Peter Strong, CEO of COSBOA, stated today “The new offspring of APRA AMCOS and the PPCA, named OneMusic, is just like some spoilt hipster kid who thinks he is way cooler than everyone else but is in reality just a bore who swallowed a dictionary.”
Background: OneMusic Australia is a joint initiative between APRA AMCOS and PPCA, the two Australian music royalty bodies that have got together to, in theory, make it easier for those using music in their businesses and those who create music.
The ACCC has been tasked with renewing the authorisation for APRA AMCOS to collect royalties on behalf of those who create music. COSBOA has identified APRA AMCOS as an inefficient shadow regulator who overcharges and confuses small business people, and does not provide a real service for the bulk of its members.
COSBOA requested that the ACCC hold a pre-decision conference before granting re-authorisation. This conference will occur on 19 July in Sydney.
Mr Strong today expressed concern that the organisation is depriving smaller artists of their fair share of royalties, also criticising the new OneMusic licence process for being overly expensive, inefficient in implementation, and unnecessarily complicated.
Mr Strong stated “We want royalty collection societies to exist because artists are small businesses too; these artists put in an enormous amount of work and deserve a return for their effort. But APRA AMCOS, the PPCA and OneMusic (a monopoly created by a duopoly) exist to serve the interests of big, overseas businesses (the major record labels, who the majority on their boards represent), by overcharging and confusing small businesses who use music. The fact that they ‘licence’ businesses to use personal streaming services like Spotify shows that they don’t really care about supporting small artists, because when these services are used commercially, something they were never designed for, they can’t distribute royalties properly. It’s appalling.”
Mr Strong also stated “The fees charged by OneMusic are far more than what businesses pay for similar licences overseas. It is completely unacceptable. We will ask the ACCC to follow recommendations from the Australian Small Business and Family Enterprise Ombudsman that it only approve authorisation in twelve-month lots. We also seek instruction from the ACCC for APRA AMCOS to undergo an independent management review conducted to increase efficiency and returns for its members. A review similar to what the ANAO does for Commonwealth government departments and agencies is well overdue and would provide better outcomes for the Australian music community. After all, APRA
AMCOS is just a monopoly, also a shadow regulator, that moves money off shore and manipulates the system.”
See below for further information.
AUSTRALIAN FEES VS GLOBAL FEES
The most controversial fee is ‘recorded music for dance use’. As an example, a music venue of the same capacity, open the same number of hours, would have to pay over $138,000 in Australia but less than $3,800 in New Zealand. See below a comparison table. APRA AMCOS states that each jurisdiction has different market and different expenses, but the difference is many tens of thousands of dollars. This is a rort and needs to be stopped.
PERSONAL STREAMING SERVICES AND ROYALTY DISTRIBUTION
COSBOA is concerned about the incorporation of personal streaming services such as Spotify and Apple Music into the OneMusic licences. For example, OneMusic permits hotels, pubs, taverns, bars and casinos to use personal streaming services in their business if they pay an extra $400 “digital copy/delivery” fee. Retailers are permitted to use these services if they purchase a “gold” licence. This is actually illegal. Some but not all guides do warn that “even with [the] licence, the use of these services by you in your business may be in breach of the terms and conditions of your end user agreement with that service.” Indeed, the terms and conditions of Spotify, for example, state that “you promise and agree that you are using the Spotify Service and Content for your own personal, non-commercial use.”
This has consequences for the accuracy of royalty distribution. Because streaming services like Spotify do not provide APRA AMCOS and the PPCA data on what songs are played in specific businesses, the "digital copy/ delivery" fees that businesses pay to OneMusic are distributed based on proxy data, or what songs are played most nationally on commercial radio and streaming services. This is a system that favours popular international artists at the expense of lesser known music creators.
Fortunately, there are alternatives: there exist other music services whose terms and conditions permit the commercial use of music. Because they are designed to be used by businesses, these services do provide APRA AMCOS and the PPCA with data on the exact music used by a business to ensure accurate royalty distribution.
If APRA AMCOS/OneMusic were really on the side of the artists, they would try to stop people using personal streaming services commercially. Overseas royalty collection societies, such as Belgium’s Sabam, tell their customers not to use personal streaming services in their businesses. APRA AMCOS, however, doesn’t care. Their response is essentially ‘we don’t care if you break the law, just give us more money.’ They’re using it as an opportunity to make even more money for the same international chart-topping artists and three major record labels. They should promote commercial background music providers as the only legal source of background music for businesses, and the best way to ensure artists receive their fair share of royalties. But they don’t.
The licence system is a web of inconsistencies and background deals with some industry associations who represent big businesses.
Released on the 1st of July, OneMusic has 24 categories of licences for different sectors, each with several tiers of licences and add-ons. For example, the retail and service provider category lists at least 28 different licence options. They have to pay additional fees if the music can be heard in car parks, if they exhibit music videos, if they use music on their websites, and if their employees listen to music. Even on headphones. Metrics used to calculate licence fees inexplicably differ between licence categories: retailers pay according to the size of their floorspace in square metres, restaurants pay according to the number of patrons they are licenced to seat, bars have go and count how many devices they use to play music, and gyms pay by number of members. For live music, retailers pay a flate rate per day, but bars pay a percentage of their gross expenditure on the performers. The system is so complicated that the information sheets include hypothetical examples to help businesses calculate their licence fees.
If the system was simple and it was easy for businesses to know what to pay, APRA AMCOS would actually collect more money. They are failing Australian artists and musicians by having a licence system this complicated as people will choose the easy option, which is to ignore APRA AMCOS/OneMusic entirely. APRA AMCOS is completely disconnected from the reality small business (and community-based musicians for that matter), not realising that we also have to manage:
OH&S, workers compensation, parental leave requirements, disability access, the award system, GST/Input credits, company tax, PAYG, registration with ASIC, payroll tax, workcover, wages, superannuation, public relations and marketing, cashflow management, contracts and torts, supplier management, franchise rules, changing technology, research & development, import/export rules, building codes, food laws, manufacturing standards, parking rules, and so forth.
Small business people simply don’t have the time or resources to understand let alone comply with a system this complicated on top of all those other tasks. If you’re a small business and don’t have someone to sit down and work with you through the process of calculating your licence fee, you’re more than likely going to throw the OneMusic information sheet in the bin.
We now know why APRA AMCOS has so many staff members, some 350. A lot of time and effort has clearly been put into designing a system so complicated and inefficient. APRA AMCOS is over resourced and inefficiencies have been created by staff trying to justify their existence. This is what tends to happen with monopolies. Any government department that developed this type of process would rightly be censured by a Senate Estimates Committee and by Parliament, and the departmental Secretary would likely be dismissed. Certainly the responsible Minister would be ridiculed in the media and in question time in Parliament.
We hope the many inefficiencies of APRA AMCOS are exposed and dealt with by the ACCC. As recently recommended by the ASBFEO, re-authorising them on an annual basis would be a way to keep them accountable and make sure that they actually change their behaviour. They also need a self-funded, independently managed review of management and efficiency similar to what government agencies are subject to when reporting to Parliament (ANAO).
International comparison of music licence fees for nightclubs: