Commercial Radio in Australia Sets a Landmark Royalty Hike of 38%

The Phonographic Performance Company of Australia (PPCA) has acknowledged the Copyright Tribunal of Australia’s determination setting a new commercial radio sound recording broadcast licence rate of 0.55 per cent of gross industry revenue — lifting the rate from a previous 0.4 per cent.

This amounts to a 38 per cent increase in royalties paid by commercial radio broadcasters, and the rate will be backdated to July 1, 2023. These hikes follows the collapse of a long-standing industry agreement and subsequent proceedings brought by PPCA after negotiations with Commercial Radio & Audio (CRA) failed to reach a new deal.

In its determination, the Tribunal cited changes in the broadcasting and music landscape, the growth of digital radio services and the expanded scope of PPCA’s repertoire as reasons for the change. However, it also reinforced concerns about the statutory one per cent cap on radio broadcast royalties, a cap which PPCA argues artificially limits the value of sound recordings.

“The one per cent cap has always shaped how the parties negotiate, what they think is possible, and the rates that have actually been paid,” the Tribunal stated, noting that removing it from consideration would risk producing outcomes “detached from commercial reality”.

The Tribunal also highlighted that no equivalent cap applies to musical works, but said the sound recording cap remains a “permanent fixture” when assessing reasonableness. PCA Chief Executive Officer Annabelle Herd stated that the decision highlights the need for legislative reform.

“We have secured more royalties for local artists, but the Tribunal’s ruling proves definitively that we cannot negotiate a fair market rate for artists while the statutory one per cent cap remains in place,” Herd said. “The Tribunal’s reasoning makes it clear that the cap was a decisive factor throughout the decision and has constricted Australian artists’ ability to receive broadcast royalties comparable to other markets.”

Herd added that while the Tribunal accepted arguments that radio’s promotional value has declined and that use of recorded music has expanded, the cap limited how far the rate could move. Under PPCA’s distribution policy, royalties collected from commercial radio receive an even split, with 50 per cent paid directly to Australian featured artists and 50 per cent to registered record companies or rights holders.

PPCA said it will continue engaging with government, parliament and industry stakeholders to push for the removal of the statutory cap and broader reform of sound recording royalty settings. “Our job is to fight for fair compensation for artists when their work is commercialised,” Herd said.

Commercial Radio & Audio (CRA) said it acknowledged the Tribunal’s determination and welcomed the decision to reject PPCA’s approach to the application of the statutory cap. According to CRA, PPCA had sought a rate of one per cent for most stations, a 150 per cent increase on the long-standing industry rate of 0.4 per cent, which was “wholly rejected” by the Tribunal. Instead, it was determined that a rate of 0.55 per cent of industry revenue reflected the present value of the broadcast right.

“Taking into account the matters above, I consider it appropriate to increase the rate to 0.55% to reflect the present value of the broadcast right… this represents a reasonable and proportionate revision,” the Tribunal stated.

CRA added that despite achieving an increase that the Tribunal explicitly found reflects present value, and which sits well below the one per cent cap, PPCA continues to push for the cap’s removal “when there is nothing to suggest the removal of the cap would increase the rate,” a spokesperson said.