment from labels into local artist development and promotion, helping an industry that is a proven economic and social contributor reach its full potential,” she continues.

The PPCA has led the charge for change.

David Pocock, the former Wallabies captain-turned independent senator, caught the pass and moved it into the halls of power in Canberra, by way of the Fair Pay for Radio Play Bill, introduced last August.

The Bill is seen by the recording industry as an attempt to rectify what the recording industry has termed an “anomaly,” initially legislated as a “temporary” measure in the 1968 Copyright Act.

Commercial Radio & Audio (CRA), which represents the interests of the commercial radio sector, is opposed to the changes, warning that the Bill was a “threat” to the sustainability of radio stations, particularly those regional and remote communities.

The new report, commissioned by the PPCA and compiled by the economics advisory firm Mandala, addresses this thorny area.

Top commercial radio stations would maintain profit margins of 15% if they paid the same rate for sound recordings as they do for musical works, researchers claim. Meanwhile, the broader radio industry margin would be “slightly reduced,” the document continues, from 13% to 11%.

Australia stands alone with this sort of copyright law, according to ARIA and PPCA, a situation that has resulted in tens of millions of dollars since the Copyright Act was activated.

“A clear finding from our research is that the system in Australia is well out of line with comparable jurisdictions,” comments Mandala director Tom McMahon. “The Australian radio industry has some of the highest revenue per capita globally. But the actual royalty rate for sound recordings paid by commercial radio stations in Australia is just 0.4% of broadcast revenue, compared to countries such as Canada, the U.K. and Germany, which have rates of between 3% and 7.5%.”

Read the report in full here.