‘This is not a free market’: Commercial radio chairman argues against removing royalty caps
Ciaran Davis, CEO of ARN and chairman of CRA has delivered his opening remarks to Senate this morning, in the Fair Pay for Radio Play Bill 2023, arguing that the cap on royalties payable to Australian musicians when played on commercial radio be kept in place.
Davis noted how commercial radio is “a vital and free part of Australian culture and media”, with 17 million Australians listening in 2023.
“In an era of declining regional media, radio is often the sole remaining source of local news,” Davis argued.
“PPCA, and the record labels they represent, are arguing to remove the cap and instead replace this with a rate that is negotiated between the parties.
“Our concern is we are not talking about a free market here.
“First, the radio industry is highly regulated. In particular here, legislation requires radio to play a minimum quota of Australian music. In other words, we are required by law to buy product from the PPCA.
“That means radio stations and the PPCA record labels are not a ‘willing buyer’ and a ‘willing seller’ reaching an agreement on a price. Instead, without the cap, radio must pay the asking price of the record labels to meet the quota. This is not a free market.
“Secondly, the PPCA is a collecting agency, with substantial market power. The big 3 record labels behind the PPCA (Sony, Universal and Warner) control around 70% of the industry and have global revenues of around $A40 billion – 40 times that of the entire Australian radio industry. Negotiating with the PPCA is collective bargaining – it is not some simple free market negotiation.
“Overall, we would caution against the changes proposed to the Copyright Act being viewed in isolation, but rather as part of an overall ecosystem governing Australian radio, including Australian music quotas, minimum local content requirements for regional stations, copyright in underlying works.
“The cap on royalty payments for sound recordings was introduced at the same time as Australian music quotas and the two cannot be separated.
“We have reminded you of all the good work done by our industry – both for local communities and for Australian musicians – our concern is this could be put at risk by this bill.”
Davis noted that commercial radio pays “around $40 million in copyright charges per annum,” equalling 5% of industry revenue.
“We have no complaint with the idea that musicians should be paid fairly for their work,” he added, ending by saying the Bill should be not be passed, with the cap staying “to provide certainty and stability for the radio industry.”
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