Marianna Papadakis Reporter

Marianna writes for The Australian Financial Review and Business Review Weekly from the Sydney newsroom. She has an interest in legal affairs, technology and business.

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Record labels win online radio royalties appeal

Published 13 February 2013 11:37, Updated 14 February 2013 09:41

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Artists and record labels have won an appeal against radio broadcasters in the Federal Court and can now expect to be paid additional royalties for internet broadcasts.

Radio is a billion dollar a year industry and the judgment is significant given most Australian stations now simultaneously transmit programs on the internet as well as on AM and FM platforms.

Radio stations will be required to negotiate a new, separate licence for internet simulcasting that will not be subject to the statutory cap which limits to one per cent of their gross income the maximum amount commercial radio operators can be asked to pay for broadcasting music.

A unanimous judgment by the full bench of the Federal Court, which overturned a previous ruling, found that simulcasting radio programs over the internet fell outside the definition of a broadcast under the Copyright Act and Broadcasting Services Act.

These simulcasts were therefore not covered by existing licences granted to Australian commercial radio stations by the Phonographic Performance Company of Australia (PPCA), which represents record companies and recording artists in Australia.

It means broadcasters must now pay extra royalties for transmitting copyrighted music online as well as on the airwaves.

Chief executive officer of Commercial Radio AustraliaJoan Warner said the industry body was disappointed with the decision and would now be considering “all options”.

PPCA chief executive officer Dan Rosen said it would now work with the radio industry to establish a separate commercial rate for internet simulcast activity.

The rate would not be bound by the controversial statutory cap. The High Court last year confirmed the constitutional validity of a statutory cap on royalties paid for sound recordings.

Mr Rosen said Australia’s radio networks simulcast programs via the web and on digital devices accompanied by advertisements and other revenue opportunities.

“As the range of devices increases, listening audiences and revenue opportunities are growing,” he said. “Music is an essential component in all of this – it helps to attract audience numbers and build loyalty so it’s important that artists and labels receive a fair share.”

It would also lead to a level playing field for innovative music streaming companies that compete with commercial radio, he said.

“This is an important win for artists and labels whose music is used widely on the internet to help drive profits for Australia’s radio industry,” he said.

The appeal centred on the interpretation of a ministerial determination in 2000 concerning the meaning of a “broadcasting service” and exceptions to the provision of such services outside the licence.

The PPCA argued the first breach occurred when DMG Radio (Australia)’s Sydney metropolitan station Nova FM streamed Eskimo Joe’s Foreign Land on the internet as well as on the radio on January 12, 2010.

The court held that the definition of a “broadcasting service” did not include a service that makes radio programs available using the internet.

“A broadcasting service is the delivery, in a particular manner, of a radio program, consisting of matter intended to entertain, educate and inform,” the judgment said. “Thus the delivery of the radio program by transmission from a terrestrial transmitter is a different broadcasting service from the delivery of the same radio program using the internet.”

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