Record companies hail radio royalty hike

The Copyright Tribunal has issued a decision that effectively sets the new performance royalties at 3 per cent. Photo / Amos Chapple

Radio bosses are singing the blues after a 58 per cent rise in the royalties music stations pay record companies and performers.

The Copyright Tribunal has issued a decision that effectively sets the new performance royalties at 3 per cent.

In addition, the tribunal ordered that the royalty rate payable by talk radio stations increase from 0.25 per cent to 0.75 per cent from November 1, 2008, to June 30, 2014.

That is about 58 per cent more than the old deal and about half what the record industry wanted.

Faced with music piracy and tumbling CD sales, the industry is turning up the volume on licensing fees.

Its collections body, Phonographic Performances New Zealand - dominated by the big four multinational music companies - focused on radio early on.

A long-running deal for radio royalties for performance rights ran out in November 2007. Since then they have been scrapping over the benefits of radio airplay.

Back in 2007 PPNZ had proposed a hike in fees that would have seen performance royalties rise 350 per cent from 1.75 per cent of gross revenue to 6 per cent. The record industry said royalties had stayed the same for 32 years and it had been undercharging.

The commercial radio duopoly of MediaWorks and The Radio Network - represented by the Radio Broadcasters Association - said there should be no increase at all. Among other things, it argued that radio airplay boosted music sales.

The association's executive director, David Innes, said the industry was disappointed by the tribunal decision. It represented $2.5 million to $3 million a year, with backdated payments to 2007 when the dispute began.

"We do not agree with the calculation of how industry returns are calculated," he said.

The bulk of the money will go to multinational record companies but local independent musicians will also benefit.

The performance royalties paid to PPNZ match but are distinct from an agreement with the Australasian Performing Right Association. Under a voluntary agreement Apra collects 3 per cent of gross revenue for songwriters.

PPNZ was pleased that the independent Copyright Tribunal had ordered a substantial increase in the royalty rate payable by radio stations.

"The tariff increases represent a very positive result for the 1600 New Zealand artist participants in our Recording Artist and Producer Fund and our 59 members," said chief executive Kristin Bowman.

The Copyright Tribunal win will be a good launching pad for PPNZ announcing proposals that are expected to cause a rise in the price of royalties for background music, including in fitness centres.

In Australia, the PPNZ's counterpart, the PPCA, dominated by the same multinationals, won a case before the Australian Copyright Tribunal backing big increases in the music licence fees charged to gymnasiums.

Music lawyer Chris Hocquard, of Dominion Law, said the deal was significant for the music industry.

He said the long-running dispute might have cost up to $2 million but had wound up with charges that were essentially identical to those for the voluntary Apra agreement.