Australia raises radio royalty rates after landmark tribunal decision
Australia has finally nudged radio royalties upwards, marking a serious win for recorded music rights holders.
After years of deadlock, Australia’s recorded music industry has secured a rare victory. Following a decision by Australia’s Copyright Tribunal, royalty rates paid by radio broadcasters for the use of sound recordings will increase by 38%, rising from 0.4% to 0.55% of gross industry revenue. The new rate is retroactive to July 2023, meaning sound recording rights holders will already start to see the benefits.
Under the old 0.4% rate, radio royalties generated around AUD $4 million (USD $2.68 million) annually for recorded music rights holders in 2023. At the new 0.55% rate, that figure would rise to around AUD $5.5 million (USD $3.68 million).
It’s not a transformational change, but it’s a real improvement. And crucially, it sets a new benchmark after a quarter of a decade of stagnation.
A long road to get here
The decision comes after a long time of things standing still. The last formal royalty rate agreement between the Phonographic Performance Company of Australia (PPCA) and broadcaster industry group, Commercial Radio & Audio (CRA), was signed back in 1999 and expired in 2003. After that, the deal was extended on a monthly basis until 2022 before the PPCA notified the CRA that it would terminate the agreement in June 2023. With no new deal reached, the dispute was pushed to the Copyright Tribunal.
Why the PPCA pushed for an increase
For years, record companies accepted lower radio royalties rates because of radio’s promotional value. Airplay often led to discovery, and that often translated into real sales for artists.
Today, that role is taken up by streaming platforms and social media. Radio spins are far less likely to translate into meaningful discovery and promotion. Plus, even in instances where it may lead to a stream, the financial upside is not as high for rights holders.
In short, record companies are no longer willing to accept the lower radio royalties given radio’s weaker promotional power.
““Historically, the promotional effect of radio resulted in a direct physical sale; whereas today, whilst a listener may subsequently stream a song that they have heard on radio, this will only lead to an increase in total collective revenue for rights holders… in very limited circumstances.”
via the Tribunal judgement
A win – but a modest one
Despite the increase, Australia remains an outlier when it comes to radio royalties.
During the Tribunal, it was revealed that Australia sits near the bottom of global markets for sound recording payouts from radio. In fact, only the US and Japan were identified as paying less, with the US basically paying nothing at all for sound recording royalties on terrestrial radio.
It all comes down to Australian copyright law, which enforces a 1% limit on how much radio can be required to pay for sound recordings. The PPCA argued that this cap prevented the Tribunal from making meaningful comparisons with overseas markets, and pushing the new royalty rate higher.
“The Tribunal’s reasoning makes it clear, in no uncertain terms, that the 1% cap was a decisive factor throughout the decision and has constricted Australian artists’ ability to receive sound recording broadcast royalties comparable to other markets.”
Annabelle Herd, PPCA Chief Executive Officer
The PPCA proposed a sliding-scale model as part of its case. Under this approach, stations whose programming is more than 45% music would pay higher royalties, up to the 1% max. The idea was simple: the more music you use, the higher royalty you pay. The Tribunal ultimately rejected this proposal, but still decided to increase the rate within the existing framework.
What happens next?
While this decision represents progress, the PPCA still believes there is more work to be done. In its view, the 1% cap continues to suppress the value of recorded music and leaves Australian artists underpaid compared to the rest of the world.
Moving forward, the PPCA aims to shift its focus from increasing royalty rates to lobbying for reform with the goal of removing the cap entirely.
You can read the full judgement from the Tribunal here.