‘Artists are at breaking point’: Removing radio caps will boost musician income by 78%
Australian artists receiving radio play would see a potential 78% income boost if the current caps limiting royalty payments were removed.
This is according to a new report by Mandala released on Wednesday by the PPCA, which looks to showcase the results of removing these radio caps on Australian artist income, the potential knock-on investment in Australian artists and music that comes from increased revenue streams, and the impact on radio profit margins from potentially higher royalty rates.
The Copyright Act 1968 limits sound recording royalties at 1% of broadcast revenue for commercial radio broadcasters, and $0.005 per head of the population for the ABC. The actual royalty rate paid by commercial radio stations Australia is 0.4% of broadcast revenue.
This is “significantly lower than other comparable benchmarks”, the report notes. No other country in the world has this form of copyright law, and these caps are not enforced on any other type of copyright in Australia.
Although six separate reviews over the years have recommended the removal of these 56-year-old caps, they remain in place. There are no such caps on songwriting copyright — which is calculated and paid separately to the sound recording copyright. This is how the musicians who play on a recording, but didn’t write the song (the drummer) make income from sound recordings.
Therefore, songwriters are paid an average royalty rate of 3.6% for radio airplay – which is in line with the payments other countries give for sound recordings played on radio.
“The Australian radio industry has some of the highest revenue per capita globally,” the report continues.
“The four largest commercial radio stations account for close to $1 billion in revenue and all maintain healthy profit margins ranging between 12% and 21%.
“Together with the ABC, these players account for 85% of all industry revenue for the radio broadcast industry. These companies are also capable of paying higher rates.
“If the four largest commercial radio companies paid sound recording royalties at the same rate as musical works, they would have an average profit margin of 15%, which is still higher than other Australian industries on average.”
The report estimates the wider radio industry would see profit margins reduced “marginally”, from 13% to 11%.
It’s not just the commercial radio stations who could afford to pay more for their music; according to the report, the ABC pays out just 0.01% of its total funding and income to sound recording royalties, compared to songwriting royalties for radio broadcast, which are roughly 27 times as much.
“If the ABC was to pay a similar amount for sound recording copyright, this would equate to just 0.28% of the ABC’s total funding from government and other sources of income,” the report explains, also noting that the ABC itself “is also a recipient of royalties from sound recordings”, and therefore would benefit in this way.
The commercial radio industry earns around $1 billion a year in advertising revenue – yet pays around $4 million in copyright fees for the music that drives their business models.
As the report points out: “Removing the radio caps is an effective, low-cost way to deliver on the Government’s objective to support the arts industry and promote Australian talent.”
“Artists are at breaking point and typically work several jobs to support themselves,” the report states, while total royalties paid out to Australian artists played on the radio during FY23 totalled just $600,000.
That’s for the entire industry. Removing radio caps could lead to an additional $4.8m being paid to Australian artists in royalties in FY25.
PPCA CEO, Annabelle Herd, said of the findings: “Australian artists are doing it tough at the moment. Plenty of recent media coverage has outlined the serious and urgent challenges facing our local industry.”
“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.
“Removing these caps is the single most effective way to increase fair compensation for artists when they need it most. It can be done quickly and, as shown by the Mandala study, it will not impact the operating model or severely hit the profitability of radio stations in Australia.
“Radio has benefitted from decades of financial windfall from these provisions in the Copyright Act at the expense of local artists and labels. The heavy burden of subsidising Australian radio – a profitable and successful industry – cannot continue to fall on struggling local artists,”
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Interesting figures that totally ignore both the Orchestral sector and the freelance Session player community which is the backbone of most of the commercially released recordings in Australia.
Removing the Cap without sharing broadcasting royalties with these constituencies is unfair and out of step with the rights enjoyed in the UK, Europe and now India.
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