COPYRIGHT TRIBUNAL OF AUSTRALIA

Reference by Phonographic Performance Company of Australia Ltd (No 2) [2025] ACopyT 3

ORDERS

THE TRIBUNAL DIRECTS THAT:

1.    By 4.00 pm on 18 February 2026, the parties are to confer and are to inform the Tribunal, by a single agreed email communication, of the further steps necessary to finalise the matter.

ORDERS

THE TRIBUNAL DIRECTS THAT:

1.    By 4.00 pm on 18 February 2026, the parties are to confer and are to inform the Tribunal, by a single agreed email communication, of the further steps necessary to finalise the matter.

REASONS FOR DETERMINATION

ROFE J (DEPUTY PRESIDENT):

1.    Introduction

1    These proceedings relate to two matters before the Copyright Tribunal in relation to the appropriate licence scheme for the broadcast of protected sound recordings on commercial radio.

2    Phonographic Performance Company of Australia Ltd (PPCA) is a copyright collecting society which represents record companies and recording artists, and Commercial Radio & Audio Limited (CRA), which represents Australian commercial radio broadcasters who hold commercial radio broadcasting licences.

3    On 17 May 2023, PPCA commenced proceedings pursuant to s 154(4) of the Copyright Act 1968 (Cth) in which it referred a proposed licence scheme to the Tribunal for consideration and confirmation that would apply to the broadcast of sound recordings on commercial radio, including by members of CRA (the PPCA Proposed Scheme).

4    On 14 September 2023, CRA filed an application in the Tribunal, seeking determination of an applicable royalty rate pursuant to s 152(2) of the Copyright Act. CRA has also put forward an alternative form of a licence scheme in response to PPCA’s s 154 reference (the CRA Proposed Scheme). During the course of the hearing, CRA was granted leave to amend its application, which is the version of its application that I have regard to in these reasons.

5    PPCA and CRA have been engaged in a series of licence scheme arrangements over several decades, which are outlined further below. Relevantly, the last licence scheme which the parties negotiated and entered into was the licence scheme agreement dated 16 June 2000, and which was deemed to have commenced on 1 July 1999 (the PPCA–CRA Agreement). At that time, CRA was known as the Federation of Australian Radio Broadcasters Limited (FARB). Pursuant to the PPCA–CRA Agreement, PPCA agreed to grant non-exclusive licences to members of CRA on the terms set out in a form of agreement annexed as a schedule to the PPCA–CRA Agreement (the 1999 Member Agreement).

6    Although the PPCA–CRA Agreement and the 1999 Member Agreement were sunset to expire on 30 June 2003, PPCA and CRA, on behalf of its respective members, agreed to continue the arrangements on a rolling month-to-month basis. These arrangements remained in effect until 30 June 2023, when the PPCA–CRA Agreement was terminated following a notice of termination issued by PPCA. To preserve the status quo of the state of affairs between the parties pending the outcome of these proceedings, the parties are currently subject to an Interim Licence Scheme. The Interim Licence Scheme provides for a retrospective reconciliation of the licence fees payable upon final determination by the Tribunal. Under this arrangement, Interim Licensees are required to pay licence fees calculated in accordance with the PPCA–CRA Agreement, which will be retrospectively adjusted to reflect the Tribunal’s Summary of parties’ proposals.

7    PPCA contends that the PPCA–CRA Agreement, adopted more than 25 years ago, is no longer fit for purpose. Nor does it provide an appropriate benchmark for determining the current rate. In its place, PPCA proposes a new licence scheme incorporating a sliding-scale royalty rate payable by individual commercial radio broadcasters, based on each broadcaster’s music use percentage (MUP), being the PPCA Proposed Scheme. Under this proposal, the rate would increase progressively, capped at 1% of gross revenue for broadcasters with an MUP greater than 45%, as further addressed below.

8    CRA adopts the contrary position. It submits that the existing arrangements, under which commercial radio broadcasters collectively pay PPCA an industry-wide licence fee equivalent to 0.4% of gross industry revenue, should continue. Alternatively, CRA contends that the PPCA–CRA Agreement remains an appropriate benchmark and that, with suitable adjustments, it supports the rate proposed by CRA.

9    In considering the ultimate outcome, I have had regard to the extensive submissions advanced by each party. Moreover, in setting out the reasons for my determination, I do not intend to recount all the evidence given and instead will outline my reasons on the key issues in dispute, addressing only the evidence and context relevant to those issues. The identified issues are deliberately broad and reflect the scope of the parties’ arguments and the numerous points of contention raised throughout the proceeding. For the reasons below, I consider the appropriate rate payable by commercial radio broadcasters for the broadcast of copyright-protected, commercially released sound recordings within the PPCA repertoire to be 0.55%.

2.    Background

2.1    The parties

10    PPCA is a copyright collecting society which was founded in 1969 by Australia’s major record companies. The current shareholders are Sony Music Entertainment (Australia) Pty Limited, Universal Music Australia Pty Ltd (UMA), and Warner Music Australia Pty Ltd (collectively, the Majors), each of whom forms part of an international group of record companies with operations in multiple countries. Shareholding in PPCA does not confer any entitlement to dividends or any other portion of PPCA’s income. PPCA derives its revenue from licensing arrangements, and all net income (gross revenue less operational expenses) is distributed in accordance with PPCA’s established distribution policy.

11    PPCA is managed by a Board of Directors comprising: (a) one representative from each shareholder; (b) three recording artist representatives; and (c) two directors representing non-shareholder licensors. Two of the artist representatives are elected by artists registered under PPCA’s Artist Direct Distribution Scheme, and one third represents the Associate of Artist Managers.

12    As a collecting society, PPCA represents the interests of its copyright owner licensors (PPCA Licensors), including record companies and Australian recording artists, who are the owners or exclusive licensees for Australia of the copyright in sound recordings which subsists under Part IV (ss 84 to 113C) of the Copyright Act. I refer to these sound recordings as the PPCA Sound Recordings. PPCA receives from its licensors a non-exclusive grant of a specific subset of the acts comprised in the copyright, including certain rights to broadcast and communicate sound recordings, from the owners or exclusive licensees in Australia of copyright in their sound recordings within the meaning of ss 89 and 90 of the Copyright Act.

13    The PPCA Licensors include large record companies, such as the Majors, as well as thousands of other Australian and international record companies, individual artists and entities which hold the relevant rights in sound recordings in Australia. Traditionally, record companies issue their product under “labels”, so, for example, even within one record company there may be a number of labels: examples are Sony Music Entertainment Inc (SME)’s Epic and Columbia labels which date back to when the group was CBS Records; and Warner Music Group’s Warner Records, Elektra Records and Atlantic Records. Labels, rather than company names, are the convenient way used by the industry and consumers to identify artists and recordings. PPCA Licensors are listed by name and corresponding label on PPCA’s website.

14    PPCA Licensors release recordings on a variety of recording labels, and PPCA provides a repertoire covering sound recordings from different labels.

15    As at June 2024, PPCA had 4,138 Licensors, up from 277 Licensors in 2003. Some Licensors have multiple record labels under whose names sound recordings are made and released. As at June 2024, PPCA was entitled to licence rights in respect of sound recordings released under 133,360 Licensor Labels.

16    PPCA Licensors have each granted PPCA a non-exclusive licence of certain copyright rights in relation to the sound recordings for which they own or control the copyright in Australia, under a standard licence agreement with PPCA referred to as an “Input Agreement”. The Input Agreement includes the right for PPCA to grant licences to third parties, including commercial radio stations, authorising them to broadcast and communicate those recordings in Australia for a licence fee. PPCA’s capacity to broaden or amend the rights licensed to it, and correspondingly the scope of any PPCA output licence, is constrained by the terms of the Input Agreement.

17    A licence granted by PPCA covering all sound recordings in its repertoire is referred to as a “blanket” licence, which is non-exclusive.

18    As the grant of rights to PPCA under an Input Agreement is non-exclusive, radio broadcasters wishing to broadcast or communicate protected sound recordings also have the alternative option of approaching individual record companies or labels who own or control the relevant copyright in Australia, to obtain direct licences to broadcast and communicate their protected sound recordings.

19    PPCA collects the fees paid by licensees and distributes via its established distribution policy annually to its Licensors and to the Australian recording artists who are registered under PPCA’s artist direct distribution scheme. PPCA bears the administrative costs associated with operating what is a complex distribution scheme in relation to the royalty income received.

20    On the other hand, CRA is the peak industry body representing Australian commercial radio stations in both metropolitan and regional areas. Currently, CRA represents 259 commercial radio broadcast licensees across Australia, who in between them operate some 534 radio stations (AM, FM and digital audio broadcast (plus) (DAB+)), who shall be referred to as the “CRA Members” for the balance of these reasons. Radio stations play an essential role in ensuring that Australian communities have access to local news, Australian music, emergency information, community information and entertainment.

21    A radio station requires a licence from the Australian Communications and Media Authority (ACMA) in order to broadcast. Since the 1960s, commercial radio stations have been licenced pursuant to the compulsory licence scheme under s 109 of the Copyright Act which contains provisions for instances where copyright in published sound recording would not be infringed by broadcast in certain circumstances.

22    Commercial radio stations are licensed and regulated under the Broadcasting Services Act 1992 (Cth), which requires commercial radio stations to provide programmes that are made available free to the general public, and includes mandatory licensing conditions such as the requirement to provide emergency service information during emergencies such as during bushfires or floods.

23    A breach of licence conditions exposes a radio station to the prospect of being found guilty of an offence or having a civil penalty imposed on it. It may also receive remedial directions from the ACMA and/or have its licence suspended or cancelled by the ACMA.

24    In conjunction with the Broadcasting Services Act, one of CRA’s key regulatory mechanisms is the development and registration of codes of practice that radio stations are to adhere to. The Code of Practice, as amended from time to time, is made available on CRA’s website along with guidelines for acceptable practice. The current application code is the Commercial Radio Code of Practice 2017.

25    Pursuant to s 123 of the Broadcasting Services Act and s 5 of the Code of Practice, commercial radio stations are required to broadcast a minimum amount of Australian content. Relevantly s 5.1. of the Code of Practice requires a licensee, during what is referred to as the Australian Performance Period, meaning the total period of 126 hours occurring in each week between the hours of 6.00 am and 12.00 midnight daily, to ensure that:

5.1.1.    the applicable proportion of the total time occupied by the broadcasting of Music by the radio service consists of Music performed by Australians; or

5.1.2.    in the case of a Licensee which broadcasts Musical Items of a reasonably similar duration, the applicable proportion of the total number of Musical Items broadcast by the radio service consists of Musical Items performed by Australians.

26    Pursuant to the Code of Practice, CRA Members are required to annually report to the Australian Recording Industry Association on their compliance with the Australian content requirements. The extent of the abovementioned regulation (including under the Broadcasting Services Act) is reflective of the key functions that radio broadcasting performs in Australia, above and beyond simply being a medium for broadcasting music.

27    The business model adapted by commercial radio stations is an advertising funded one. Advertisers pay the stations to insert advertisements into their radio programs in order to reach their desired audience. To date, radio stations have paid royalties based upon the advertising revenue earned to the Australasian Performing Right Association Limited and Australasian Mechanical Copyright Owners Society (APRA AMCOS) and to PPCA, since 1964 and 1985, respectively.

28    CRA entered into an agreement with APRA AMCOS dated 2010 which governs, and continues to govern, the blanket licence and fees payable by radio stations in relation to their broadcast and communication of musical works (APRA AMCOS–CRA Agreement). I will elaborate upon this further below.

2.2    Evidence and witnesses

29    Both parties adduced significant bodies of evidence. Despite the volume, much of the material was of limited assistance and provided little help to the Tribunal’s task. A substantial portion of the evidence is designated confidential or highly confidential or otherwise classified within a hierarchy of confidentiality.

2.2.1    Lay witnesses

2.2.1.1    PPCA

30    PPCA adduced evidence from a range of lay witnesses within the industry.

31    Lynne Small made two affidavits, dated 2 July 2024 and 4 March 2025, respectively. Ms Small has been employed by PPCA since 1996; and was the Chief Operating Officer of PPCA until 1 May 2025, at which time she became a Special Consultant to PPCA. Ms Small’s evidence concerned matters including PPCA and its licensing arrangements (both generally and with CRA and its members); and a survey sampling exercise undertaken by CRA’s solicitors relating to protected and unprotected sound recordings. Ms Small has previously given evidence in earlier Tribunal proceedings, including in Re Phonographic Performance Company of Australia Ltd (under s 154 Copyright Act 1968 (Cth)) (2015) 114 IPR 316 (Simulcast 1), Re Phonographic Performance Co of Australia Ltd (2010) 87 IPR 148 (Gyms), Re Phonographic Performance Company of Australia Ltd under Section 154(1) of the Copyright Act 1968 (Cth) (2016) 125 IPR 1 (Foxtel).

32    The following record company representatives gave evidence generally about the significant investment that record companies make in creating and promoting sound recordings; the risks involved; the significant changes in the music industry, including in revenue models and the decreasing promotional value of radio; the importance of fair payment for sound recordings; and the importance and impact of Australian music.

33    Christopher Maund made two affidavits, dated 1 July 2024 and 3 March 2025, respectively. Mr Maund is the Chief Operating Officer of the label and publishing divisions at Mushroom Group and has worked in the music industry for over 28 years. Mushroom is Australia’s leading independent music group of companies, whose labels have signed over 60 Australian artists or catalogues of artists including Kylie Minogue, Jimmy Barnes, Hunters & Collectors and Yothu Yindi.

34    Elizabeth Blakey, made two affidavits, dated 16 July 2024 and 6 March 2025, respectively. Ms Blakey is the Senior Vice President, Legal & Business Affairs at Warner Music Australia, part of Warner Music Group, one of the world’s leading music entertainment companies. Ms Blakey has worked in the recording industry for over 29 years, 20 of which have been at Warner. She is also an alternate director on the PPCA Board and Chair of the Australian Recording Industry Association (ARIA) and PPCA Copyright Committee.

35    Rebecca Sandel made two affidavits, dated 18 July 2024 and 28 February 2025, respectively. Ms Sandel is the Senior Vice President, Legal & Business Affairs at UMA, where she has worked for over 12 years. UMA is part of the global Universal Music Group, which has signed artists include Empire of the Sun, Taylor Swift and Katy Perry.

36    Gordon Pitt made one affidavit, dated 11 November 2024. Mr Pitt is the Vice President, Commercial, Business & Legal Affairs, ANZ at Sony Music Entertainment (Australia), an indirect subsidiary of SME. He has worked in Australia’s music, sport and entertainment industry for over 24 years. Mr Pitt has also been member of the Board of Directors for ARIA since July 2021, and of the ARIA/PPCA Copyright Committee since April 2013. Mr Pitt is also an Alternate Director of PPCA.

37    Of this cohort of witnesses, only Ms Blakey, Mr Pitt and Mr Maund were cross-examined, and their cross-examination focussed on discrete aspects of their evidence.

38    PPCA’s witnesses also included the following recording artists, who generally gave evidence about their experience; the process of creating and promoting sound recordings; the significant time, effort, skill and resources required to do so; changes in the music industry; the importance of revenue from PPCA; the role of radio and relevant changes over time, particularly in music promotion; and the value of Australian music. None of these record artists were subject to cross-examination.

39    Joshua Pyke made one affidavit on 5 July 2025. Mr Pyke is an award-winning artist with over 20 years’ experience in the music and entertainment industry. He is also the Chair of the PPCA Board and the first recording artist to act in that position.

40    Holly Rankin made one affidavit on 16 July 2024. Ms Rankin, who performs under the stage name Jack River, has been a songwriter and recording artist for about 11 years and has also been involved in running and organising various festivals in Australia.

41    James (Jimmy) Barnes made one affidavit dated 22 July 2024. Mr Barnes has over 50 years of experience in the music industry, having been the lead singer and one of the songwriters for the Australian rock band ‘Cold Chisel’, as well as a successful solo artist.

42    Paul Anthony Dempsey made one affidavit dated 28 June 2024. Mr Dempsey is a singer, guitarist and songwriter for the band ‘Something for Kate’ (amongst others), as well as a solo musician. He has been a professional musician for close to 30 years.

43    David William de Barran Cullen made one affidavit, dated 1 July 2024. Mr Cullen has been an artist manager since 1990. He is responsible for overseeing all aspects of artists’ professional journeys, including talent development, songwriting and recording, negotiating deals, and coordinating marketing and promotional activities. His current roster includes artists such as Paul Kelly, Ball Park Music and Kate Miller-Heidke. Mr Cullen gave evidence about the investment and support needed to create and promote sound recordings; the importance of Australian sound recordings; the importance of PPCA’s revenues for artists; and the changing role of radio in supporting artists. Mr Cullen was not cross-examined.

44    PPCA also adduced evidence from Shane Homan, an independent non-economic expert witness, who made two affidavits, dated 2 July 2024 and 3 March 2025, respectively. Mr Homan is an Associate Professor and the Head of School of Media, Film and Journalism at Monash University; and has spent the past 30 years studying popular music. He is an independent expert witness and gave evidence about the relationship between commercial radio and recorded music in Australia, including the relevance of radio in the changing music consumption landscape; the significance and value of music to commercial radio and in particular, from content, branding identity, marketing and revenue-generation perspectives; selection of music for radio airplay; importance of Australian music; and challenges for Australian artists.

2.2.1.2    CRA

45    CRA adduced evidence from the following eight lay witnesses.

46    Elizabeth Young made one affidavit, dated 4 December 2025. Ms Young is the Chief Executive Officer (CEO) of CRA. Given that Ms Young has only been in this role since 7 August 2024, much of her evidence was gained from her review of CRA’s business records.

47    Five of CRA’s witnesses were senior radio executives, from a mix of metropolitan and regional networks, each with decades of experience in the industry.

48    Peter Colosimo made two affidavits, dated 10 December 2024 and 28 April 2025, respectively. He is the Chief Operating Officer of Nova Entertainment Pty Limited and its associate companies, a role he has held since 2020. Employed by Nova Entertainment since 2013, Mr Colosimo oversees both internal functions (including legal, technology and People Experience) and external functions (including partnerships and strategy). His responsibilities include long-term strategic planning, commercial partnerships, regulatory engagement, and talent management. He also serves as Company Secretary, responsible for governance and risk matters.

49    David Cameron made two affidavits, dated 11 December 2024 and 28 April 2025, respectively. He has worked in the radio industry for over 30 years and, since January 2020, has been the Chief Content Officer of Southern Cross Austereo (SCA), which operates the HIT and Triple M networks. In this role, he oversees the production and delivery of all broadcast and podcast content. Mr Cameron’s focus is on audience growth and revenue optimisation through strategic content development.

50    Blair Woodcock made one affidavit, dated 2 December 2024. He is the Head of Content – Regional at SCA, a position he has held since May 2021. Mr Woodcock is responsible for all regional programming, including strategic direction and oversight of regional content teams and on-air talent. His role involves staff management of all their content teams, including talent (i.e., talk show hosts and presenters) and ensuring the quality and consistency of regional content across SCA’s stations.

51    Duncan Campbell made two affidavits, dated 17 December 2024 and 28 April 2025, respectively. He is the Chief Content Officer of Australian Radio Network Pty Limited (ARN), which operates the KIIS and Gold networks. Mr Campbell has held that position since 2010 and has over 40 years’ experience in the radio industry. He is responsible for ratings performance and content strategy across all ARN platforms, including iHeartRadio. His work involves developing content strategies informed by audience behaviour and market trends.

52    Mark Taylor made two affidavits, dated 2 December 2024 and 28 April 2025, respectively. He is the Chief Executive Officer of ACE Radio Broadcasters Pty Ltd, an Australian media company established in 1984. Mr Taylor has over 40 years’ experience in the radio industry and has held his current position since October 2015. He is responsible for ACE Radio’s day-to-day operations and strategic direction. Major business decisions are made by Mr Taylor in consultation with the company’s Board.

53    Given the focus on music and sound recordings in these proceeding, CRA did not call any witnesses from its members big “talk” stations but noted the high success of stations 2GB and 3AW—which play very little music—nonetheless have consistently high ratings in Sydney and Melbourne, Australia’s largest advertising markets.

54    Debrorah Hishon made one affidavit, dated 3 December 2024. Mr Hishon is the Head of Commercial (ANZ) and Media Measurement Director (ANZ) at GfK ANZ Pty Ltd. In this role, Ms Hishon coordinates all radio ratings contracts and oversees client service for the radio industry, including radio stations, advertising agencies and other clients. Ms Hishon manages a client service team and assists in manages teams of people in the field of radio audience measurement.

55    Anita Cade made one affidavit, dated 13 December 2024. Ms Cade is a partner at Ashurst Australia, the solicitor on record for CRA. Ms Cade’s evidence described an in-house analysis conduct by Ashurst of the proportion of protected and unprotected recordings played on commercial radio.

2.2.2    Expert witnesses

56    Each party also called up expert witnesses, all from the United States of America (US or United States), all of whom participated in joint expert sessions and gave concurrent evidence on limited topics preselected by the parties. These experts are professional experts.

2.2.2.1    PPCA

57    PPCA relied on the evidence of the three experts.

58    Jeffrey Eisenach made two affidavits, dated 1 July 2024 and on 28 February 2025, respectively. Dr Eisenach is a Senior Managing Director at NERA Economic Consulting, an Adjunct Professor at Antonin Scalia Law School within George Mason University, and a non-resident senior fellow at the American Enterprise Institute. Dr Eisenach obtained a Bachelor of Arts, majoring in Economics from Claremont McKenna College in 1979, followed by a PhD in Economics from the University of Virgina in 1985. Dr Eisenach has significant experience as an economist and an expert witness, and was an independent expert retained by PPCA in Simulcast 1 and Re Phonographic Performance Company of Australia Ltd under s 154 of the Copyright Act 1968 (Cth) (2016) 117 IPR 540 (Simulcast 2) (together, the Simulcast Proceedings). Dr Eisenach gave evidence about the economic approaches to assessing reasonable rates; and his opinion as to the reasonableness of the rate in the PPCA Proposed Scheme.

59    Barry Massarsky made two affidavits on 2 July 2024 and 2 March 2025, respectively. Mr Massarsky is a Partner and Co-Practice Leader of Music Economics and Valuation for Citrin Cooperman, a tax, attest and advisory service firm. Mr Massarksy obtained a Bachelor of Arts degree, cum Saude, from Boston University in 1977, which included numerous courses in economic analysis, followed by a Master of Business Administration from Cornell University in 1981 which included an emphasis in managerial and industrial organisation economics. His work specialises in the economics of music copyright and masters and publishing catalogue valuations. Mr Massarsky gave evidence about radio revenue in the United States and Australia; the importance and extent of use of music on radio; the decreasing role of radio in promoting music; the comparative differences in the value of sound recordings versus musical works; the significant cost and risk to record labels; and the increasing value of music catalogues. Mr Massarsky also gave evidence as an independent expert in the Simulcast Proceedings.

60    Robert Kulick made one affidavit dated 27 February 2025. Dr Kulick is an econometrician; Managing Director in the Communications, Media and Internet Practice at NERA; Adjunct Professor at George Mason University of School of Law; Visiting Fellow at the American Enterprise Institute; and an Affiliate of the University of Maryland Economics Leadership Council. Dr Kulick holds a PhD in Economics from the University of Maryland, completed in 2017, and a Bachelor of Arts, majoring in Economics, from Princeton University, completed in 2006. Dr Kulick gave independent expert evidence about the unreliability of the regression analysis undertaken by on of CRA’s experts, Professor Waldfogel.

2.2.2.2    CRA

61    CRA led evidence from the following two experts.

62    David Reitman made one affidavit, dated 16 December 2024. Dr Reitman is an experienced and well-qualified economist who hold applied mathematics and economic degrees from Havard University and Stanford University, including a PhD. He has published papers in leading competition and economics journals. His professional experience includes about 10 years in academia, 10 years as an economist working for the US Department of Justice, and almost 20 years’ experience working as an economist in private practice. He has substantial experience valuing copyrights, including with respect to music.

63    Joel Waldfogel made one affidavit, dated 9 December 2024. Professor Waldfogel is a Professor of Strategic Management and Entrepreneurship and holder of the Frederick R. Kappel Chair in Applied Economics at the Carlson School of Management, University of Minnesota and an affiliated faculty member at the Department of Economics and at the University of Minnesota Law School, and is also a Faculty Research Associate at the National Bureau for Economic Research in the United States. Professor Waldfogel received his bachelor’s degree in economics summa cum laude from Brandeis University in 1984 and a doctorate in Economics from Stanford University in 1990. Professor Waldfogel gave evidence responding to Mr Massarsky and necessarily had a more limited role than Dr Reitman.

2.3    Agreed facts

64    The following matters provide context to the proceedings and are largely taken from the parties’ Statement of Agreed Facts dated 2 May 2024.

65    It is common ground between the parties that music (both protected and unprotected) is an important factor for many (but not all) radio stations.

2.3.1    Broadcast right

66    Section 85(1) of the Copyright Act sets out the nature of copyright that subsists in sound recordings, which consists of the exclusive right to do all or any of the following acts:

(a)    to make a copy of the sound recording;

(b)    to cause the recording to be heard in public;

(c)    to communicate the recording to the public;

(d)    to enter into a commercial rental arrangement in respect of the recording.

67    A broadcast right is considered as a subset of the so-called “communication right” as set out in s 85(1)(c) of the Copyright Act.

68    Radio stations have broadcast their radio programs since the 1920s.

69    Certain sound recordings are known as “protected” sound recordings, which means that they enjoy a broadcast right in Australia, as distinct from “unprotected” sound recordings, which do not enjoy a broadcast right in Australia. The difference between protected and unprotected sound recordings which occupied a large amount of evidence is discussed further below.

70    Since at least 2 November 1985, PPCA has been entitled to the radio stations’ APRA logs pursuant to their PPCA licence conditions, although in practice PPCA obtains aggregated APRA log information from APRA directly.

2.3.2    Existing broadcasting licensing arrangements

71    Prior to this Reference, the broadcast of PPCA Sound Recordings by commercial radio broadcasters in Australia was licensed pursuant to the PPCA–CRA Agreement. Pursuant to that agreement, PPCA entered into a Member Agreement (as that term is defined in the 1999 Industry Agreement) with each member of CRA in relation to the broadcast of PPCA Sound Recordings. PPCA has the right to collect royalties in relation to sound recordings within its repertoire.

72    The PPCA–CRA Agreement and the PPCA Proposed Scheme relate to the analogue and digital broadcast of PPCA Sound Recordings by commercial radio broadcasters. They do not apply to the simulcasting activities of those broadcasters over the internet (including over mobile telecommunications networks), which are separate and distinct from the radio broadcasts. Relatedly, PPCA already grants a blanket licence to CRA Members to simulcast all commercial sound recordings in the PPCA repertoire (PPCA–CRA Simulcast Licence).

73    DAB+, being another form of terrestrial broadcast signal, was launched in Australia in 2009.

74    Stations first began to simulcast their same radio programs over the internet in 2001. As noted above, the communication of sound recordings by simulcast is the subject of a separate licence and payment of a separate licence fee. The simulcast licence and licence fee were determined by the Tribunal in the Simulcast Proceedings.

75    On 10 August 2022, PPCA terminated the PPCA–CRA Agreement (and consequently the 1999 Member Agreements), taking effect from 30 June 2023. On 11 August 2023, the Tribunal made interim orders, in which certain commercial radio broadcasters were granted (and any additional broadcasters who become members of CRA during the interim period would be granted) interim licences by PPCA.

76    The PPCA Proposed Scheme adopts a percentage of revenue model, consistent with the 1999 Industry Agreement. CRA Members have long-standing arrangements in place enabling them to pay broadcast licensing fees for the MUP of revenue basis to both PPCA, and APRA AMCOS.

2.3.3    APRA

77    APRA was established in 1926 to manage the performance and communication rights of its members. This covers musical works that are communicated or performed publicly including on radio, television, online, at live performances and so on.

78    Each radio station is required to supply music usage reports to APRA (APRA logs) on a quarterly basis pursuant to their APRA AMCOS–CRA Agreement licence conditions.

79    Since at least 2 November 1985, PPCA has been entitled to the radio stations’ APRA logs pursuant to their PPCA licence conditions, although in practice PPCA obtains aggregated APRA log information from APRA directly.

2.3.4    The statutory framework and principles

80    At a foundational level, a piece of recorded music broadcast on commercial radio involves three distinct copyrights:

(a)    the musical work (i.e., the underlying work or musical arrangement);

(b)    in the case of a song, the literary work (i.e., the lyrics to the musical work); and

(c)    the sound recording (being the aggregate of sounds that constitute the recording).

81    In these reasons when the term musical work is used it is intended to refer to both the music and lyrics (literary work) in a song, unless otherwise noted.

82    The broadcast and communication rights for the musical and literary copyright works in a song are exclusively licensed by the copyright collecting society, APRA.

83    PPCA is the non-exclusive licensor for the broadcast and certain other communication rights for sound recordings, insofar as those sound recordings are commercially released.

84    In contrast to musical and literary works, not all sound recordings attract copyright protection for broadcasting, only protected sound recordings have a broadcast copyright. In summary, s 89 of the Copyright Act provides that copyright subsists in a sound recording if:

(a)    its maker at the time of making was a ‘qualified person’ (s 89(1));

(b)    it was made in Australia (s 89(2)); or

(c)    it was first published in Australia (s 89(3)).

85    The maker of the sound recording is defined by s 22(3) as the person who owned the record at the time it was provided. In practice, the maker would typically be the record label. Pursuant to s 97(2), the owner of the copyright in the sound recording is the maker.

86    A “qualified person” is an Australian citizen or person resident in Australia or body corporate incorporated under the law of the Commonwealth or of a state: s 84. For the purpose of broadcast copyright in sound recordings, this definition is in effect extended by reg 7(2) of the Copyright (International Protection) Regulations 1969 (Cth) (CIP Regulations). Schedule 3 to the CIP Regulations sets out a list of countries that provide rights for secondary uses of sound recordings, which I shall refer to as the “Schedule 3 Countries”. By effect of reg 7(2), the definition of a “qualified person” extends to persons who were citizens, nationals or residents of the Schedule 3 Countries), and bodies corporate incorporated under the laws of a Schedule 3 Countries, at the time when the recording was made. Protection is also extended to recordings made within Schedule 3 Countries.

87    The distinction between a protected and unprotected sound recording is complex and not always readily apparent. Considerable evidence was led concerning the circumstances in which a commercial sound recording attains, or is denied, such protection. The distinction will be examined in greater detail below. It is sufficient at this stage to note that important limitations exist on the exclusive rights of the owner of copyright in a sound recording—most notably, the compulsory licensing provisions relating to the public performance and broadcasting of records. In WEA Records Pty Ltd v Stereo FM Pty Ltd (1983) 1 IPR 6 (WEA Records) at 10, the Tribunal observed that the equivalent s 85(1) provision strikes a balance between the claims of record producers for an adequate return for their skill and effort in making records, and the competing interests of broadcasters and those concerned with performing rights. Compulsory licences for the broadcasting of sound recordings are addressed by s 109. The essence of the statutory scheme is that it is not an infringement of copyright in a published sound recording to broadcast that recording without the consent of the copyright owner, provided that the recording has been released in Australia or the prescribed period has elapsed since the recording’s first release overseas, that royalties are paid in accordance with the requirements of the Copyright Act, and that the maker of the broadcast has given an undertaking to pay such amount as may be determined in accordance with an order of the Tribunal under s 152 of the Copyright Act.

2.3.5    “Protected” and “unprotected” sound recordings

88    Sound recordings that enjoy the right of broadcast in Australia are referred to as protected sound recordings, and those which do not are referred to as unprotected sound recordings. In contrast, all musical works are protected by a broadcast right in Australia. Unlike sound recordings, there is no distinction between protected and non-protected works. Unprotected sound recordings within the PPCA Repertoire do not include the broadcast right, however, do include the balance of the communication right in s 85(1)(c) of the Copyright Act (which relevantly includes the right to communicate sound recordings over the internet by simulcast).

89    The distinction between protected and unprotected sound recordings requires the application of copyright law in Australia, including the interaction between provisions of the Copyright Act and provisions the CIP Regulations. Whether a sound recording is protected depends on it having one or more “connecting factors” to Australia or to one of the other Schedule 3 Countries.

90    The number of Schedule 3 Countries has increased over the decades, and as copyright law, through Tribunal decisions, has continued to evolve. By way of illustration, at the time the PPCA–CRA Agreement was entered into, the number of Schedule 3 Countries was 46.

91    More recently, as at June 2023, there were 119 Schedule 3 Countries, with the numbers rising as result of the inclusion of some 73 countries, including Canada, France and Republic of Korea. By way of example, sound recordings from Canadian artists Celine Dion, Justin Bieber, Bryan Adams, Shania Twain, Drake, The Weeknd; the South Korean girl group BlackPink; and French artists David Guetta and Daft Punk are now included in the protected repertoire.

92    Considering the number of Schedule 3 Countries is relevant to decisions of the Tribunal over the course of the last few decades. Since WEA Records was determined in the early 1980s, around 90 additional countries have been included in the Schedule 3 Countries. Furthermore, since the decision in Foxtel, a further 39 countries have been added, including Croatia, the Cook Islands, Mongolia, and Vanuatu.

93    Notably, the United States is not one of the Schedule 3 Countries.

94    In summary, the combined effect of ss 22 and 89 of the Copyright Act and reg 7(2) of the CIP Regulations is that the relevant “connecting factors” for considering whether a sound recording is ‘protected’ include the following:

(a)    The country of residence or incorporation of the person(s) who, at the relevant time, owned the record on which the sound recording was made–in practice, this would typically be the record company, although there are also many artists who own their sound recordings directly as well;

(b)    The country or nationality or residence of the “maker” of a sound recording of a “live performance” at the time the sound recording was made;

(c)    The release date of the sound recording, the country of first release and if released in Australia, the date of first release in Australia; and

(d)    The location of the recording studio at which the sound recording was recorded or mixed, being the location at which it was made.

95    While the parties agreed as to the basic mechanism of how the protection regime of sound recording operated, they diverged on one aspect: what constitutes a “live performance”.

96    PPCA contends that a recording made in a studio environment is a “live performance” and it is sufficient to attract protection (even if only one track of many which comprise the final recording) if the recording involves even one performer from one of the Schedule 3 Countries. PPCA relies on the definitions in s 22(7) to submit that a performance of a musical work is taken to be a “live performance” whether it is “in the presence of an audience or otherwise”, and “performer” includes “each person who contributed to the sounds of the performance”. PPCA submits that sound recordings are not limited to the performance of underlying musical or literary works, but include other matters, such as football matches or the sounds of nature.

97    CRA contends that on PPCA’s interpretation every sound recording that incorporates a recording of a person who is alive making sounds is the sound recording of a live performance irrespective of the number or timing of the mixing or the “stitching together” of, the tracks comprised in the sound recording.

98    PPCA’s interpretation was rejected in Foxtel, where the Tribunal observed at [104] that they did not accept that a studio recording is a live performance within the meaning of s 22(7). The Tribunal elaborated that such a reading would be inconsistent with s 22(3) which appears to contemplate the possibility of a sound recording other than a sound recording of a live performance. The Tribunal noted that if every recording of a live performance is a sound recording of a live performance, then the exception consumes the rule. At [105], the Tribunal considered that “the definition of ‘live performance’ is directed at complete ‘performances’ rather than recording studios involving any degree of mixing”. PPCA submits that these Tribunal’s comments were “made in obiter” are not binding and are plainly wrong.

99    On the construction arising from Foxtel, a sound recording of a “live performance” is likely to be one that is of a performance at a concert, or one which is performed in a studio (with or without an audience), but not a sound recording built up from a number of separate individual recordings made by live people subsequently stitched together into a final sound recording. A sound recording comprising multiple recordings stitched or mixed together is also not “a sound recording, made at the time of the live performance” as required by the definition of a “sound recording of a live performance” under s 22(7). That would be a sound recording made after the individual constituent performances.

100    Further, a “performance” suggests the performance of music or a play or some kind of work in its entirety, rather than in parts.

101    There is no reason apparent, in the text or context, that the intention of Parliament was to have the majority of studio recordings fall within the definition of “live performance”. The exception nonetheless has meaningful work to do in circumstances where there is a recording of a concert or a complete in-studio recording of a performance (for example, at a radio station for broadcast). CRA’s construction also gives the expression “whether in the presence of an audience or otherwise” work to do (the above examples, apart from a concert, may not be in the presence of an audience).

102    In Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2025) 311 FCR 493, the Full Court of the Federal Court of Australia considered at [113]–[114] the circumstances in which it may depart from an earlier Full Court authority that is said to be “plainly wrong”. Having reviewed the relevant authorities, the Court at [114] chose to adopt the principle that:

[…] the Full Federal Court should depart from an earlier Full Federal Court decision only where there is a compelling reason to do so. What constitutes a compelling reason will depend on the particular issue and circumstances of the case.

103    The Tribunal’s construction of “live performance” in the Foxtel decision was reached after full argument. PPCA has not identified any compelling reason to regard that reasoning as plainly wrong or to justify departing from it. Accordingly, the construction of “live performance” in Foxtel is adopted in this determination.

2.3.5.1    What percentage of PPCA’s repertoire comprises sound recordings?

104    Each party devoted significant efforts to estimate how much of PPCA’s repertoire comprised ‘protected’ sound recordings, and put forward evidence-based estimates as to the proportion of the repertoire that were protected works. PPCA relied on the estimate of Ms Small and CRA relied on the estimate of Ms Cade along with the sample exercise undertaken by Ashurst.

105    Each party criticised the methodology of the other, and I do not propose to go into the detail of these criticisms. Estimating the proportion of protected sound recordings is not an exact science, and for the purpose for which the ultimate estimate figure is to be deployed, the cost of attempting to calculate with mathematical precision the proportion of protected works within the PPCA repertoire outweighs the benefit. Akin to the Foxtel decision, I do not consider that the difference between the parties’ estimates will ultimately be material on the result.

106    PPCA has undertaken no analysis of the proportion of protected recordings played on commercial radio since WEA Records was determined in 1983. In that matter, the Tribunal found at 43 that the high MUP broadcaster, Stereo FM Pty Ltd (2MMM), used an average of 54% of protected sound recordings in the period from the commencement of transmission by 2MMM until the commencement of programming, 53% in the period October 1980 to 30 June 1981, 58% in the period 1 July 1981 to 30 June 1982, and 60% in the period 1 July 1982 to 30 June 1983.

2.3.5.2    Ms Small’s estimate

107    Ms Small conceded that the estimation of the percentage of PPCA’s repertoire comprises sound recording was not a complex exercise “for the record label that made the sound recording”. However, Ms Small noted while the PPCA’s agreement with its Licensors obliged them to provide certain information to PPCA in relation to their sound recordings, in practice, the information given is not always sufficient to determine whether the sound recordings are protected or not. With the PPCA repertoire constantly evolving, Ms Small gave evidence that it was difficult for PPCA to maintain oversight across the relevant information. According to Ms Small, PPCA did not hold a master list which conclusively identifies whether particular sound recordings in the PPCA repertoire are protected.

108    As laid down in Gyms at [28], a matter which was heard between 2009 and 2010, Ms Small gave evidence in that the proportion of protected recordings in the PPCA repertoire was 70%. At [308]–[309], the Gyms Tribunal effectively accepted an estimate of 60% for the proportion of sound recordings played in fitness classes as being protected sound recordings within PPCA’s repertoire.

109    In Foxtel, heard between 2015 and 2016, Ms Small gave evidence that she believed 70% of PPCA’s repertoire was protected. The Tribunal noted at [100] that this was not quite the same thing as the proportion of sound recordings used or broadcast on Pay TV (being the context of that case) were protected sound recordings but did not find it necessary to determine the latter question.

110    In referring to these earlier decisions in her evidence, Ms Small notes that relatively recent Tribunal determinations have accepted estimates for the proportion of PPCA Sound Recordings that are protected sound recordings, ranging from 60% to 80%. Ms Small gave evidence that, in advancing PPCA’s proposed benchmark based on the royalty rate payable to APRA AMCOS for the corresponding musical work, a 20% downward adjustment would be appropriate to account for the decrease in percentage of unprotected sound recordings within PPCA’s repertoire. On this basis, Ms Small estimates that PPCA’s repertoire comprises approximately 80% of protected sound recordings. A factor influencing Ms Small’s present estimate, as compared to those provided in Gyms and Foxtel, is the increase in the number of recognised Schedule 3 Countries, which purportedly has the effect of “significantly increasing the proportion of PPCA Sound Recordings which are protected sound recordings, and correspondingly decreasing the proportion of unprotected sound recordings”. Nonetheless, major jurisdictions such as Canada, Republic of Korea and France had already been included in Schedule 3 Countries prior to the Foxtel determination.

111    In reaching her estimate, Ms Small also consulted PPCA’s internal “Airplay by Country” Reports. According to Ms Small, the Airplay by Country Reports are generated as part of PPCA’s distribution process for commercial radio simulcasts over the internet, rather than PPCA’s distribution process for commercial radio broadcasts. PPCA does not generate corresponding reports directed to commercial radio broadcasts. However, because the content of the commercial radio simulcasts is the same as the commercial radio broadcasts, it was Ms Small’s view that the Airplay by Country Reports provided a reasonable indication of the sound recordings which are broadcast on commercial radio.

112    Ms Small’s evidence was that in order to create the Airplay by Country Reports, PPCA cross-references the commercial radio stations’ reported music against data it has relating to PPCA’s repertoire to identify the corresponding PPCA Sound Recording and its “country of origin”. Ms Small acknowledged that in attributing the country-of-origin PPCA adopted its interpretation of “live performance” rather than that of the Tribunal in Foxtel.

113    By way of illustration, Ms Small observed that in one year from July 2021 to July 2022, the percentage airplay of sound recordings designated with the United States as their country of origin was 30.06%.

114    The Airplay by Country Reports show that on a percentage airplay basis:

(a)    The United States is usually slightly above 30%;

(b)    The United Kingdom is usually around 30%;

(c)    Australia is usually around 20%; and

(d)    Canada, together with France and Republic of Korea usually total around 6%.

115    The Airplay by Country Report for 2022–23 shows that seven of the 39 countries added to the Schedule 3 Countries since Foxtel contributed approximately 0.3% of airplay with the remainder contributing no airplay at all.

116    Ultimately, after consulting PPCA’s records, Ms Small arrived at an estimate of 80% of the PPCA repertoire being protected. This comprised 70% based on the Airplay by Country Reports, and a further 10% which Ms Small added to her estimate of protected recordings as she considered that 70% understated the position, largely on the basis (a) that information provided by licensors is ‘frequently incomplete and sometimes inaccurate’ and (b) of relevant ‘connecting factors’ that she had seen revealed in other Tribunal proceedings.

117    Ms Small noted that during her time at PPCA, the Tribunal has accepted estimates for the proportion of protected sound recordings ranging from 60% to 80%. In cross-examination, Ms Small agreed that the analysis performed in Reference by Phonographic Performance Company of Australia Ltd (2007) 73 IPR 162 (Nightclubs), Gyms and Foxtel, matters in relation to nightclubs, fitness classes and free-to-air television, respectively, did not assist in estimating the proportion of protected and non-protected sound recordings used by commercial radio.

118    PPCA was obliged under the Australian Competition and Consumer Commission Determination entitled “Application for revocation and substitution of the authorisations A30082, A30083, A30084, A30085, A30068 and A30087” and dated 27 September 2007 to publish an annual list of recordings in respect of which PPCA made distributions, and those it did not (the ACCC Authorisation). Only the 2017/18 distribution list was in evidence. The distribution report comprised some 3533 pages. CRA submits that dividing the total number of recordings listed by those for which distributions were made yields a figure of 54.95%. PPCA criticises CRA’s reliance on the distribution report, amongst others on the basis that it is five years old and outdated, it is not limited to radio, as it includes television and other public performance, and there is no weighting between tracks played once or hundreds of times. Ms Small’s evidence was that PPCA was trying to do its best for its members on maximising distributions, and the analysis was “robust” according to PPCA’s policies, including applying PPCA’s interpretation of recordings of “live performances”.

119    Ms Small acknowledged in her written evidence that PPCA contended for a broader interpretation as to what constituted a “live performance” than that adopted by the Tribunal in Foxtel. In cross-examination Ms Small conceded that if PPCA’s interpretation of “live performance” was incorrect, her estimate of 80% was “overstated”.

120    Having seen Ms Small’s estimate of 80% for the proportion of protected works, Ms Cade undertook a sampling exercise to verify whether Ms Small’s estimate was a reasonable estimate of the proportion of protected works in the PPCA repertoire. As a result of the sampling exercise, Ms Cade concluded that Ms Small’s estimate was not reasonable, and Ms Cade estimated that the proportion of protected works in the PPCA repertoire was in the range of 42% to 56%.

2.3.5.3    Ms Cade’s estimate

121    Ms Cade’s sampling exercise involved her supervision of a team of 12 lawyers, graduates and paralegals who analysed a year’s playout logs for nine commercial radio stations. Ms Cade selected the nine stations to ensure that they represented a mix of broadcasters from a mix of Australian states and of metropolitan and regional stations and a mix of overall music use as measured by their MUP (ranging between talkback and high MUP stations). Within those nine stations, Ms Cade included four stations that Ms Small had singled out as having a music focus. The sampling exercise covered approximately 14,000 unique sound recordings, 5,000 unique artists and 589,000 total spins.

122    The team undertook online searches to seek to identify the nationality of the artists. Ms Cade adopted the nationality of the artist as being suggestive of (or proxy for) the country in which the “maker” may have been a citizen, national, resident or incorporated or where the track was made. Mr Massarsky gave evidence in the joint session of a “practice” of artists from the United States recording in countries other than the United States which he said had been “consistent” since 2000. Ms Cade’s team did not investigate whether any United States’ artists in the sample may have recorded in Schedule 3 Countries.

123    Mr Massarsky opined on the significant movement of United States’ based artists travelling abroad to record. According to Mr Massarsky, such decisions are typically influenced by preferences for particular engineers or producers, the availability of suitable soundstages, and resource constraints in the United States that may compress production schedules. As a result, artists often choose to record overseas. The factors driving these decisions are both artistic and commercial—namely, the opportunity to record the right music at the right time. The United States’ status as a non-Schedule 3 Country was therefore not considered by Mr Massarsky to be a pertinent factor in determining the proportion of protected and unprotected sound recordings.

124    Ms Cade’s evidence was that the analysis undertaken by her team pointed to a protected proportion of recordings of 42% or at most 56%, on the basis that a track was designated protected if any artist or bandmember was a national of a Schedule 3 Country.

125    PPCA challenged Ms Cade’s sampling exercise on several bases, and did ultimately obtain the following concessions during her cross-examination:

(a)    artist nationality, recording location and place of incorporation are “quite different” factors;

(b)    these factors would not always align;

(c)    “many artists” who are nationals of one country, record sound recordings in another country; and

(d)    “many artists” who are nationals of one country, release sound recordings under labels of record companies incorporated in another country.

126    Ms Cade also conceded that the analysis was imperfect. Whilst she nevertheless maintained that the sampling exercise “does not provide in itself a reliable estimate, but […] provides a reliable basis to come to an estimate”, this appeared to be based entirely on speculation about “what we know about the US music industry”. However, there is no evidence as to the extent of Ms Cade’s or her team’s knowledge of the United States’ music industry.

127    On the other hand, CRA submitted that while spending “many hours” trying to find errors in Ms Cade’s classifications of protected recordings (and undertaking extensive internet inquiries in doing so), Ms Small did not undertake any analysis of the “unprotected” recordings in Ms Cade’s classifications. CRA submits that the Tribunal should infer that if there are errors in Ms Cade’s sampling exercise, they are likely to “go in both directions”.

128    Ms Small did accept that “Ms Cade and her team were doing the best they could do from publicly available information”.

129    CRA also emphasised that the relevant information about each sound recording (such as where it was made, and the place of incorporation of the record label, or in the case of an individual maker of the sound recording, place of citizenship or residence) was “squarely in the power of” PPCA or its licensors to produce. Given that the majority of sound recordings commercially released in Australia are owned or controlled by three major record labels, all of which are shareholders in PPCA, CRA submits that it would be a much easier task for PPCA than CRA to assemble the information. Ms Small agreed that it would not be a complex exercise for the record label that made the sound recording to assess whether a sound recording was protected. On the other hand, CRA was constrained to the use of publicly available information. While witnesses from the three record labels gave evidence, those witnesses were silent on the issue of the proportion of protected sound recordings.

130    The protection regime is complex and relevant information, such as the location of the studio where the recording was made, or the location of the incorporation of the record label is not always easily accessible. PPCA maintains “Airplay by Country” Reports which provide an indication based on the information provided to PPCA as to the percentage of sound recordings played on commercial radio on a country-by-country basis. That analysis gives an estimate of 70%, using the PPCA interpretation of “live performance”.

2.3.5.4    Conclusion on protected sound recordings with PPCA’s repertoire

131    Determining the precise proportion of protected sound recordings within PPCA’s repertoire is not capable of mathematical precision. As the Tribunal observed in Foxtel at [100]:

[…] The debate about the use of unprotected recordings is therefore about determining what the share of ‘substantial’ an otherwise unknowable quantity is to be. This appears to the Tribunal to be a pointless endeavour. […]

132    That observation remains apt. The available evidence does not permit a definitive or empirically certain quantification of the proportion of protected sound recordings in PPCA’s repertoire.

133    The determination in WEA Records was based on a sample of usage from a single broadcaster, 2MMM, some 40 years ago, which indicated a proportion of 54%. The lower range of Ms Cade’s current estimate falls below that historical figure. Given the subsequent inclusion of additional Schedule 3 Countries, such as Canada, Republic of Korea and France, it is reasonable to assume that the proportion of protected sound recordings has not decreased in the decades since WEA Records.

134    However, I consider that Ms Small’s estimate of 80% is too high. That figure represents a 10% uplift from her earlier estimate of 70%, an adjustment I do not regard as justified. Even accounting for its imperfections, Ms Cade’s “reasonableness check” sampling exercise supports the conclusion that the 80% estimate overstates the likely proportion of protected sound recordings.

135    Further, Ms Small’s 70% estimate, which was based on Airplay by Country Reports, is, by her own admission, affected by PPCA’s unduly broad interpretation of “live performance”. This methodological issue suggests that her 70% estimate is also likely to be somewhat inflated.

136    Taking these considerations together, and allowing for the inclusion of additional Schedule 3 Countries, as well as the likelihood that some United States’ artists record in a Schedule 3 Country, I consider that the true proportion of protected sound recordings within PPCA’s repertoire lies somewhere between the historical figure found in WEA Records and Ms Small’s adjusted estimates. The evidence, viewed as a whole, points to a figure that lies within a reasonable range rather than at either extreme of the estimates advanced by the parties. While it is not possible to arrive at a precise percentage, the available data provides sufficient foundation to reach a considered and balanced view of the likely proportion of protected sound recordings within PPCA’s repertoire, which I consider likely sits around 65%.

2.4    The 1% cap

137    Section 152(8) of the Copyright Act provides:

The Tribunal must not make an order that would require a broadcaster who is:

(a)    the holder of a licence allocated by the Australian Communications and Media Authority under the Broadcasting Services Act 1992 that authorises the holder to broadcast radio programs; or

(b)    a person authorised by a class licence determined by that Authority under that Act to broadcast radio programs;

to pay, in respect of the broadcasting of published sound recordings during the period covered by the order, an amount exceeding 1% of the amount determined by the Tribunal to be the gross earnings of the broadcaster during the period equal to the period covered by the order that ended on the last 30 June that occurred before the period covered by the order.

138    This provision, more commonly referred to as the “1% cap” was introduced with the commencement of the Copyright Act in 1969. Since its introduction, both PPCA and CRA have expended efforts to political lobbying with CRA advocating for its retention and PPCA petitioning for the removal or otherwise increase of the rate.

139    The 1% cap continues to apply exclusively to the commercial radio broadcasting of sound recordings. Importantly, this cap relates only to broadcasting, not simulcasting. Further, it applies solely to sound recordings and does not extend any musical works as contained within the APRA repertoire.

140    According to the Second Reading Speech for the Copyright Bill 1968 (Cth), the 1% cap had “been set to allay fears expressed by […] the commercial broadcasting stations […] that the payment of royalties for the broadcasting of records could impose a substantial financial burden on them”.

141    In the written and oral evidence presented before this Tribunal, that PPCA has devoted considerable time, resources and efforts over many years to seek removal of the 1% cap has become more apparent. In support of PPCA’s contention regarding its unsuitability, Ms Small gave evidence that there had been multiple independent inquiries which had reviewed the operation of the 1% cap and recommended that it be removed. For example:

(a)    The Federal Government commissioned report, titled “Review of Australian Collecting Societies” conducted by legal practitioner Shane Simpson and, which became known as the Simpson Report published in July 1995. The Simpson Report considered the operation of the 1% cap, concluding that:

Broadcasters are in no need of the protection offered by the present cap. They are sufficiently well represented to be able to negotiate market rates without the protective arm of the government interfering in that process. Experience has shown that the best way of setting rates is by inter-partes negotiation with access to the Copyright Tribunal to determine matters that cannot be resolved in that way. It is recommended that the ceiling on the broadcast fee payable pursuant to section 152 be removed forthwith.

(Emphasis in original.)

(b)    Following the Simpson Report, the Federal Government established the Intellectual Property Review Committee in 1999 (which was headed by Dr Henry Ergas and became known as the “Ergas Committee”) to conduct a review into intellectual property and competition policy. The Ergas Committee also considered the issue of the 1% cap and its effect on competition. In its report issued September 2000, the Ergas Committee on p 116 recommended the 1% cap be removed “[t]o achieve competitive neutrality and remove unnecessary impediments to the functioning of markets on a commercial basis […]”.

142    PPCA has over the years made multiple submissions to various government and quasi-government inquiries supporting the removal of the 1% cap. In 2006, it briefly appeared that PPCA’s lobbying had been successful as the Attorney General at the time, the Hon Philip Ruddock MP, announced via a media release dated 14 May 2006 that the Federal Government had agreed “to remove the statutory cap on licence fees paid by radio broadcasters for using sound recordings”. However, the removal never came to pass.

143    Having been unable to obtain the repeal of the 1% cap through its extensive lobbying efforts, PPCA commenced a Constitutional Challenge in the High Court in 2010, where it sought to have the 1% cap repealed on the grounds that s 152(8) was unconstitutional. PPCA claimed that the 1% cap stipulated under that provision amounted to an acquisition of property on other than just terms, in breach of s 51(xxxi) of the Constitution. The High Court subsequently dismissed PPCA’s challenge in Phonographic Performance Company of Australia Limited v Commonwealth of Australia (2012) 246 CLR 561. The basis of the dismissal flows from the majority’s acceptance of the Commonwealth’s submission at [10] that, upon the proper construction of the Copyright Act, copyrights subsisting in Australia on 1 May 1969 under the Imperial system were terminated; that thereafter, no copyright subsisted otherwise than by virtue of the Copyright Act; and that copyright in respect of sound recordings there attached immediately the compulsory licensing system including the “cap” upon the royalties payable thereunder.

144    The 1% cap was further considered by the Australian Law Reform Commission (ALRC) in its Inquiry into Copyright and the Digital Economy in 2013. The issue was also considered by a Senate Committee established to review current regulation of internet simulcasts in 2013, and the Productivity Commission in 2015. While the ALRC concluded in its Final Report dated November 2013 and later published in February 2014 that “[…] if the s 109 licence is retained, there appears to be a strong case for repeal of the one per cent cap […] The problematic nature of the caps was recognised by the Simulcast Inquiry, which stated that it ‘can understand why previous reviews have recommended the abolition of such a cap”.

2.5    Previous licensing arrangements and negotiations between PPCA and CRA

145    In 1983, the Tribunal in WEA Records determined that a radio station, 2MMM, using a high proportion of music should pay a broadcast fee of 0.45% of its gross earnings to PPCA and record labels, pursuant to s 152(6) of the Copyright Act.

146    Prior to WEA Records decision, licensing arrangements for the right to broadcast sound recordings in Australia were managed through agreements between PPCA (established in 1969) and CRA’s predecessor, FARB. In the period prior to PPCA’s incorporation, FARB negotiated licences on behalf of its members directly with the major record labels.

147    In the 40 years since WEA Records was determined, the parties have entered into successive agreements pursuant to which CRA Members collectively paid PPCA an industry aggregate licence fee (or royalty rate) of a percentage of gross revenue, with gross revenue essentially defined as gross earnings from broadcasting. The latest of those agreements, dated 16 June 2000, was deemed to have commenced on 1 July 1999, being the PPCA–CRA Agreement. The royalty rate gradually increased over time. However, the percentage of gross revenue has remained as 0.4% of industry gross revenue since 1 July 2001. In 2022, PPCA gave notice that it was terminating the PPCA–CRA Agreement.

148    I discuss the PPCA–CRA Agreement in more detail in section 8.4 below.

2.5.1    Licensing agreements

149    The first agreement to be negotiated after WEA Records took effect in November 1985 (the 1985 Agreement). Pursuant to the 1985 Agreement, FARB and PPCA agreed that FARB’s radio broadcaster members would pay a licence fee of 0.16%, then 0.2% of gross industry revenue.

150    The 1985 Agreement was replaced with effect from 1 January 1989 by a new agreement between FARB and PPCA. Pursuant to that agreement, the licence fees payable were 0.215% of gross industry revenue.

151    A new agreement was entered into with effect from 1 January 1993. Pursuant to that agreement, the licence fees payable were between 0.215% and 0.365% of, as an industry, the CRA Members’ gross revenue. The 1993 Agreement remained in force until 30 June 1999.

152    Pursuant to the PPCA–CRA Agreement, which took effect in July 1999, CRA Members were required to pay a licence fee, as an industry, of between 0.376% (in the 1999/2000 financial year) and 0.4% (for the 2001/2002 financial year onward) of “industry gross revenue”. Industry gross revenue was defined as the gross earnings during a financial year of all licensed radio broadcasters, as determined by the Australian Broadcasting Authority (now ACMA) in accordance with the provisions of the Radio Licence Fees Act 1964 (Cth), which has since been repealed.

153    The term of the PPCA–CRA Agreement was to expire on 30 June 2003. It was repeatedly extended by the parties for a further 20 years, until it was terminated by PPCA on 30 June 2023. While the parties initially agreed to annual extensions, from June 2005, the agreement was extended on a rolling monthly basis. The rate paid by CRA Members has remained at 0.4% of industry revenue for more than 21 years. In the 2023 financial year, the industry licence fee amounted to around $4 million.

154    Ms Small, who had been with PPCA since 1997, gave evidence that it was PPCA’s long held view that the current rate under the PPCA–CRA Agreement is “well below the proper value of the right to broadcast PPCA sound recordings”. She attributed this undervaluation to the combined effect of the 1% cap and the WEA Records decision, the latter having been determined in the shadow of the 1% cap. However, in oral evidence, Ms Small agreed that in licence negotiations with CRA, PPCA would have sought to maximise the revenue for PPCA’s Licensors.

155    According to Ms Small, PPCA did not consider that it would be productive to pursue a re-negotiation of the percentage of the gross revenue under the PPCA–CRA Agreement while the statutory 1% cap remained.

2.5.2    Licence related correspondence and negotiations

156    Ms Young annexed copies of correspondence between PPCA and CRA sent in the course of their negotiations regarding the extension of the PPCA–CRA Agreement commencing in November 2003.

157    It is apparent from PPCA’s correspondence, that its decisions to extend the licence agreement were made at a board-level. The correspondence also reveals that throughout the negotiations, PPCA maintained concerns regarding the legislative cap imposed by s 152(8) and the Federal Government’s position in relation to its removal. For example, in a letter dated 18 February 2004, Stephen Peach (then CEO of PPCA) wrote the following to Joan Warner (then CEO of CRA):

[…] PPCA is of the view that, in the event that the 1% statutory cap is altered or removed, a new rate should be negotiated and put in place for PPCA members as soon as possible thereafter […]

PPCA is, of course, agreeing to this extension of the current agreement only on the basis that the Government is still considering PPCA’s submissions as to the removal of the 1% cap. The agreement to extend the term on the current rates should not be misunderstood or interpreted as any change in PPCA’s strong view that the current licence fees remain a grossly inadequate rate of return for sound recording copyright owners for the extensive use of sound recordings on commercial radio.

158    PPCA agreed to the continued monthly rollover of the PPCA–CRA Agreement as from mid-2005 as it wanted to see the resolution of the 1% cap issue at a Federal Government level before committing to any new long-term arrangement.

159    By a letter from Annabelle Herd (CEO of PPCA) to Ford Ennals (then CEO of CRA) on 10 August 2022, PPCA gave notice of its termination of the PPCA–CRA Agreement. PPCA wrote that the licence fee was “undervalued” and that the licensing arrangements in place between PPCA and CRA Members were “anachronistic” and “no longer fit for purpose”. The letter also referred to the Tribunal’s comments from seven years prior in the Simulcast 1 decision, stating:

In the Simulcast proceedings the Copyright Tribunal has already found that the current fees payable under the Industry Agreement do not represent freely determined market rates due to the 1% cap imposed by s 152(8) of the Copyright Act 1968 (Cth) (which the Tribunal indicated should be understood as an “historical artefact”). In fact the Tribunal clearly determined that the broadcasting rate of 0.4% is “artificially low”.

160    PPCA has continued its lobbying efforts to remove the 1% cap since terminating the PPCA–CRA Agreement.

2.5.3    PPCA’s focus on lobbying rather than re-negotiation of the rate

161    PPCA explains that its focus on the lobbying efforts accounts for why the rate stayed at 0.4% for 21 years, despite successive licence extensions, and why it made no attempt to increase that rate during that period. It can be inferred that PPCA considered engaging in re-negotiation with CRA would not be productive while it considered the prospect of legislative reform remained open, any policy change would render the outcome of any renegotiations nugatory. Ms Small gave evidence that only after the termination of the PPCA–CRA Agreement in 2022 did PPCA resolve to pursue renegotiation of the rate with CRA, in parallel with its ongoing lobbying efforts.

162    PPCA’s lengthy lobbying efforts were the subject of comment in the Simulcast 1 at [197]–[198] in the context of a discussion about the PPCA–CRA Agreement and the 1% cap:

[…] seeking a determination by this Tribunal (unfortunately, as matters presently stand) involves an extraordinary amount of time, effort and cost. In circumstances where the best it could ever do was 1%, it made little sense for PPCA to try to renegotiate the 0.4% rate and even less sense for it to return to the Tribunal about that issue for so long as the 1% cap remains in place.

[…] The fact that the rate of 0.4% has continued to roll over since expiry of the agreement in 2003 is also a result of the constraint imposed by the 1% cap. The I% cap means that there is no incentive for PPCA to seek to renegotiate the rates irrespective of the extraordinary changes in circumstances wrought by digital technology and thus use of sound recordings since 2000. The 0.4% rate is best understood as an historical artefact […]

163    Despite PPCA’s long-held view that the current rate under the PPCA–CRA Agreement was “well below the proper value of the right to broadcast PPCA sound recordings”, for the 21 years following the expiry of the term of the PPCA–CRA Agreement in June 2003, PPCA focussed exclusively on having the 1% cap removed. PPCA appears to suggest that it faced a binary choice: either renegotiate with CRA or lobby to raise the 1% cap. Until 2022, it seems PPCA could pursue one strategy, but not both.

164    PPCA acknowledges that the ongoing imposition of the 1% cap provided “little to no incentive” for PPCA to invest its resources in re-negotiating the PPCA–CRA Agreement, and instead considered it would be a better use of resources to re-negotiate with CRA or bring the matter before the Tribunal once the 1% cap was removed, consistent with the Tribunal’s findings in Tribunal’s findings in Simulcast 1 at [193], [197], [198], [199], [205] and [208]. In particular, the Tribunal observed at [197] that PPCA was hampered by the fact that it did not know what potential “upside” there might be in any renegotiation:

[…] The collection and distribution of licence fees by CRA members under the agreement is conducted by CRA. Until this proceeding PPCA did not know the internal division of liability as between CRA’s members and thus reasonably assumed that as some radio stations would be paying less than 0.4% due to their low music use percentage, others must be paying more and perhaps close to the 1% cap. The potential “upside” was thus not known to PPCA until recently […]

165    PPCA’s submissions are somewhat at odds with the reports of evidence led from its then CEO, Mr Peach, in the Gyms and Foxtel cases to the effect that PPCA’s licences had been historically undervalued, and that since 2002 to 2003, PPCA had pursued increased remuneration from licensees with vigour. See Gyms at [90]; Foxtel at [48], [108].

166    To provide context to its efforts advocate against the 1% cap, PPCA handed up during the hearing a chronology of its lobbying and litigation history spanning from July 1995 to 7 March 2024 (the PPCA Chronology). CRA contends that the PPCA Chronology does not support PPCA’s assertion that its attention has been focussed solely on lobbying rather than renegotiation since 2003. CRA accepts that PPCA made submissions supporting removal of the 1% cap to the inquiries discussed above. However, CRA submits that there were gaps, noting that in the 10 years between 2012 and 2022, PPCA filed only five submissions. During that time, CRA also highlights that PPCA was involved in several Tribunal proceedings and judicial review applications: i.e., the Simulcast Proceedings, Foxtel and Phonographic Performance Company of Australia Ltd v Copyright Tribunal of Australia (2019) 141 IPR 406 (Foxtel FCAFC).

167    In addition to those Tribunal referrals and judicial reviews of those decisions prosecuted by PPCA during 2012 to 2022 as listed above, during the period of the PPCA–CRA Agreement (as extended), PPCA also was a party to the following:

(a)    the Nightclubs case;

(b)    the Gyms case;

(c)    a case concerning the judicial review of the Gyms case, namely Fitness Australia Ltd v Phonographic Performance Co of Australia Ltd (2010) 89 IPR 442 (Fitness v PPCA);

(d)    an application for special leave to the High Court from the review of the Gyms case, which was ultimately refused;

(e)    the Constitutional Challenge;

(f)    a Federal Court proceeding seeking a declaration that the PPCA–CRA Agreement licence did not cover simulcasts of radio: Phonographic Performance Company of Australia Ltd v Commercial Radio Australia Ltd (2012) 94 IPR 585; and

(g)    an appeal from that decision: Phonographic Performance Co of Australia Ltd v Commercial Radio Australia Ltd (2013) 100 IPR 1 (Simulcast FCAFC).

168    CRA contends that the PPCA Chronology shows that during the 20-year period that PPCA chose not to attempt any re-negotiation of the PPCA–CRA Agreement licence rate or to file a reference to the Tribunal on said issue, PPCA was busy expending resources on Tribunal referrals and review applications which were likely to be more lucrative to PPCA’s members, albeit none were subject to a 1% cap. I do not consider CRA’s criticism to be entirely accurate as the Constitutional Challenge concerned the 1% cap.

169    Without revealing the confidential figures, CRA makes the point that in dollar terms the difference between 0.4% and 0.5% of annual industry revenue is substantial, and, if PPCA considered 0.4% to grossly undervalue the licence, it should have provided an incentive for PPCA to attempt to renegotiate the rate with CRA well prior to 2022, or to have brought proceedings to this Tribunal if it thought that it could obtain a better rate.

170    From the above, it cannot be inferred that PPCA was hampered from negotiating with CRA to increase the rate whilst lobbying for the removal of the 1% cap due to a lack of resources, or that it was only able to do one or the other but not both. During the relevant period, PPCA was vigorously pursuing referrals and proceedings relating to licences for rights which were not subject to a legislative cap. Plainly, PPCA had the resources and ability to deal with multiple negotiations or referrals at the same time, and until 2022 it chose not to seek to renegotiate the PPCA–CRA Agreement licence whilst the 1% cap remained in place.

2.5.4    Other factors said to hamper PPCA’s ability to negotiate

171    PPCA contends that it was unable to effectively negotiate a higher rate because it only knew the industry total and not the rates paid by individual CRA Members.

172    A condition of the PPCA–CRA Agreement is for CRA to inform PPCA of the amount of the licence fee to be paid by each member. During the cross-examination of Ms Young (CEO of CRA), she gave evidence that to her knowledge, PPCA had never asked CRA for an individual breakdown of the fees paid by each of its station members.

173    In any event, after Simulcast 1, PPCA had knowledge of the internal attribution of liability as between CRA Members, and thus a knowledge of the potential “upside” of any re-negotiation. Still, PPCA chose not enter into re-negotiation for another seven years.

3.    The proposed schemes

174    Before the Tribunal are two competing schemes for consideration, each advanced by the parties as the appropriate mechanism for licensing the broadcast of sound recordings in the contemporary landscape of radio broadcasting.

3.1    The PPCA Proposed Scheme

175    PPCA propounds a licensing scheme under s 154 of the Copyright Act based on the existing framework from the Simulcast Decisions, with a tiered licence fee based on the licence fees currently paid by CRA Members to APRA, under the APRA AMCOS–CRA Agreement for the broadcast right in relation to musical works, with certain adjustments.

176    Under the PPCA Proposed Scheme:

    A separate non-exclusive blanket licence would be granted to each radio station to broadcast sound recordings within Australia, regardless of whether the station is a CRA Member;

    Each licensee would pay a quarterly licence fee calculated in accordance with the applicable MUP, ranging from 0.0363% of gross station revenue for a MUP between 0 and 9.99 to a rate adjusted to 1% for a MUP over 45%;

    CRA may be appointed to act as agent for participating radio stations;

    Licensees must comply with mechanisms including a station-records inspection regime, quarterly reporting of music use data, and an annual provisional licence fee statement; and

    PPCA may terminate the licence on 90 days’ notice if s 152(8), being the 1% cap, is varied or removed.

177    PPCA submits that its proposed scheme adopts the same approach adopted by the Tribunal in Simulcast 1 and relies heavily on the comments of the Tribunal in that decision. Broadly, it contends that the use of the APRA AMCOS–CRA Agreement as a benchmark in that case, along with the appropriate adjustments, supports the PPCA Proposed Scheme.

178    PPCA further submits that the PPCA Proposed Scheme provides a clear and transparent system for the calculation of an applicable licence rate for each station based on its individual revenue and music use. Consistent with Simulcast 1 at [329]–[330] and [332(8)], the PPCA Proposed Scheme would apply to all radio broadcasters, regardless of whether they are CRA Members. PPCA contends that the individual licences accord with the structure of the Copyright Act, it is the broadcaster that requires the licence to avoid infringing copyright in the sound recording. Notably, the language of s 152 contemplates a broadcaster whereas s 154 contemplates organisations rather than individual broadcasters itself.

179    Under PPCA Proposed Scheme, high MUP stations would, but for the imposition of the 1% cap, face a 2.52% licence fee. This would represent more than a 500% increase, which on any basis would be a very substantial increase from the current 0.4% rate.

180    PPCA accepts that the 1% cap as imposed by s 152(8) in practice constrains any rate that the Tribunal would order under s 154(4). If the Tribunal were to set a rate greater than 1% then the commercial radio stations would bring an application under s 152, and any resulting rate would be capped at 1%. Thus, any station with an MUP of above 45%, the rate would be capped at 1%. An increase of 0.4% to 1% is an increase of 150%.

181    CRA contends that PPCA’s proposed approach disregards the extensive course of past dealings between the parties, and the reasoning in WEA Records. CRA rejects the APRA AMCOS–CRA Agreement as an appropriate benchmark in this matter, for reasons I consider below.

182    CRA contends that the rate proposed by PPCA is unreasonable as it represents a dramatic increase in the licence fee paid by CRA Members in the past 40 years. In almost all instances, CRA submits that a radio station will pay more than double what the industry previously paid.

183    CRA further submits that PPCA adopts an impermissibly broad definition of “gross revenue”. According to CRA, PPCA’s definition of gross revenue would capture, for example, simulcast revenue and revenue from podcasting that uses no commercial sound recordings. Those revenues go beyond the scope of PPCA’s licensed rights and would require the Tribunal to exceed its power by ordering a fee that exceeds the 1% cap—as 1% of all revenue necessarily is in excess of 1% of broadcasting revenue. In its closing submissions, PPCA accepted that there should be symmetry between the effect of the definition of gross revenue and gross earnings of a broadcaster in s 152(19). PPCA narrowed its definition to exclude revenue podcasting, insofar as the particular podcasters do not use music. Regarding simulcasting and revenue derived from DAB+ services, PPCA contended that simulcasting ought to be included at least to some extent.

184    CRA also submits that the PPCA Proposed Scheme requires the Tribunal to determine and specify rates above 1%, and to subsequently apply the 1% cap. Under s 152, that is beyond the Tribunal’s power, and under s 154, that is plainly unreasonable. In view of s 152(8), CRA submits that there is no utility in determining a value of over 1% and, moreover, the Tribunal has no power to do so.

3.2    The CRA Proposed Scheme

185    Pursuant to s 152(2), CRA requests the Tribunal to make an order that the licence fee payable by CRA, on behalf of its radio broadcast members, to PPCA be set at 0.4% of CRA Members’ “gross earnings”, as more narrowly defined.

186    Alternatively, CRA propounds a licensing scheme under s 154(4) which in all material respects adopts the framework adopted by the parties under the PPCA–CRA Agreement after the WEA Records decision, with the same 0.4% rate. In CRA’s view, the PPCA–CRA Agreement is the “most obvious benchmark”. The CRA Proposed Scheme would entail:

(a)    PPCA granting a non-exclusive blanket licence to CRA Members (in respect of each station that they own) to broadcast sound recordings in Australia;

(b)    a licence fee of 0.4% of CRA Members’ gross revenue;

(c)    CRA providing to PPCA a Collection Agreement and the licence fee payable by each member; and

(d)    a quarterly licence fee based on the industry gross revenue for the year.

187    CRA’s proposed rate (and on its alternative case under s 154, the CRA Proposed Licence) would, in substance, continue the arrangements in place between the parties since 2000 pursuant to the PPCA–CRA Agreement and extensions of it. CRA submits that the reasonableness of the rate derived from the PPCA–CRA Agreement is corroborated by the difficulty in applying the appropriate adjustments to the rate under APRA AMCOS–CRA Agreement.

188    CRA submits that the proposed rate under both applications, under either ss 152 or 154, is straightforward: it reflects the parties’ longstanding agreed industry fee of 0.4% of gross revenue. Given that rate has been in place for 20 years, it should be regarded as the going rate for the PPCA–CRA licence. CRA’s position also reflects the Tribunal’s determination in WEA Records of 0.45% for a station with a high proportion of music used.

189    Conversely, PPCA argues that the CRA Proposed Scheme under s 154 and the CRA Proposed Licence are both unreasonable and should not be adopted. PPCA rejects the PPCA–CRA Agreement as an appropriate benchmark, on the basis that it is outdated and “archaic”.

190    PPCA contends that CRA’s s 152 application is deficient in numerous evidential and procedural respects, including that the Tribunal does not have the power to order a broadcaster to make payments directly to PPCA, as held in WEA Records at 16 and 24. PPCA submits that it is not appropriate for CRA to determine how the fee is to be split amongst the CRA Members.

191    Moreover, PPCA submits that CRA’s proposed rate and scheme:

(a)    are wholly at odds with the findings of the Tribunal in other decisions such as Simulcast 1; and

(b)    does not account for the fair market value of the blanket licence offered by PPCA, the increased use of that blanket licence by CRA Members, increases in PPCA’s repertoire, and other significant changes that have occurred in the music industry in the last 25 years. Aside from the additional payment of fees to PPCA since 2016 for a simulcasting licence, CRA denies that there have been any other material changes that would affect the value of the licenced right.

192    Further, PPCA contends that an industry-wide fee calculated by reference to CRA Members’ total revenue is inappropriate. It submits that the licence fee should be determined for each broadcaster individually and should, insofar as is practicable for a revenue-based rate, reasonably reflect that individual broadcaster’s extent of use of sound recordings.

193    CRA’s approach contains a further layer of opacity by empowering CRA with the responsibility of calculating licence fees for each the CRA Members based on the industry gross revenue (contrary to Simulcast 1) and MUPs. This gives PPCA no visibility over the accuracy of the licence fees paid by each station.

194    PPCA rejects the 0.4% rate propounded by CRA, maintaining that any figure derived from the approach in WEA Records is archaic and unsuited to current market conditions. It further contends that, rather than applying a uniform 0.4% of the CRA Members’ gross revenue, the licence fee should be calculated by reference to each station’s individual MUP, given the substantial differences in music use across stations depending on their creative focus and branding.

4.    The Tribunal’s task

195    In Australasian Performing Right Association Ltd v Australasian Mechanical Copyright Owners Society Ltd (2009) 84 IPR 402 (Digital Downloads), the Tribunal aptly summarised its function at [30]–[32]:

The tribunal was established to deal with cases where a monopoly or quasi monopoly exists by reason of the role of a collecting society or equivalent licensing body. Copyright law aims to give, to the creator of copyright subject matter, the incentive to invest intellectual effort and resource outlays by conferring the right to prevent copying of works that could otherwise be copied at relatively low cost. A prime purpose of copyright law is to protect the result of creative effort, so that, for example, composers and lyricists may, during the continuance of copyright protection, control the uses to which the results of their creative efforts are put and get some return for the exploitation of those results.

One of the mechanisms of the Copyright Act that operates as part of the balancing exercise designed to ensure dissemination and diffusion of ideas is the system of compulsory licence schemes, which ensure appropriate access to copyright subject matter. The exclusive rights granted by the Copyright Act are tempered or qualified by statutory exceptions to the statutory monopoly. Under the scheme of statutory exceptions, in the absence of agreement or consensus, it will be necessary for a determination to be made of the remuneration to be paid by those who will take advantage of the exceptions. It will also often be necessary for a determination to be made of the precise terms and conditions on which the exceptions are to apply.

In negotiating the terms upon which protected subject matter may be copied, and the remuneration for such copying, it would generally be easier for users and prospective infringers to deal with a single body rather than with a myriad of individual copyright owners. That is particularly so in the case of the statutory exceptions. The Copyright Act therefore makes provision for the minimisation of the costs of enforcing copyright through the system of collecting societies. Collecting societies provide creators with an administrative option for the more effective enforcement of rights in relation to the use of copyright subject matter and the collection and distribution of licence fees or royalties.

196    The statutory task of the Tribunal under s 154(4) is to confirm or vary the licence scheme which has been referred for consideration, or to substitute another scheme proposed by a party on such terms that the Tribunal considers reasonable in the circumstances. The Tribunal can do this only after giving the parties to the reference an opportunity to present their cases. In relation to price terms or pricing formulae, the Tribunal should be satisfied that the remuneration provided by a scheme is reasonable or equitable: Foxtel FCAFC at [49].

197    The task of the Tribunal under s 152 is, after taking into account all relevant matters, to determine an amount payable by the broadcaster which represents an equitable or a fair and reasonable remuneration to the copyright owner for the broadcaster’s use of protected sound recordings: WEA Records at 27.

198    There is no presumption in favour of the PPCA Proposed Scheme merely because it is the licensor and it referred its scheme first to enliven the Tribunal’s jurisdiction: Simulcast 1 at [18].

199    It is not the role of the Tribunal to “subsidise” rightsholders to compensate them for the ill effects of industry circumstances: Simulcast 1 at [167]. See also [157]–[158].

200    Before making a decision under either provision, the Tribunal must give the parties to the reference an opportunity to present their cases. This Tribunal has had the benefit of three weeks of lay and expert evidence and extensive written and oral closing submissions.

4.1    Source of Tribunal’s power: s 152 or s 154

201    CRA contends that the only power which the Tribunal has to fix a rate for the broadcast of protected sound recordings on radio is found in s 152 of the Copyright Act, and that the Tribunal does not have any such power under s 154. Moreover, it submits that s 154 is inapt to deal with compulsory licences, the subject of the present case. CRA relies on the following comments of the decision of the Full Court of the Federal Court of Australia in Foxtel FCAFC at [143]:

The starting point mandated by s 154(1) is the voluntary offer of a licence scheme by the licensor on behalf of its members. It is not a scheme for the compulsory license of rights, which are addressed in other provisions of the Act. […] the absence of the prescriptive provisions applicable to compulsory licensing provides a further indication that this is the correct approach.

202    PPCA accepts that the restrictions imposed by s 152, and in particular by the 1% cap, would in practice confine the Tribunal’s assessment of reasonableness when applying s 154(4). This is on the basis that it would not be reasonable to order a broadcaster to pay more than 1% of its gross earnings in circumstances where the broadcaster could otherwise broadcast protected sound recordings pursuant to the compulsory licence under ss 109 and 152 for payment of an amount that did not exceed that figure.

4.1.1    Section 152

203    The Tribunal in Re WEA Records Pty Ltd (1981) 40 ALR 111, considered the jurisdiction of the Tribunal in the context of an application under s 152 of the Copyright Act.

204    The Tribunal observed that there were three main areas of the Tribunal’s jurisdiction: first, where a royalty or equitable remuneration must be determined for the exercise of a particular right (s 152 is one instance of this jurisdiction); secondly, where licence schemes are involved (such as s 154); and thirdly, where an individual requires a licence and there is no licence scheme in operation, or, I would add, where a licence scheme exists, but a licensor has refused or failed to grant a person a licence (s 157).

205    Where there is no agreement between the copyright owner and the broadcaster fixing the remuneration, the broadcaster is protected from infringement under s 101 by the compulsory licence provision of s 109 if the broadcaster gives a written undertaking to pay the copyright owner the amount fixed by the Tribunal under s 152: Re WEA at 122.

206    As to the second area of the Tribunal’s jurisdiction, licence schemes, the term “licence” is defined by s 136(1) as meaning “a licence granted by or on behalf of the owner or prospective owner of the copyright in a work or other subject-matter to do an act comprised in the copyright”.

207    “Licence scheme” is also defined in s 136(1) as meaning “[...] a scheme [...] formulated by a licensor or licensors and setting out the classes of cases in which the licensor or each of the licensors is willing, or the persons on whose behalf the licensor or each of the licensors acts are willing, to grant licences and the charges (if any) subject to payment of which, and the conditions subject to which, licences would be granted in those classes of cases”.

208    An instance wherein the jurisdiction of the Tribunal in relation to licence schemes arises is upon the reference to the Tribunal by the licensor of a proposed licence scheme under s 154.

209    Section 152 deals with determining the amount payable in respect of the broadcasting of only protected sound recordings, as no licence is necessary for unprotected recordings. Section 152(2) provides for the Tribunal to determine the “amount payable by a broadcaster” to the owners of copyright in published sound recordings in respect of the broadcasting, during a period, of those recordings by that broadcaster. An application under s 152(2) may be made by the broadcaster, or the owner of a copyright in a published sound recording (s 152(3)).

210    Whilst organisations such as CRA and PPCA, both of which are representative of broadcasters or copyright holders, may under sub-ss 152(4) and (5) be made parties to the application, the section speaks of “a broadcaster “or ‘the broadcaster’, rather than a collection of broadcasters: for example sub-ss 152(6), (7), (8), (9) and (10). Likewise, s 109 is directed to the potential copyright infringing broadcast of a particular broadcaster.

211    The Tribunal must, in the course of making an order in relation to a broadcaster under s 152(2), and after giving the parties an opportunity to present their cases (s 152(6)), “take into account all relevant matters, including the extent to which the broadcaster uses” the relevant copyright owners’ sound recordings (being protected sound recordings): s 152(7).

212    Section 152(8) provides that the Tribunal must not make an order that would require a radio broadcaster to pay an amount exceeding 1% of its gross earnings.

213    Pursuant to s 152, the Tribunal has the power to determine the amount payable by a broadcaster in respect of its broadcasting of protected sound recordings during a particular period. The basis on which the amount payable is to be determined or assessed is not fixed in the Copyright Act. The amount could be calculated or expressed in anyway. The Tribunal in Re WEA found that the payable amount was best expressed as a percentage of gross earnings attributable to the use of the protected recordings. In WEA Records, the gross earnings were the gross earnings of 2MMM, not the industry.

214    The amount payable should represent an equitable or a fair and reasonable remuneration to the copyright owner for the broadcaster’s use of protected sound recordings. That amount is ultimately constrained by the 1% cap in s 152(8), which by policy ought to be less than the amount of damages payable if no undertaking was given under s 109 and the broadcast infringed the sound recording copyright: WEA Records at 26.

215    Whilst in WEA Records PPCA was the authorised collecting agent for the record companies, and a party to the s 152 application, the Tribunal concluded at 24 that, having regard to the provisions of ss 152(6)(c) and 152(18), it was not open to the Tribunal to order payment to PPCA on behalf of the copyright owners amongst whom “the cake” was to be divided. Such an arrangement could only be achieved by agreement between the parties, in which case an order could then be made by consent.

216    CRA’s application under s 152 is unlike those in WEA Records where there were multiple separate applications made by a number of broadcast stations. The Tribunal heard the first application—that of 2MMM—and stood the other applications over so that they might be heard in light of the findings in in the first application. As it turned out, the other applications were not heard, as following the WEA Records decision, the broadcasters and PPCA were able to negotiate and agree a licence scheme.

217    CRA purports to bring the s 152 application on behalf of its members. Whilst CRA may apply to, and become, a party (and PPCA does not take a standing issue, and itself is a party), the terms of s 152 are inappropriate for dealing with collective licensing schemes or proposed schemes. Having regard to the language of s 152, it does not seem open to the Tribunal to order payment from a representative body such as CRA on behalf of its members, to a collecting society, rather than the copyright owners: WEA Records at 24. That course may be available with agreement, by consent, but that is not the case here.

218    For these reasons, I do not consider s 152 to be the appropriate source of the Tribunal’s powers to be exercisable in the present circumstances.

4.1.2    Section 154

219    Section 154 of the Copyright Act deals with collective licensing, where licence schemes are administered by a representative body, such as PPCA.

220    The terms “licence”, “licensor” and “licence scheme” are defined in s 136 of the Copyright Act. A “licence scheme” is a scheme formulated by a licensor (a collecting body). A licence scheme is not of itself a copyright licence. It is a scheme that provides for the grant of a licence. The grant of rights arises when someone seeks a licence under the scheme and is granted one. According to the statutory definition such a scheme must have three characteristics:

(a)    it must set out the class of cases which the licensor or each of the licensors is willing to grant licences;

(b)    the charges (if any) subject to the payment of which licences would be granted in those classes of cases; and

(c)    the conditions subject to which the licences would be granted in those classes of cases.

221    The jurisdiction of the Tribunal arises where a licensor proposes to bring a licence scheme into operation and refers that scheme to the Tribunal: s 154(1). Under s 154(4), the Tribunal must consider the referred scheme and, after giving the parties an opportunity to present their cases, make such order confirming or varying the scheme, or substituting another scheme proposed by one of the parties, as the Tribunal considers reasonable in the circumstances.

222    The statutory task of the Tribunal conferred by s 154(4) is the making of an order to confirm, vary or substitute a scheme which the Tribunal considers reasonable in the circumstances. The Full Court in Foxtel FCAFC held at [49] that the standard requires, in relation to the imposition of a pricing structure, that the remuneration be reasonable or equitable. In relation to non-price terms the question is whether the term is reasonable in the circumstances. It is within the Tribunal’s power under s 154 to determine the reasonable or equitable licence rate payable under a proposed scheme as part of the pricing structure within that scheme.

223    Section 154(4) permits the making of variations, in the sense of alterations or amendments to a proposed scheme, but it does not empower the Tribunal to substitute a scheme of an entirely different kind: Nightclubs at [9]. Section 154(4) does not give a tribunal the power to determine a hybrid scheme it considers would be reasonable in the circumstances having regard to the schemes proposed by the parties: Simulcast 1 at [35]. The Tribunal is able to vary the percentage of expenditure upon which a proposed formula is based or vary the base upon which the calculation is to be made: Gyms at [285]. A scheme as determined by the Tribunal that includes conditions and charges that conflict with the proposals made by the parties will remain within the definition of a licence scheme and be within the power of the Tribunal, provided that it is reasonable in the circumstances: Foxtel FCAFC at [142]. The Tribunal is free to adjust charges where it considers that any constraint on the licence offered by the licensor relevantly diminishes the value of the scheme offered: Foxtel FCAFC at [156].

224    I consider that the Tribunal has the power to determine the appropriate licence rate under s 154 of the Copyright Act. Given PPCA’s acceptance that the 1% cap would in practice confine the Tribunal’s assessment of reasonableness when applying s 154(4), there may be limited practical difference in the assessment task as to whether a rate is determined s 152 or s 154.

4.1.3    Parties’ contentions: s 152 versus s 154

225    PPCA contends that the statutory cap is to be applied after fair market value is determined, which it considers is consistent with the approach undertaken by the WEA Records Tribunal. In other words, the 1% cap prevents the Tribunal from ordering a rate above 1% but otherwise does not act as a downward pressure on the rate. Further, the 1% cap does not suggest that the Tribunal should not first ascertain what a reasonable royalty rate is, before limiting any order to 1% where the requirements of s 152(10) are satisfied.

226    The task of statutory construction begins and ends with the text itself: Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39]. No language in s 152 supports the approach proposed by PPCA. The only provision of s 152 that requires the Tribunal to determine a rate is s 152(6), which provides the Tribunal with the power to make an order with respect to the amount payable. Section 152(7) sets out the matters which the Tribunal must consider, and s 152(8) prohibits the Tribunal from making an order under s 152(6) that would require a radio broadcaster to pay more than 1% of gross broadcast revenue. The process the Tribunal is to follow in determining what order it should make under s 152(6) is not specified, but nothing in s 152 suggests that the Tribunal must undertake that task without having regard to the statutory cap in s 152(8).

227    Accordingly, the statutory scheme does not compel the two-step process proposed by PPCA. While the Tribunal may consider market evidence as part of the matters listed in s 152(7), the text of s 152 makes clear that any amount it determines must be fixed within the limit set by s 152(8). The 1% cap is therefore an operative constraint on the Tribunal’s task, not a mechanism applied only after a market rate is first identified. In that sense, the statute requires the Tribunal to reach a payable amount consistent with both the considerations in s 152(7) and the ceiling in s 152(8), rather than to determine a theoretical fair market value divorced from the statutory limit.

228    CRA submits that the Tribunal has no power here to proceed under s 154. It argues that while s 154 confers a general power to approve licence schemes, as was observed in Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia (1932) 47 CLR 1 at 7:

[…] When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power [...]

229    In Crime and Corruption Commission v Carne (2023) 280 CLR 555, Gordon and Edelman JJ further elaborated on this principle at [67] with the following:

The notion which underlies Anthony Hordern is “that affirmative words appointing or limiting an order or form of things may also have a negative force and forbid the doing of the thing otherwise”. It has an obvious affinity with the maxim “when there is express mention of certain things, then anything not mentioned is excluded”.

(Citations omitted.)

230    On the other hand, PPCA relies on the following observations of Gummow and Hayne JJ in Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at [59]:

Anthony Hordern and the subsequent authorities have employed different terms to identify the relevant general principle of construction. These have included whether the two powers are the “same power”, or are with respect to the same subject matter, or whether the general power encroaches upon the subject matter exhaustively governed by the special power. However, what the cases reveal is that it must be possible to say that the statute in question confers only one power to take the relevant action, necessitating the confinement of the generality of another apparently applicable power by reference to the restrictions in the former power. In all the cases considered above, the ambit of the restricted power was ostensibly wholly within the ambit of a power which itself was not expressly subject to restrictions.

(Citations omitted.)

See also [44]–[61], [165].

231    I accept that the powers under ss 152 and 154 of the Copyright Act are distinct in both character and purpose. Section 154 is not an extension of s 152; rather, the two provisions have separate provenance, as is apparent from their text and legislative history. As was the case in Nystrom, the principle in Anthony Hordern has no application because there is no repugnancy between the two powers; they operate harmoniously (see Nystrom at [165]).

232    When s 152 is read together with s 109, the regime that emerges is one of compulsory licensing. By contrast, s 154 concerns voluntary licence schemes (see Foxtel FCAFC at [143]). The availability of a compulsory licence regime does not displace the Tribunal’s jurisdiction in respect of voluntary schemes. This is reinforced by the wording of s 109(2), which makes clear that the compulsory regime does not apply where the broadcast is made under an agreement with the copyright owner.

233    Further, the scope of s 152 is narrow and is directed solely to determining the amounts payable for the broadcasting of published sound recordings that would otherwise infringe copyright. It does not empower the Tribunal to determine other terms governing the use of copyright material. Section 154, by contrast, confers a broader jurisdiction to consider licence schemes involving any copyright, including both the charges and the conditions on which licences are to be granted. This is consistent with the definitions of “licence”, “licensor” and “licence scheme” in s 136.

234    This distinction is also reflected in the standing requirements. Section 154 permits collecting societies, including PPCA, to bring forward licence schemes for approval. In contrast, an application under s 152(2) may only be made by a broadcaster or the owner of copyright in a published sound recording (which may include an exclusive licensee). As a non-exclusive licensee, PPCA does not fall within that requisite class of copyright owner. Similarly, in light of the definition of “broadcaster” in s 152(1), it is doubtful that CRA possesses standing to invoke s 152, although that issue does not need to be resolved for the present purposes.

235    The foregoing is supported by Reference by Australasian Performing Right Association Ltd; Re Australian Broadcasting Corporation (1985) 5 IPR 449 (Reference by APRA; Re ABC), where the Tribunal was unpersuaded that s 152 had any relevance in the interpretation of s 154, holding at 460 that it was “plainly indicative” that provisions of the Copyright Act upon enactment were not intended to be “at all controlled or affected” by s 152.

236    The legislative history confirms this understanding. Parliament’s intention, particularly through the amendments introduced by the Copyright Amendment Act 2006 (Cth), was to enhance the Tribunal’s jurisdiction in relation to voluntary licence schemes. The amendments to the definition of “licence” in s 136(1), and the accompanying materials, including the Explanatory Memorandum of the Copyright Amendment Bill 2006 (Cth) at 174 and the Minister’s Second Reading Speech for Copyright Amendment Bill 2006 (Cth) at 3, make clear that Parliament contemplated a broad, independent s 154 jurisdiction. Nothing in the legislative history suggests that s 152 was intended to qualify or limit that jurisdiction.

237    The High Court has cautioned against reading limitations into statutory grants of jurisdiction or power unless clearly required by the text or context: see Owners of Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 at 421; PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 310.

238    There are no express terms in s 154 that condition or limit the Tribunal’s powers by reference to s 152, nor does the statutory context justify implying such a constraint. Accordingly, I am satisfied that s 154 operates as an independent source of jurisdiction, and the considerations that would otherwise limit the exercise of power under s 152 feeds into consideration as factors to weigh under s 154.

4.2    Approaches

239    In making the value judgment of whether the royalty under a proposed licence scheme is reasonable in the circumstances, the Tribunal may adopt a number of approaches, either alone or, more usually, in combination. The approaches may overlap to some extent. The approaches were set out by the Tribunal in Digital Downloads at [35] include the following:

•    Market rate: the rate actually being charged for the same licence in the same market in similar circumstances.

•    Notional bargain rate: the rate on which the tribunal considers the parties would agree in a hypothetical bargain, between a willing but not anxious licensor and a willing but not anxious licensee.

•    Comparable bargains: the rate arrived at in a bargain not in the same market but in circumstances sufficiently similar to such a hypothetical bargain as might provide some guidance to the tribunal.

•    Judicial estimation: the rate determined by the tribunal after taking into account a range of matters such as previous agreements or negotiations between the parties, comparison with other jurisdictions, comparison with rates set by other licensors, capacity to pay, value of the copyright material, the general public interest and interest of consumers and administrative costs of the licensor.

See also Foxtel at [36], and Re Application by Isentia Pty Ltd (2021) 170 IPR 476, at [245]–[246].

240    The same approaches apply for either s 152 or s 154. The Tribunal in WEA Records began with a notional bargain approach at 25, noting at 28 that the relevant amount should represent what “could have reasonably been charged” for a licence in the actual circumstances prevailing, the only assumption being that the parties were willing to negotiate and conclude a bargain. The Tribunal at 39–40 also assessed comparable rates in other agreements, including an agreement between APRA and FARB at that time in relation to music copyright, which it considered appropriate to use as a guide, while bearing in mind the differences between that agreement and the referred scheme before it. A second agreement—which the Tribunal was referred by the record companies that 2MMM paid for the provision of a news service—provided no real assistance to the Tribunal. The Tribunal’s ultimate determination of the amount payable appeared to be reached via a process of judicial estimation after taking into account all relevant matters.

241    I reiterate that the amount ordered under s 152, or the equitable or fair and reasonable remuneration determined for the licence scheme under s 154 should not be greater than the amount in damages that would be awarded for copyright infringement: see WEA Records at 26 and Isentia at [259]–[260]. If it were, there would be no incentive for a broadcaster to give any undertaking under s 109, which like the s 152(8) statutory cap, would in practice dictate the maximum rate under s 154.

4.2.1    Notional bargain

242    Both Dr Eisenach and Dr Reitman embraced the “willing buyer and willing seller” standard, wherein the parties to the bargain were neither “anxious” nor “compelled” as an appropriate criterion for assessing the suitability of benchmark agreements. Dr Reitman noted that by “not anxious” he meant that the parties have alternatives they can turn to, with substitutes available. Dr Eisenach noted that the willing buyer and willing seller criteria also imply that both the buyer and seller are “reasonably well informed about the nature and characteristics of the asset, its actual and potential uses, and the state of the market as of the valuation date”.

243    Dr Eisenach explained that the market value falls between what one party is willing to pay, and what the other party is willing to accept. It is the value of the first choice relative to the next-best available alternative that determines willingness to pay in a bargaining model. A good indicator of fair market value, where the parties have comparable bargaining power, falls midway between the two parties’ willingness to pay and willingness to accept.

244    Dr Eisenach and Dr Reitman agreed that while bargaining models are difficult to implement, they provide useful context and can inform the assessment of benchmarks, especially regarding changes over time, and what adjustments, if any, are required.

245    The history of previous negotiations and dealings between the parties is also important, particularly where the “parties have arrived freely and willingly upon a basis of remuneration which has been adopted for a long period”: Reference by APRA; Re ABC at 466, later endorsed in Simulcast 1 at [19].

246    Where possible, the notional bargain must reflect the actual position of the parties, not the position that would be reached between a hypothetical licensor and a hypothetical licensee with notionally equal bargaining power (as in a compulsory acquisition case): Simulcast 1 at [25]. The only assumption that is made is that the parties are willing to negotiate and conclude a bargain. Otherwise, “the parties are to be taken as they are, with whatever strengths and weaknesses in their bargaining power the available material discloses they possess”: Simulcast 1 at [44].

247    The Tribunal’s task in making such a value judgment does not involve a process that embodies “values of accuracy, precision and exactitude”; there may be a “wide range within which any selected value might be considered reasonable”: Simulcast 2 at [15]; Isentia at [250]. Further, as the Tribunal in Nightclubs held at [10], “[i]n each reference under s 154, the tribunal must make a value judgment as to what it considers reasonable in the circumstances. It is not usually possible to calculate mathematically the correct licence fee in any particular case […]”.

4.2.2    Benchmarking

248    Both Dr Reitman and Dr Eisenach agreed that benchmarking was the most appropriate approach in this case. The experts cautioned that it is important when adopting a benchmark to consider factors that might affect the value of the rights at issue in the benchmark market relative to the target market (which here is the licensing of sound recording radio broadcast rights).

249    Preferably, a benchmark would satisfy the “willing buyer and willing seller” standard and be representative of a fair market value because both parties had voluntarily engaged in, and benefitted from, the agreement. The chosen benchmark should also be a comparable agreement negotiated in comparable circumstances.

250    According to Dr Eisenach and Dr Reitman, adjustments may be required if there are material differences between the benchmark and target markets, including the parties, the rights at issue, different time periods covered, differences in the relative bargaining power of the parties and in underlying market factors including the nature or costs of production of the goods or services being offered. The greater the differences between these markets, the more complex the adjustments or assumptions necessary to achieve “comparability”, thereby tending to make the benchmark less suitable.

251    The more differences between the benchmark and the target markets, the more assumptions are needed for adjustments, and the more cumulative imprecision in the derived rate for the target market.

4.2.3    Judicial estimation

252    If none of the other approaches provides a solution, the Tribunal may engage in the process of judicial estimation. That process involves synthesis of the relevant facts and circumstances into a rate which the Tribunal regards as reasonable or equitable in the circumstances: Foxtel FCAFC [55]–[56].

253    The factors that the Tribunal has taken into account in the process of “judicial estimation” cover a range of matters, including comparison with other jurisdictions; comparison with rates set by other licensors; the capacity of licensees to pay; the value of the copyright material; the administrative costs of the licensing body; the nature of the use of copyright material; the benefits of the use for the user, the copyright owner and the relevant industry; costs of production of the material; and the public interest: see Isentia at [247]–[248]; Audio-Visual Copyright Society Ltd v Foxtel Management Pty Ltd (No 4) (2006) 68 IPR 367 (Screenrights v Foxtel) at [142]. Equally so, no single factor is of universal application: Screenrights v Foxtel at [143].

254    PPCA invites the Tribunal to take the above matters into account in determining the appropriate reasonable royalty rate, before applying any adjustment to reflect the 1% cap. The determination of a reasonable rate may involve a matter of judicial estimation. While the statutory provisions provide a framework within which the Tribunal must operate, it cannot yield a precise or formulaic outcome. Rather, the Tribunal must exercise its judgment, drawing upon the available evidence, industry practice, and commercial realities to arrive at a figure that is fair and reasonable in all the circumstances.

255    CRA highlights that in the context of s 154(1) of the Copyright Act, the Tribunal in Foxtel at [36] stated the approach to assessing equitable remuneration was to (1) impose any market price; (2) if there is none, then determine what bargain the parties would have reached in a hypothetical negotiation on a willing but not anxious basis; (3) if this is not possible examine comparable transactions; (4) if that cannot be done, engage in judicial estimation involving “a synthesis of the relevant facts and circumstances into a rate which the Tribunal regards as reasonable or equitable in the circumstances”. This approach was approved by the Full Court on judicial review in Foxtel FCFCA at [38], [61].

256    It follows that judicial estimation is properly regarded as the final step in the process, to be employed in matters where no existing market, hypothetical negotiation, or comparable transaction provides a reliable benchmark. This may arise, for example, where the Tribunal is considering for the first time the operation or effect of a particular provision, as was the case in WEA Records.

4.3    ACCC Guidelines

257    Pursuant to s 157A of the Copyright Act, the Tribunal must, if requested by a party to a reference or application under relevantly in this case, s 154, have regard to relevant guidelines (if any) issued by the Australian Competition and Consumer Commission (ACCC). The ACCC has developed guidelines to assist in the determination of reasonable copyright remuneration in proceedings relating to voluntary licences and licence schemes before the Tribunal and to assist users and collecting societies in determining reasonable and equitable remuneration (the ACCC Guidelines). The ACCC Guidelines recognise that arrangements might exist where copyright owners have come together to be represented collectively in circumstances where they might otherwise have been in competition. The ACCC Guidelines also recognise that the Tribunal is “intended to act as a constraint on the exercise of market power” in such circumstances by making decisions with respect to the reasonable terms and conditions of copyright licences, including licence fees.

258    The ACCC Guidelines were considered in some detail by the Full Tribunal in Isentia (at [42]–[43], [304]–[307] and [636]) and both PPCA and CRA have referred to the ACCC Guidelines.

259    The ACCC Guidelines recommend using a benchmarking or notional bargain approach, noting that where possible, both approaches should be used as a cross-check against one another. If there are substantial differences between the prices determined using the two approaches, further investigation may be required.

260    The ACCC Guidelines note that appropriate benchmarks may include:

(a)    the existing rate, or rate currently being charged for the licensing of the material. This could be a rate determined by previous negotiations or by previous determinations;

(b)    rates or tariffs paid for the use of the same copyright material in different uses;

(c)    rates or tariffs paid for the use of similar copyright material in other jurisdictions; and/or

(d)    rates or tariffs paid in comparable, more competitive markets.

261    Notably, the ACCC Guidelines were published after the Simulcast Decisions were handed down.

5.    Authorities

262    The Tribunal’s approach to determining reasonable or equitable remuneration under the Copyright Act has evolved through a series of significant decisions over the past few decades. While each concerned different rights and licensing schemes arising from various provisions, certain recurring themes emerge: (1) the identification of relevant comparators; (2) the influence of statutory constraints such as the 1% cap; (3) the use of judicial estimation in the absence of reliable market evidence; and (4) the weight given to economic change and market realities in assessing what is “fair and reasonable”.

5.1    Identification of appropriate comparators

263    From WEA Records to Foxtel, the Tribunal has consistently treated the identification of a suitable benchmark agreement as a critical starting point. Where genuine market rates or freely negotiated comparators exist, they form the most persuasive evidence of a reasonable rate. In Simulcast 1, the Tribunal examined both the “PPCA–CRA Broadcast Agreement” and the “APRA–CRA agreement” (the two agreements now advanced by the parties as the appropriate benchmarks in this case) concluding that the latter provided the better guide for valuing the new simulcast right, as it was unaffected by the statutory 1% cap and issues concerning protected recordings: see [249], [255]. The Tribunal in Foxtel similarly considered a range of potentially comparable licences but declined to rely on any of them where they did not reflect conditions free from market imperfections or structural constraints.

264    In considering an appropriate comparator, previous dealings between the parties are ordinarily an appropriate starting point. However, they do not always provide the most reliable standard. In Isentia, a referral under s 157(3) of the Copyright Act, the Tribunal found that a prior licence between one of the applicants, Isentia Pty Limited, and the respondent, the Copyright Agency Limited (CAL), was of little assistance in determining a reasonable rate, as it merely reflected “the expression of the market power News Corp enjoyed in The Australian […] [which was] unconstrained by rivalry and substitution possibilities”: at [219]–[223].

265    The common thread across the authorities is that useful comparators must be commercially negotiated, relevant in scope, and free from distorting influences such as statutory caps or monopolistic bargaining conditions. Where these features are present, the Tribunal has been reluctant to afford substantial weight to purported benchmarks. While prior negotiations or agreements may provide context, they are often imperfect. Turning instead to agreements concerning other copyrights or collecting agencies may assist, but such comparisons inevitably require significant adjustments, introducing their own risks of distortion.

5.2    The influence of statutory constraints

266    WEA Records remains the foundational decision for considering an application made under s 152(2) and the nature of any subsequent orders to such an application under s 152(6). There, the Tribunal fixed a rate of 0.45% for the use of protected sound recordings by 2MMM, expressly noting the 1% ceiling imposed by s 152(8). The reasoning in Simulcast 1 confirmed that the rate determined in WEA Records “itself reflects the 1% cap”: Simulcast 1 at [195]. Later tribunals, including in Simulcast 1, have emphasised that any rate determined under s 152 must be understood within that statutory landscape.

267    The authorities also illustrate the importance of distinguishing between rights subject to statutory caps (as in broadcasting) and those that are not (as in simulcasting or subscription television). Where no cap applies, as in Foxtel, the Tribunal has been freer to consider substantial increases reflective of expanded use and value, as in those circumstances it is unbound by the artificial constraint of s 152(8).

268    The Foxtel case concerned a reference by PPCA under s 154 of the Copyright Act seeking approval of a licence scheme for the subscription television industry for the use of copyright sound recordings, by which PPCA sought to replace the existing agreement between the parties which had been made in 2004. The only party directly affected by the reference was Foxtel Management Pty Limited. The debate in the reference principally concerned the ascertainment of an appropriate fee and a determination of whether it should be paid by reference to revenue or continue on a per subscriber per month basis.

269    As a result of the changed circumstances since 2004, the Tribunal considered at [91] that it would be quite unsound to rely on the existing agreement between the parties to convey relevantly comparable information about the appropriate pricing structure in 2011. None of the other agreements were considered suitable. With there being no market value and no way of determining the outcome of a hypothetical bargaining process, and with none of the comparable transactions relied upon by the parties proving suitable, the Tribunal turned to the process of judicial estimation. At [92], the Tribunal observed that the process “involve[d] an assessment of the pertinent circumstances, many of which will conflict in the directions towards which they tend”. The Tribunal went on further to note that judicial estimation “also involves questions of degree and judgment; it is not a calculus and no answer is right, although some will be more right than others”. The Tribunal considered the following matters from [92]–[123]:

(a)    the extent of Foxtel’s need for a blanket licence;

(b)    the alleged historic undervaluation of PPCA’s licences;

(c)    the changes in content, platform and revenues;

(d)    current and previous agreements in the industry;

(e)    the convenience to the parties of not requiring individual licences with sound recording copyright owners;

(f)    the significance of music;

(g)    instances of prior payment/double payment; and

(h)    the value of recorded music in general.

270    Ultimately, the Tribunal concluded at [124] that PPCA was entitled to a “substantial increase” in the fees which it received from the subscription television industry given the fundamental changes to the nature of the industry and the way Foxtel operated. In the fundamentally changed circumstances of Foxtel, the Tribunal concluded that PPCA was entitled to a 150% increase in the fees it was being paid.

5.3    The use of judicial estimation

271    A recurring feature of these proceedings is the Tribunal’s resort to judicial estimation when no reliable benchmark or market rate exists. WEA Records involved such an exercise, although the basis for the 0.45% determination was never fully articulated. In Foxtel, after rejecting all comparators as unreliable, the Tribunal explicitly invoked/took up judicial estimation.

272    Similarly, in Gyms, having accepted at [291] that no market evidence existed for sound recording use in fitness classes, the Tribunal determined at [309] a fair rate of $15 per class through judicial estimation, emphasising the exercise of evaluative judgment rather than strict calculation. By contrast, the Tribunal found at [88] that the rate at the commencement of the proceedings had been $0.946 per class with a minimum annual fee of $49.39 and a maximum of $2,570.04 but it has increased since then to take account of CPI increases.

273    The first respondent in Gyms, Fitness Australia Inc., sought judicial review of the Tribunal’s determination, and the decision was subsequently set aside by the Full Court of the Federal Court of Australia in Fitness v PPCA.

274    In Foxtel, that Tribunal noted at [51] that the parties to Gyms settled the matter on the basis of an agreement which resulted in a 59% increase in PPCA’s fees. This outcome stands in marked contrast to the Tribunal’s earlier determination—later quashed—which had proposed a substantially higher increase of over 1,400%. The comparison highlights the significant divergence between the negotiated commercial resolution reached by the parties and the Tribunal’s initial assessment of an appropriate rate arising from an exercise of judicial estimation.

5.4    Market evolution and changed circumstances

275    Finally, the authorities demonstrate the Tribunal’s willingness to recognise material changes in industry structure, technology, and usage as justifying reassessment of prior rates. In Foxtel, the Tribunal found that the expansion of digital platforms and on-demand services justified a 150% increase in licence fees, noting that Foxtel’s use of sound recordings had “greatly increased” since the existing agreement. Likewise, in Isentia, the Tribunal considered that prior licences could not provide a reliable foundation where they were “the expression of market power” rather than competitive bargaining and gave detailed attention to the ACCC Guidelines at [304]–[307] as a tool for ensuring reasonableness in such contexts.

276    Taken together, these authorities establish that while the Tribunal must operate within the statutory framework and consider all relevant circumstances, its function is ultimately evaluative. It must determine, having regard to the evidence, comparable, and economic realities, a rate that represents fair and reasonable remuneration—resorting to judicial estimation only when all other methods fail.

6.    Standard and approach for benchmarking

277    The parties agree that the Tribunal should determine a reasonable rate for the broadcast of protected sound recordings on radio using a benchmarking process. The evidence regarding the most appropriate benchmarks, and necessary adjustments, was given by Dr Reitman and Dr Eisenach. While both experts agreed that benchmarking was the appropriate approach to assess the competing proposed schemes, they adopted different prior agreements as the appropriate benchmark. Each considered two existing benchmark candidates—the APRA AMCOS–CRA Agreement and the PPCA–CRA Agreement; and made adjustments to fit either benchmark into the circumstances of the present case.

278    Existing rates represent those currently being charged in the market. These rates may either be derived from rates in the same market or rates in comparable markets. Further, the rates can be derived either by negotiations or via a regulatory or judicial determination.

279    According to the ACCC Guidelines, an appropriate benchmark “should preferably, as far as possible, be grounded in a more competitive market”. Dr Eisenach noted that the existence of “take it or leave it” activity (the ability to demand acceptance or stop supply) during negotiation is an indicator of disproportionate bargaining power. Related to this was the availability of viable alternatives. If a party has a viable next best alternative, it is easier for them to walk away from negotiations. If there are no good alternatives, then a party cannot readily walk away from the negotiation.

280    On p 15, the ACCC Guidelines further caution that existing rates may be less appropriate as benchmarks if they reflect the exercise of market power, even if those rates were determined through arms-length negotiations.

281    Dr Reitman agreed with Dr Eisenach that the function of the Tribunal was to act as a constraint on the exercise of market power by collecting societies. However, Dr Reitman considered that the transaction cost of making a referral to the Tribunal—which he estimated could cost “tens of millions of dollars”—somewhat reduced the Tribunal’s effectiveness as a restraint.

282    Dr Reitman and Dr Eisenach were generally aligned in their views as to the approach to be adopted in setting a reasonable rate, including with respect to benchmarking. In particular, they agreed that:

(a)    an appropriate criterion for assessing a reasonable fee is that which would be negotiated between a willing, but not anxious, licensor and willing, but not anxious, licensee. In this context, anxious refers to “any kind of form of pressure or bargaining power”;

(b)    benchmarking was the most appropriate approach to adopt in this proceeding;

(c)    the relative bargaining power of the parties is a relevant consideration in assessing benchmark agreements. Preferably, both parties should have roughly equal bargaining power;

(d)    the objective in setting prices involving collecting societies should be to approximate as closely as possible the prices that would have occurred in a competitive market;

(e)    adjustments may be required if there are material differences between the benchmark and target markets, including the parties, the rights at issue, different time periods covered, differences in the relative bargaining power of the parties, and differences in underlying market factors including the nature or costs of production of the services being offered;

(f)    the appropriateness of a benchmark as a comparable bargain is a sliding scale, the greater the differences between the benchmark market and the target market, the more complex the adjustments or assumptions necessary to achieve “comparability,” thereby tending to make the benchmark less suitable; and

(g)    a bargaining framework (including bargaining models) is useful for considering what adjustments need to be made to a benchmark rate to account for the differences between the benchmark and target markets and changes in the market that impact the benchmark rate.

283    Dr Reitman and Dr Eisenach also agreed that the profits of the record companies and radio stations do not directly enter the assessment of a benchmarking analysis. This is because the notional bargain to assess the reasonable fee to be paid by radio stations for their broadcast of sound recordings is based on differences in returns relative to the alternatives available. Thus, the fact that record companies are increasingly receiving revenue from music streaming services in place of physical sales of records and CDs, or that CRA Members’ revenue [REDACTED], does not mean that the value of the licence to broadcast sound recordings is less.

284    In addition to their disagreement as to the most appropriate benchmark, Dr Eisenach and Dr Reitman disagreed on two matters. The first disagreement concerned the extent to which a benchmark is appropriate if it is affected by a statutory constraint (such as the 1% cap), where the same statutory constraint applies to the target market and whether fair market value incorporates the existence of the 1% cap or whether the 1% cap is imposed after the fair market value is determined.

285    The second concerned the interpretation of the willing-but-not-anxious framework. Dr Reitman considered that the willing but not anxious buyer/seller framework means that the parties have alternatives in the market—i.e., there is competition, with substitutes available. In looking at a rate negotiated by a collecting society and considering that CRA has no apparent alternatives for broadcasting on the radio, an analysis should then be made of a notional bargain in which the rate was set with competitive alternatives. Dr Eisenach disagreed, considering that other constraints, particularly the threat of Tribunal proceedings, to be sufficient.

286    Dr Reitman considered that the framework assumes competition and available substitutes, and that where no viable alternatives exist, the analysis should consider a notional bargain struck in a competitive market. Dr Eisenach disagreed, considering that other constraints, particularly the threat of Tribunal proceedings, were sufficient. These disagreements are discussed further below in the context of the PPCA–CRA Agreement and the APRA AMCOS–CRA Agreement as potential benchmarks.

287    These disagreements are discussed further below in the context of the PPCA–CRA Agreement and the APRA AMCOS–CRA Agreement as appropriate benchmarks. Before considering each of the proposed benchmarks, I note that neither of them is particularly recent. Substantial changes to the industry have taken place since 2000 when the PPCA–CRA Agreement was entered into, and since 2010, when the APRA AMCOS–CRA Agreement was entered into. It is useful to examine the changes before proceeding to consider the proposed benchmarks.

7.    Changes to the radio and recording label landscape since 2000 and 2010

288    PPCA contends that the PPCA–CRA Agreement is not an appropriate benchmark as “things have moved on” to such an extent since the agreement was signed that it is no longer relevant. PPCA submits that there has been a “seismic shift” brought on by advances in the internet and the digital revolution.

289    Dr Reitman and Dr Eisenach agree that the commercial radio broadcasting industry landscape has fundamentally changed since 1999. The ways in which listeners consume music have changed dramatically over the last few decades, primarily as a result of the rise of streaming services. These changes are a relevant consideration in assessing fair market value.

290    CRA contends that the purported changes are not significant, and the PPCA–CRA Agreement remains the most relevant benchmark. It is therefore necessary to examine the changes that have occurred in the commercial radio broadcast industry since 2000, if so, whether they affected the value of the licensed right, and whether adjustments should be made. The changes, in no particular order, are as follows.

7.1    Advent of streaming

291    Since 2015, now around a decade ago, and as observed in Simulcast 1 at [157], the sound recording industry and record labels have been subject to rapid and sweeping changes due to the development of digital technology and the advent of streaming services. Digital technology has fundamentally shifted the way music is consumed, with access to music as a service now largely replacing ownership of physical recordings, such as CDs and records.

292    Sales of physical media and MP3s now account for a very small portion of overall sound recording revenues. Consumers are no longer making a simple “buy or don’t buy” choice but can listen to music on demand as a service via a medium of their choosing. If a person wishes to listen to a particular sound recording, they can do so at any time through platforms such as YouTube Music, TikTok, or subscription services. Subscription services such as Apple Music or Spotify follow two models: a paid subscription, or an advertisement funded “free” subscription.

293    Survey data from the ACMA shows that in 2023, 70% of Australians aged 18 years and older reported utilising one or more digital music services in 2023, up from 37% in 2017—an increase of 89% in five years. Those over 18 years of age reported streaming music via a variety of platforms, including Spotify (62%), YouTube Music (28%), and Apple Music (13%). Music streaming subscription charges have also increased in Australia over the last few years.

294    Since the advent of streaming, radio audiences have declined, and radio stations no longer serve as the primary channel for discovering and promoting new Australian music and talent.

295    Both sides agreed that the increased revenue to the record labels from streaming is irrelevant to the present task of the Tribunal. However, the advent of streaming services and the higher royalties paid by streaming services than by radio stations is relevant to the opportunity cost of the licence to radio stations to broadcast sound recordings which I discuss below.

7.2    Promotional value of radio

296    In WEA Records, the Tribunal found at 46–7 that promotion via radio play was vital to a record achieving success, and that a hit record only occurred when radio chose to pick the record up and played it. At the time of the WEA Records decision, radio airplay was an integral part of marketing songs. An allowance was made in that case for the promotional value of radio, with the Tribunal observing at 48:

In determining the amount which it is fair and reasonable that 2MMM should pay[…] it would be wrong, in our view, to ignore the benefit accruing to record companies by increased sales of the sound recordings. To do so would confer an additional benefit on the relevant record company (the copyright owner) above that to which it is entitled from the statutory use of its property. It would obtain in effect a double benefit, namely, whatever royalty is payable tighter with the sales derived from the use of its product. […] the amount to which the record companies would otherwise be entitled under s 152 must be reduced on account of the benefit accruing to them from the playing by 2MMM of protected sound recordings. It is, of course, impossible to quantify the extent of this reduction with any precision […]

297    It is uncontroversial that the role of radio has transformed significantly since the days of WEA Records. The experts agreed that the role of commercial radio in the discovery and promotion of new music had declined since the decision in WEA Records. This is primarily the result of the emergence of streaming and other digitally driven changes in the music marketplace. Whilst it was not in dispute that commercial radio continues to play some role in the promotion of sound recordings, the parties disagreed as to the extent of the decline in the promotional value of radio.

298    PPCA accepted that commercial radio continues to have some value in promoting music, but submitted that the role of radio promotion:

(a)    has significantly reduced as compared with what it was at the time of WEA Records and when the PPCA–CRA Agreement was entered into; and

(b)    is now marginal or minimal in value today as compared with other platforms, particularly social media platforms such as TikTok. PPCA contends that the greatly reduced significance of the promotional effect of radio is consistent with the Tribunal’s findings in Simulcast 1 at [154].

299    The witnesses agreed that, at present, radio is no longer the main platform for listeners to listen to new songs. Mr Massarsky gave evidence that it was now typical for new music to be discovered via streaming and social media “virality”. Moreover, Mr Maund gave evidence that the “vast majority” of the big singles have had a viral moment on social media; and that “a very high percentage” of new Australian artists need viral moments to have success. Whilst radio promotion continued to increase revenue for Mushroom, Mr Maund acknowledged that such an increase was “not nearly as much as it used to [be]”.

300    According to Professor Waldfogel, with the rise of the streaming platforms, such as Spotify and Apple Music, both promotion and distribution now occur through streaming platforms, which simultaneously play the roles once played by both radio stations and record stores. Professor Waldfogel considered that radio still drives streaming. It is one of the ways in which listeners become aware of new songs or reminded of old songs, and record labels still expend effort and resources to get their songs played on radio. Whilst previously, radio airplay may have caused people to go in stores and buy a record or CD, now it might cause them to stream a song instead. Dr Kulick agreed that there was a positive relationship between radio airplay and streaming. However, both Professor Waldfogel and Dr Kulick agreed that it was not possible to quantify any causal relationship between radio airplay and streaming.

301    Dr Kulick raised the concept of “simultaneity”, advancing that there might be a correlation between streaming and airplay on radio whereby the streaming of music translated into airplay on radio. However, other than the evidence about the existence of a DAB+ station that played the TikTok Top 40 songs, there was no evidence to support the proposition that streaming drove radio programming. No questions were put to the radio station witnesses on the topic.

302    Mr Maund noted that streaming and social media platforms have made it harder for Australian artists to achieve success. Unlike radio programs in various radio stations, there is no Australian content requirement for streaming platforms. Many radio stations have an Australian music program to satisfy their Australian content obligations. Only three of the recordings in the ARIA top 100 list (streaming) for 2023 were by Australian artists in the top 50 list. In contrast, 21% of the top recordings played on Australian radio are by Australian artists. In relation to Australian music and artists, commercial radio appears to continue to provide some promotional value.

303    Dr Reitman considered that radio still had promotional value for older music and a Generation X or above listener demographic. Mr Massarsky observed that Generation X had migrated to streaming in droves, and he considered that local increases in streaming were due to factors such as tours and concerts rather than radio airplay.

304    The record labels must consider that there is some value in radio play as they continue to devote resources to promoting their sound recordings to radio stations for airplay, including by having meetings with radio stations and sending dedicated priority lists. While the value may be diminishing, some value remains. If radio play was not of net benefit to record labels, there would be no reason for record labels to expend resources on taking these steps.

305    With the advent of streaming and the complexities of the streaming associated revenue streams (advertisement based or subscription) and the allocation of revenue from streams of songs to artists and record labels, there is much less (and possibly no) correlation between radio play and revenue to artists and record labels as compared with the days of WEA Records when radio play necessarily translated into sales of records and CDs.

306    Thus, whilst radio play continues to have some promotional value, it is much less than it was when an unquantified allowance was made for the promotional value of radio in WEA Records.

307    Neither Dr Reitman nor Dr Eisenach suggested that an adjustment should be made in relation to the promotional value of radio.

7.3    Advent of DAB+ FM stations

308    While DAB+ radio was launched in Australia in 2009, MUP figures for DAB+ stations have only been maintained since 2016 to 2017. DAB+ stations operate predominantly in the metropolitan area. There are 198 metropolitan DAB+ stations and 77 regional stations.

309    AM/FM broadcasts are analogue broadcasts, whereas DAB+ is a digital broadcast. Like AM/FM, DAB+ travels over the airwaves and is part of the terrestrial network. However, DAB+ uses a higher frequency than analogue radio and requires broadcasters to acquire additional radio spectrum and invest in new transmission equipment. DAB+ is promoted as an upgraded version of traditional AM/FM radio, offering crystal-clear sound and extra features like text-based song titles, artist information, and local weather.

310    Many DAB+ stations are an extension of existing AM/FM radio stations, which simultaneously transmit the same content as their counterpart AM/FM radio station, usually including the same advertising. The advertising on these DAB+ stations has often been included as part of an advertising package for the main AM/FM station, rather than constituting a separate revenue source.

311    Other DAB+ stations are “standalone” stations that broadcast their own content. Many of these standalone DAB+ stations are high MUP stations utilising little to no talent in comparison to traditional stations. Mr Campbell agreed in cross-examination, in the case of standalone DAB+ stations, that music is not just the foundation, it is “the bricks and the mortar and the roof as well”.

312    Like simulcasting, DAB+ stations enable new opportunities for exploitation. The music played on standalone DAB+ stations is often curated to target particular groups of listeners (for example playing solely music from the 1980s). The DAB+ stations provide more station choice for listeners and enable advertising to be targeted to niche listening audiences.

313    CRA contends that the high MUP of the standalone DAB+ stations reflects the lack of value for CRA Members in these stations. Broadcasters do not invest in creating talent content for DAB+ stations because of their limited listenership and, consequently, attraction to advertisers. To the extent that DAB+ stations have generated any revenue, CRA submits that such revenues would be included in the gross revenue from which the PPCA rate is calculated.

314    Two examples of standalone DAB+ stations were the Coles and Chemist Warehouse DAB+ stations. Mr Colosimo, the COO of Nova, gave evidence that Nova operates 23 standalone DAB+ stations including six Coles radio stations. Nova is commissioned by the supermarket chain, Coles, to program a brand-specific DAB+ station to play in-store to its 14 million shoppers across 800 stores. These DAB+ stations are created to enhance the consumer's shopping experience and to provide an advertising platform for the client. Coles Radio is broadcast in six capital cities and advertising can be tailored for local audiences. Coles Radio, which features “sing along” songs targeted to be familiar to shoppers, can be accessed outside Coles stores, for example on car radios, and attracts a total audience of 300,000 listeners beyond its in-store reach. According to Mr Colosimo, any revenue derived for providing Coles Radio was counted as part of the licence fee paid to PPCA.

315    However, CRA contended that the future for DAB+ was limited. Ms Young observed that her instructions from CRA’s Board (comprising representatives from the CRA Members) were that DAB+ is “not strategically important for the industry”. Ms Young further observed that “they don’t focus their attention on it”, and that given its limit to certain locations, it was “cost prohibitive” for the industry to continue to develop it. Even in metropolitan areas, DAB+ fails in tunnels. Given difficulties in establishing infrastructure, and getting coverage in tunnels, efforts are instead moving to streaming. As to the future of DAB+ going forward, Ms Young’s evidence was that “DAB[+] remains on foot with the spectrum that we have used as we use it today, but certainly not for growth in our future”. According to Ms Young, CRA will not be investing in further DAB+ technology, being the infrastructure or promotion of DAB+.

316    CRA contends that the advent of DAB+ stations does not support an increase in the value of the licenced right, or a higher licence fee. Any future revenue derived from DAB+ stations would be included in the gross revenue used to calculate the PPCA licence fee. However, on the evidence, until recently, CRA had been publicly promoting the benefits of DAB+.

317    Like simulcasting, the fact that when DAB+ became available most radio stations chose to avail themselves of the new format suggests that radio stations saw this opportunity as one they should pursue: Simulcast 1 at [141]. Whilst the evidence was that the DAB+ audiences were small, I consider that there must still be some benefit to the radio stations in broadcasting on DAB+ stations whether as standalone or as AM/FM counterpart stations. As Dr Eisenach stated in relation to DAB+ stations “[there is] no reason to believe that those ears [are not] being monetised”. If there were no benefit after more than 10 years of DAB+ availability, I would expect the stations to stop broadcasting on DAB+. Whilst Ms Young suggested that CRA would move its efforts to streaming in the future rather than DAB+, there was no evidence from the radio stations that any of the stations intended to stop broadcasting on DAB+, or scale back their operations. Indeed, that sentiment was at odds with CRA’s media materials. Relevantly, a media release by CRA from 19 December 2023 provided indications of DAB+ strong, or at least stable, performance:

The number of DAB+ only commercial radio station listeners was up 6% compared to the same period in 2022 and grew 14.2% over full year 2023, to 2.8 million listeners on average over the eight 2023 GfK surveys.

“Since 2021, listeners of commercial radio DAB+ only stations have grown by a massive 48%. Audiences are loving the great new content being added by the commercial networks, and DAB+ is easier to access than ever.” Mr Ennals said.

“The resurgence of in-car listening has continued, with 34.8% of listening happening in cars, and listening up 2.3 percentage points in a year. Strong new car sales, where DAB+ station access prominence is key, has also contributed to the growth in DAB+ listening.”

For this survey commercial radio station listening via a DAB+ device rather than an AM/FM receiver (also called simulcasting) was 4.6 million listeners, with 37.4% of commercial radio listeners tuning-in via a DAB+ device. Listening via device was 69.1% for AM/FM, 21.8% was via DAB+, and 9.1% via streaming.

DAB+ has empowered listeners to enjoy commercial radio how they want, while adding new favourites to their listening options,” Mr Ennals said.

[…] This demographic’s love of DAB+ only commercial radio stations continues to grow, with a 13.4% explosion in listeners YOY to 868,000. Twenty-nine percent listen to commercial radio, including DAB+ only stations, via streaming for the survey period.

318    Other relevant media releases by CRA also allude to the strong performance by DAB+, as a result of younger and older listeners tuning into commercial radio. Moreover, Mr Taylor from ACE Radio Broadcaster stated that he was “very happy with DAB[+]”. Mr Taylor further agreed that DAB+ had been a valuable addition to his radio network in the last three years. Mr Campbell also thought that there was a role for DAB+ to play, particularly as the penetration of the frequency (of DAB+) in cars, homes and smart speakers continues to rise.

319    While it is not possible to predict the future with certainty, the evidence suggests that DAB+ is likely to remain a fixture of the broadcasting environment for the foreseeable future. The fact that new cars are now routinely equipped to receive DAB+ transmissions also indicates that the DAB+ technology has achieved a degree of permanence and consumer accessibility. As the proportion of vehicles fitted with DAB+ continues to increase, and as the supporting transmission infrastructure expands accordingly, the reach and significance of DAB+ broadcasting are likely to grow. This ongoing development underscores that DAB+ represents not a transient or experimental advancement, but a sustained and evolving aspect of the modern radio landscape.

320    All the experts agreed that the presence of specialised very high MUP stations that were effectively like curated playlists with advertisements was not something that existed in 2000. PPCA submits that the emergence of such stations constitutes a material change in the broadcasting landscape since 2000. These stations, which provide listeners with niche, highly tailored music content supported by advertising revenue, reflect a marked evolution in the way recorded music is delivered and monetised.

7.4    Increased volume of music played

321    There has been an increase in the absolute volume of music played on radio since 1999, mainly as a result of the plethora of DAB+ stations with high MUP which have launched since 2010, but also from an increase in the number of radio stations. Around 2002 to 2003, there were 248 radio stations, none of which were DAB+. There are currently 534 AM/FM and DAB+ radio stations, representing a 54% increase in station numbers. Of those 534 stations, 129 are DAB+ standalone stations, 259 are AM/FM radio stations and 146 are DAB+ stations broadcasting the same content as the AM/FM stations.

322    According to PPCA’s calculations, set out in an annexure to its closing submissions, using the reported MUPs, CRA Members broadcasted (on AM/FM and DAB+) approximately [REDACTED] hours (or [REDACTED]) more music per year in 2022/23 than they did 20 years before. PPCA contends that this is a significant increase in music usage since the PPCA–CRA Agreement was first negotiated.

323    CRA sought to reframe this proposition by weighting the percentage of music used by audience. This is because the increase in volume has not translated into increased revenue to radio stations. Time spent listening to music on radio (hours per week per person) [REDACTED] between 2017 and 2023, even with the advent of DAB+ stations.

324    Whilst radio station audiences may have diminished over time, revenues have stayed relatively constant. Accordingly, CRA contends that it is more appropriate to consider the music use on a listenership or revenue basis rather than on an absolute volume basis. Dr Reitman compared the music use percentages of the AM/FM stations from 2003 (being the year of the first available data) to AM/FM and DAB+ stations in 2023, weighted by audience. On that basis, the data demonstrated a [REDACTED] in the percentage of music use over time.

325    PPCA submits that the significant increase in the volume of music played by radio stations since 1999 is another important change since 2000, as it represents an increased use of the licence for which rightsholders are entitled to be compensated. PPCA submits that even if radio listenership has declined, the increased volume of music played has enabled CRA Members to remain commercially viable and better able to compete with streaming services.

7.4.1    Use of sound recordings in snippets

326    PPCA also raised the use of sound recordings by stations in the form of “snippets” or uses of memorable parts of songs which are played in the background or during talk segments as a further source of the increased volume of music use by the radio stations.

327    In line with the APRA AMCOS–CRA Agreement, each of the stations operated by CRA Members provides APRA AMCOS with music playout data, which APRA AMCOS then uses to calculate the MUP for each station. PPCA submitted that “snippets” were not captured in the music playout data reported to APRA AMCOS and, as a result, this use of sound recordings by radio stations was unquantified and unpaid.

328    Ms Small’s evidence was that at the time of commencement of the PPCA–CRA Agreement, radio stations were manually playing records and CDs. Now that music is digital, radio stations can select and pre-program music, and they can weave in samples of songs, as well as other sound effects, in a manner that was not previously possible. Ms Small considered that with the advent of technology allowing for easier access to songs, uses of “snippets” were likely to be more frequent than they were at of the commencement of the PPCA–CRA Agreement.

329    Whilst the use of sound recordings in the form of snippets has increased with technological advancements and the emergence of new social media forums where snippets can be associated with viral and trending songs, this increase represents only a small proportion of the overall volume of music broadcast by commercial radio stations. Despite the heightened visibility and cultural prominence of snippets on digital platforms, their actual duration and frequency within radio broadcasts remain limited. Most stations continue to rely primarily on full recordings in programming, with snippets forming only brief interludes or background segments. Accordingly, while technologically enabled snippets to contribute to the diversity of music use, they constitute only a minor proportion of total music broadcast, and their impact on overall usage and licensing obligations is marginal.

7.5    Increased size of the PPCA repertoire

330    The size of the PPCA repertoire has increased compared to what it was at the time the PPCA–CRA Agreement was entered into and the reasons for this increase since 2000 are twofold.

331    First, due to the effluxion of time, the size of the repertoire increases over time as new songs are recorded. It is telling that the ARIA, which reports the number of new music tracks released each year, reported that between July 2000 and June 2023, approximately 2.3 million new music recordings were released.

332    Second, the addition of new Schedule 3 Countries, which has the effect of increasing the proportion of works that are “protected” within the repertoire. The most significant additions to the list of Schedule 3 Countries are Canada, France and Republic of Korea, which were added after the negotiation of the PPCA–CRA Agreement, but during the period in which it was being rolled over on a monthly basis. As mentioned above, the United States remains a non-Schedule 3 Country.

333    The inclusion of additional countries within the Schedule 3 Countries has the effect of extending protection to sound recordings that were previously unprotected, effective from the date of such inclusion: see s 15(2) of the CIP Regulations and s 17 of the Copyright (International Protection) Amendment Regulations 2024 (Cth).

334    Dr Eisenach’s evidence was the larger the PPCA repertoire and the more ways in which radio stations make use of it, the greater is the value associated with this option.

335    While CRA accepts that the size of the PPCA repertoire has increased , it rejects the idea that such increase has led to an increase in the value of the licenced right. CRA submits that despite its size, in actuality the CRA Members only use a small proportion of sound recordings within the repertoire.

336    Ms Small estimates the size of the PPCA repertoire as being some 19 million sound recordings. The evidence suggested that Spotify’s recordings increased from 50 million to 100 million in just five years between 2019 and 2024. Radio stations put forward a figure of 900 to 1200 for an active or core playlist of songs which is played consistently, but in cross-examination that proved to be a conservative estimate However, even on the most generous estimate of the commercial radio station core playlist and even if factoring in the continual refreshing of those core lists, that is an insignificant percentage of the total PPCA repertoire.

337    PPCA emphasises the breadth of its repertoire as being valuable to the radio stations. However, that submission has its limits. Whatever the actual size, there is a core part of the PPCA repertoire that is relevant and valuable to commercial radio stations in Australia. I do not consider that fact that the PPCA repertoire covers songs from countries such as Burkina Faso, São Tomé and Príncipe and Cabo Verde is of any real commercial benefit or value to commercial radio stations in Australia.

338    At the time of negotiating the PPCA–CRA Agreement, it was already known that the size of the PPCA repertoire would increase over time, both through the continuing creation of sound recordings by artists and by additional countries being added to the Schedule 3 Countries. It was also known that commercial radio stations would primarily be interested in a core section of the PPCA repertoire, with little to no interest in material at the fringes. Due to the growth of the repertoire over time and the addition of new Schedule 3 Countries, the proportion of the repertoire representing that core playlist is likely smaller today than it was in 1999.

7.6    Blanket licence

339    The PPCA–CRA Agreement sought to promote convenience through its offer of a “one-stop” or “blanket” licence for almost all sound recordings released commercially in Australia. This element has been retained in the PPCA Proposed Scheme.

340    PPCA contends that the blanket licence provides radio stations with the ability to use the latest music as soon as it is released and at the time they are most valuable when charting or when the music is becoming popular through streaming or social media platforms.

341    The blanket licence also allows stations to curate playlists to distinguish themselves from competitors (for example 80’s music, heavy metal, top 40), respond quickly to significant events such as the passing of an iconic artist, use sound recordings in live discussions, broadcast sound recordings in advertisements, and play program content licensed from third parties containing sound recordings.

342    The witnesses for CRA acknowledged the benefits of the blanket licence and that these benefits have value to radio stations. However, CRA contended that the benefits of the blanket licence had not changed since the days of WEA Records and the commencement of the PPCA–CRA Agreement.

343    Moreover, while PPCA pointedly notes the benefits of a blanket licence to CRA Members, it must be acknowledged that benefits are also conferred on the PPCA Members, including the non-major labels. Such benefits include the efficiencies in licencing arrangements and lower transactional costs.

344    Contrary to CRA’s position, PPCA submits that the blanket licence is of greater value today than at the time when the PPCA–CRA Agreement was entered into as radio stations now have access to a larger repertoire compared to then. Further, the practice of radio stations engaging in music research and market studies to identify and curate playlists has significantly increased since 1999.

345    PPCA also posits that while a number of CRA’s witnesses sought to downplay the proportion of the overall PPCA repertoire broadcast by radio stations, the oral evidence revealed that the proportion actually used was significantly greater than suggested in the written material. In my view, such scrutiny from PPCA is somewhat misplaced. The value of the licence to the licensor should not depend on the degree of use made by a particular licensee or the extent of research and curation undertaken by that licensee. The blanket licence grants the right to use the repertoire in its entirety. The decision as to how extensively to exercise that right rests with the licensee. Whether a broadcaster elects to use a small portion or a substantial portion of the repertoire does not, in itself, alter the intrinsic value of the rights conferred by the blanket licence.

346    It is correct that the blanket nature of the licence has always had value for the radio stations. I do not consider that there has been a relevant change to the value of the blanket licence since 1999. The value of the blanket licence lies in it covering the entirety of the repertoire and continuing to cover the entirety of the repertoire.

7.7    Opportunity cost of licensing

347    Opportunity cost plays a key role in understanding how copyright holders and broadcasters may negotiate licence fees.

348    Dr Reitman summarised the opportunity cost of licensing as the following:

Opportunity costs are an important part of the notional bargaining framework that applies to negotiating broadcasting rights, with higher opportunity costs of supply leading to higher negotiated rates. The direct incremental cost of making existing recordings available is essentially zero for rightsholders, given the non-rivalrous nature of copyrights. But what does matter to rightsholders is if licensing one use of music decreases revenues from other uses. The greater the extent that radio broadcasts are substitutes for other forms of listening that generate revenues, those revenues become an opportunity cost to supplying music for radio listening. On the other hand, if […] radio broadcasts are increasingly a complement to other forms of listening or promote other forms of listening rather than substitute for them, then the opportunity cost of licensing radio broadcasts falls.

349    This notion was foreshadowed in WEA Records, where the Tribunal observed at 48:

We are satisfied on the evidence that the substitution of airplay for the purchase of records and pre-recorded tapes is a realistic consequence of the growing acceptance in the community of radio airplay […] we also take into account the real risk of reduced sales of sound recordings due to the substitution of listening to radio for the purchase of records and the over-exposure on the radio of some sound recordings. It is likewise impossible to quantify the significance of this risk in any precise terms.

350    The Tribunal there also made an unquantified allowance in favour of the record companies for piracy or home taping of songs from the radio. Due to the advent of streaming, piracy and home taping are no longer phenomena which merit such an allowance

351    Dr Eisenach explained that opportunity cost analysis seeks to estimate the costs to the licensor of granting the licence, thereby identifying the licensor’s reservation price, because a rational licensor would not grant a licence for less than it could earn by withholding it

352    On this point, the experts agreed on the following:

(a)    the opportunity cost to PPCA and its members of licensing radio stations is a relevant consideration in assessing fair market value;

(b)    opportunity costs are an important part of the notional bargaining framework that apply to negotiating broadcasting rights, with higher opportunity costs of supply leading to higher negotiated rates; and

(c)    a relevant factor for rightsholders is if licensing one use of music decreases revenues for some other uses.

353    Dr Reitman explained that the fundamental shift in the way that people consume music, with music as a service largely replacing ownership of recordings, changes the degree to which different modes of listening substitute for one another.

354    Dr Eisenach considered that the increasing opportunity cost of PPCA licensing radio stations to broadcast sound recordings was an important factor affecting the value of the sound recording broadcast right. This was because streaming services are at least to some extent a substitute for radio listening, the opportunity cost to sound recording licensors of licensing their repertoires to radio broadcasters includes a reduction in the royalties they receive from streaming services. The evidence reflected that streaming services pay significantly higher royalties than radio broadcasters, and both their usership and their retail prices are increasing. According to Dr Eisenach, even if radio listening has just a small effect on streaming revenues, it still results in a significant diminution in total royalties paid to sound recording copyright owners.

355    PPCA submits that there is an increased opportunity cost to rightsholders of licensing sound recordings to be played on radio that justifies an increase to the rate payable by CRA Members relative to the position at the time of WEA Records and the commencement of the PPCA–CRA Agreement. This is because there are presently people listening to radio that, if radio was not available, would otherwise turn to streaming or other ways of listening to music; and this switch would result in increased revenue to rightsholders due to the higher rates paid by those alternative service providers.

356    In particular, PPCA submits that a switch from a person listening to radio would result in increased revenue to sound recording rights holders as follows:

(a)    additional people subscribing to paid streaming services that were not subscribers before;

(b)    additional people listening to advertisement-based streaming services, which would result in advertisers leaving radio and increasing their advertising spend with advertisement-based subscription services, and therefore increased advertising revenue; and

(c)    additional people switching to other modes of listening, such as YouTube, physical sales and digital downloads which would also result in increased revenue for rightsholders.

357    However, as Dr Reitman observed, it is reasonable to conclude that radio airplay does not cannibalise direct sales or direct revenues from streaming in the same way that radio airplay cannibalised record sales 40 years ago. If someone spends an additional hour listening to broadcast radio rather than their paid subscription music streaming service, that does not cannibalise any revenue for rightsholders as the subscription has already been paid—more streams do not increase the total royalty pool. There may be some effect on distribution of the royalty pool to record companies and artists due to an hour less streaming, however on the evidence before the Tribunal, that is likely to be unquantifiable and marginal. There is no direct loss of revenue to PPCA such as when a person listened to the sound recordings on the radio instead of purchasing a record or CD.

7.8    The Simulcast 1 decision

358    The Tribunal in Simulcast 1 was tasked with considering competing schemes propounded by PPCA and CRA for the licensing of commercial radio broadcasters to use sound recordings in their simulcast transmissions of radio broadcasts to listeners using the internet (otherwise known as simulcasting). The simulcast is simply the radio broadcast as transmitted via the internet, rather than via terrestrial transmission, with the ability for a radio station to substitute different advertisements. Although a simulcast is ancillary to, and dependent upon the radio broadcast, it is a different right with a separate value.

359    The referral to the Tribunal followed the decision in Simulcast FCAFC where the Full Court of the Federal Court of Australia held at [2]−[6] that simulcasting was not within the scope of the PPCA–CRA Agreement: see Simulcast 1 at [4].

360    In the course of considering the proposed schemes before it, the Tribunal in Simulcast 1 made comments about the suitability of the PPCA–CRA Agreement as appropriate benchmark.

361    PPCA seizes upon the Tribunal’s dismissal of the PPCA–CRA Agreement as an out of date “historical artefact” with a rate that is “artificially low”, being “far below what would be a market rate” by reason of the “significant distortion” of the legislative 1% cap, as reasons as to why it is not an appropriate benchmark in this referral: see Simulcast 1 at [48(3)], [194]–[198], [248], [256] and [283]. In advancing its case, PPCA places great weight on these comments, and on that Tribunal’s failure to attribute any significance to the many rollovers of the PPCA–CRA Agreement.

362    The comments of the Tribunal appear to have encouraged PPCA in its belief that whilst the 1% cap remained, the best rate that it could achieve was 1% discounted to account for the proportion of protected sound recordings in its repertoire. For example, the Tribunal stated at [205]:

[…] The reasons CRA gave in support of this submission fail to recognise the fundamental fact that the best PPCA could do is 1% of revenue and, based on the history of the 2MMM case, it was reasonable for PPCA to believe that it would likely achieve less than 1% due to the broadcast right being confined to protected sound recordings. CRA also overlooks the enormous time, effort and cost that would be involved in referring the broadcast rate to the tribunal for potentially little reward given the 1% cap. The fact that PPCA instead focused its resources on getting the 1% cap removed from the legislation is commercial conduct consistent with PPCA’s view that the 1% cap constraint operates to suppress the rate that it believes should be paid for sound recordings.

See also further comments at [197], [207] and [219].

363    At [224], the Tribunal held that it would be unreasonable to use the 0.4% rate from the PPCA–CRA Agreement as the foundation for valuing the related simulcast right, and that the APRA AMCOS–CRA Agreement would be a better foundation as it avoided the “significant distortion” resulting from the 1% cap (at [248]), concluding (at [249]) that the APRA AMCOS–CRA Agreement “provides a better guide to the value of the broadcast right and the simulcast right together than any attempt to make adjustments to the [PPCA–CRA] Agreement”.

364    The comments and observations of the Tribunal in Simulcast 1 have again encouraged PPCA in its belief that the sound recording right is at least as valuable as the value of the corresponding APRA musical and literary works.

365    With respect to the 1% cap imposed on the right to broadcast of sound recordings, it is notable that no such statutory cap applies for the right to simulcast sound recordings: Simulcast 1 at [224].

8.    Unchanged factors

366    While the advent of the digital age has brought about many changes to the broadcasting and music industries, which are being weighed in considering the competing schemes, it is equally relevant to consider those factors that have remained constant, or otherwise subsisted, since the PPCA–CRA Agreement was entered into in 2000. Certain core features of the relationship between sound recordings and commercial radio have endured, and these form part of the background against which the Tribunal must assess what is reasonable in the present circumstances.

8.1    The importance of music to radio

367    PPCA contends that importance of music to radio has become more apparent overtime, however, the significance of music to radio broadcasting is not a new or recent development. The Tribunal in Australasian Performing Right Association Ltd v Federation of Australian Radio Broadcasters Ltd (1999) 46 IPR 20 at [8] observed that:

At the hearing, there was much debate about the reality of the increase in music usage claimed by APRA, a claim which related to the period up to this proceeding. Over the years, the measures applied to the broadcasting of music have differed, so as to make comparison difficult. However, the tribunal does not find it necessary for the purposes of the present case to make precise findings covering the lengthy period since 1964. It is apparent that there have been changes over that period in the character of the use of music by radio broadcasters. Those stations which make high use of music have developed techniques and practices to focus a station's image with great precision on the particular type of music broadcast by it. For these stations, their music is their defining feature. There has been a qualitative change in their use of music. In broad terms, the tribunal accepts that there has also been a quantitative increase in the percentage of broadcasting time occupied by music.

368    That passage reflects a state of affairs which remains largely unchanged. Music-based stations have long used their chosen genres and playlists to define their identity, distinguish themselves from competitors, and attract particular audience demographics. PPCA’s submission that “without music there would be no commercial radio as we know it today” is accepted at a general level but does not demonstrate that the role of music has fundamentally altered since the PPCA–CRA Agreement.

369    The parties agreed that music-based radio stations derive value from sound recordings in their programming through their ability to attract and maintain audiences and, in turn, to draw advertisers seeking to reach those audiences. The music a station chooses to air contributes directly to its brand identity and its positioning in the market. It was common ground that, while stations rely on music to varying degrees, their programming typically consists of a mix of protected and unprotected sound recordings.

370    The experts agreed that “[i]n broad terms, the ways in which radio uses music and combines music with talk, sport and other content have not changed significantly”, and that “[r]adio stations continue to receive value from the use of music to attract and maintain audiences”.

371    Talent also continues to play an important role, particularly during the highest audience periods such as breakfast. This was illustrated by the significant drop in listeners following the departure of Kyle Sandilands and Jackie Henderson, co-hosts of ‘The Kylie and Jackie O Show” when they switched stations from 2DAY FM to Mix FM106.5 in January 2014 in Sydney, the GfK radio ratings demonstrated a proportionate shift of audience to Mix FM 106.5. Local talent also plays a key role in driving listenership. In March 2024, Jason Hawkins and Lauren Phillips, known as Jase and Lauren, who previously hosted the breakfast show on KIIS FM 101.1 in Melbourne, moved to the breakfast show on NOVA 100 in Melbourne. In April 2024, the Kyle & Jackie O Show began networking from Sydney into the Melbourne breakfast slot on KIIS FM 101.1, meaning it was broadcast simultaneously in both cities. The movement of listeners with Jase and Lauren from NOVA 100 to KIIS FM 101.1 illustrates both the impact that changes in talent can have on audience numbers and the continued importance of local presenters.

372    Music (both protected and unprotected) remains an important factor for many, though not all, radio stations. There are high-rating stations whose formats are predominantly talkback or sport and whose success depends largely on content other than music.

373    The Tribunal in Simulcast 1 observed that while music was a significant feature of many radio stations, they offered an entertainment package that included more than music. Describing the position as at 2015, the Tribunal said at [153]:

Equally, while some radio stations use their dominant music style as an important part of their branding, others do not. PPCA rightly pointed out that some radio stations describe their formats using terms such as “contemporary hit radio”, “easy listening”, “mainstream rock”, “chill out”, and “hot adult contemporary”, which indicates that music is an important part of the package being offered. But this does not change the fact that generally speaking radio stations offer more than music, a fact which sets them apart from online music providers.

374    That remains the position today. Although the manner in which audiences access and consume music has diversified in the digital era, the essential way in which radio combines music with other forms of content has not materially changed. The additional research, curation and audience analysis undertaken by stations in recent years to retain listeners and increase the value derived from their licences reflect refinements in programming practice rather than any transformation in the role or importance of music itself.

375    Music has always been a critical input to radio broadcasting (other than talkback) and remains so. I do not consider that there has been any material change in the importance of music to radio since WEA Records and the commencement of the PPCA–CRA Agreement.

8.2    The 1% cap

376    Another enduring feature of the industry landscape is the statutory 1% cap. The 1% cap has remained in place since its introduction in 1969 and, despite PPCA’s assiduous lobbying efforts (detailed above at section 2.4) over many decades, it has not been removed or altered. For more than 50 years, the 1% cap has formed part of the commercial and regulatory framework within which the parties have operated.

377    While the 1% cap imposed by s 152(8) may be described as “arbitrary”, it is longstanding and, for present purposes, a permanent fixture. No equivalent statutory cap has been introduced in respect of broadcasts of musical works, but the existence of the 1% cap in relation to sound recordings remains an important consideration in assessing the reasonableness of any proposed scheme.

378    The Tribunal in Simulcast 1 observed at [206] that, by reason of s 109, PPCA cannot prevent radio stations from using sound recordings in their broadcasts. The effect of that provision creates a different commercial dynamic for commercial radio stations compared with other licensees such as Foxtel or simulcasters, which do not have the benefit of s 109. The Tribunal also observed at [189] that “[n]o radio station would agree to pay more than 1% in circumstances where it knows that the circuit-breaker for any deadlock in negotiations, the tribunal, is confined by the 1% cap”. The longstanding existence and operation of the statutory cap, and the compulsory licence in s 109, are relevant elements of the circumstances in which the Tribunal is to consider whether a proposed scheme should be confirmed, varied or substituted as reasonable under s 154(4). This accords with the experts’ evidence that the 1% cap has influenced the PPCA-CRA royalty rate over the past 40 years.

379    Where the Tribunal is required to determine what is reasonable in the circumstances, it would be wrong, as PPCA contends, to ignore a fundamental element of those circumstances, namely the statutory cap. PPCA’s approach—to first determine a “fair market value” absent the 1% cap and then to apply the 1% cap only if the outcome exceeds 1%—fails to reflect the reality that the 1% cap itself is part of the prevailing market and legislative environment in which the parties operate.

380    The existence of the 1% cap is a relevant factor in any negotiation between the parties, whether actual or hypothetical. As the Tribunal observed at [193] in Simulcast 1, PPCA had “understood, reasonably in [their] view, that the best it could ever do before the tribunal in a referral relating to the broadcasting right was a percentage of 1% as related to the use of protected sound recordings” (see also [205] and [208]).

381    CRA argues that, despite PPCA’s attempts to portray itself as having vigorously lobbied for the removal of the 1% cap over the past 20 years, the evidence and chronologies it provided paint a different picture. CRA points to Ms Small’s evidence, which showed only that PPCA regarded the rate as constrained by the 1% cap and the WEA Records decision, and that it decided to focus its resources on lobbying for the removal of the 1% cap and on increasing fees under other licences. During cross-examination, Ms Small accepted that she did not expect CRA would agree to any increase in the licence fee. CRA notes that she did not suggest PPCA lacked the resources to pursue renegotiations or Tribunal proceedings, or that the PPCA–CRA Agreement fee would have been considered too low if the 1% cap remained. Indeed, CRA highlights her statement that, at the time of renewing the PPCA–CRA Agreement, “PPCA did not consider that it would be productive to pursue a re-negotiation of the rate under the [PPCA–CRA] Agreement in the shadow of the [1%] cap”.

382    The suggestion that PPCA’s failure to renegotiate with CRA over two decades was due to its exclusive focus on lobbying to repeal the 1% cap is contradicted by its own chronology. The record shows substantial periods during which PPCA was not expending resources on lobbying. Between March 2012 and June 2022, for example, lobbying activities were very limited, with none occurring after October 2018.

383    CRA also contends that PPCA’s suggestion that it failed to renegotiate with CRA because it was focused solely on lobbying to repeal the 1% cap is contradicted by its own chronology. The record shows long periods during which PPCA undertook little or no lobbying activity. Between March 2012 and June 2022, for example, lobbying efforts were very limited, with none after October 2018.

384    CRA further argues that PPCA’s involvement in other Tribunal proceedings should not have affected its ability or willingness to negotiate with CRA. In CRA’s view, PPCA’s participation in multiple matters shows that it was capable of managing several proceedings at once. CRA notes that PPCA has been involved in proceedings with both CRA and Free TV Australia Limited, and previously participated in matters concerning Gyms and Nightclubs.

385    CRA also submits that there is no evidence of the resources PPCA devoted to the matters listed in its chronology. Many of those proceedings were not mentioned in Ms Small’s affidavit, despite her stated intention to include all information relevant to lobbying and the 1% cap. Nor is there any evidence about the resources available to PPCA for negotiations with, or Tribunal proceedings against, CRA.

386    CRA further points out that PPCA continued lobbying even after commencing renegotiations with CRA. For example, PPCA launched a campaign to remove the 1% cap one month after filing the present reference, demonstrating, in CRA’s view, that it was capable of doing both. This dual approach, CRA says, mirrors PPCA’s conduct when the PPCA–CRA Agreement was first entered into.

387    Finally, CRA argues that nothing in the chronology suggests PPCA considered the fee payable under the renewed PPCA–CRA Agreement unreasonable if the 1% cap remained. Over 23 years, this was never stated in any correspondence between the parties. Consistent with Ms Small’s evidence, CRA notes that PPCA’s communications emphasised the need to renegotiate the agreement, not that the fee was inherently inadequate under the 1% cap. PPCA’s reluctance to challenge the existing rate for 20 years, either in negotiation or via a referral, in light of its CEO’s intention to “vigorously pursue” referrals where it considered the licence to be undervalued, suggests that PPCA must not have considered that the current licence was greatly undervalued, and that it would not achieve a rate at or close to 1%. The evidence indicates that the difference between, say, 0.4% and 0.5% of industry revenue is substantial—close to [REDACTED] in the 2023 financial year alone. PPCA therefore had ample incentive to renegotiate with CRA, or to initiate Tribunal proceedings if it believed a higher rate was achievable. The evidence, however, demonstrates that it did not take such steps.

388    PPCA itself endorsed the question posed by the Tribunal in Simulcast 1 at [208]: why would PPCA involve itself in a negotiation and referral process that would entail such time, effort and cost for “most likely little possible reward”? PPCA’s reticence to challenge the status quo cannot be attributed solely to the costs of a referral hearing. As CRA submitted, even a change of 0.1% would translate into a substantial amount of money each year, and more so over several years or a decade.

389    I infer that, from PPCA’s repeated agreement to roll over the PPCA–CRA Agreement, it must have regarded the rate in that agreement as if not reasonable, then at least sufficiently close to reasonable that it was uneconomic to refer the scheme to the Tribunal in the hope of achieving a higher rate.

390    Like purchasing a house next door to an abattoir, the parties have long operated with full knowledge of the statutory cap. It may one day be removed or increased, but while it remains in place its presence necessarily affects the fair market value of the licence.

391    I consider that the 0.4% rate in the PPCA–CRA Agreement represented a fair market value of the sound recording broadcast right at the time the agreement was made. That value is affected by the existence of the statutory cap, which has overshadowed negotiations since its introduction. By contrast, in the case of the simulcast right, the fair market value was not constrained by the existence of any statutory cap and could, as a result, exceed 1%.

392    I therefore consider that the longstanding statutory cap is a relevant circumstance to must be taken into account in the consideration required by s 154(4).

8.3    PPCA and CRA’s relationship

393    For the 40 years or so after the WEA Records, the parties repeatedly entered into, and extended, agreements providing for CRA Members, as an industry, to pay PPCA a percentage of gross revenue. The latest of these agreements, the PPCA–CRA Agreement was terminated by PPCA in 2022. From 2001 to 2021, CRA Members paid a rate of 0.4%, and the PPCA–CRA Agreement was regularly renewed, first on a yearly and then on a monthly basis. It may be accepted that these arrangements reflected a longstanding and stable commercial relationship grounded in mutual understanding of each other’s operational and strategic interests. The blanket licensing arrangements conferring broadcasting rights in PPCA’s repertoire of sound recordings have been mutually beneficial. They promoted efficiency and certainty in the licensing of sound recordings by enabling CRA Members to broadcast a wide range of sound recordings without the need for individual negotiations, while providing PPCA with a reliable, industry-wide revenue stream.

394    The evidence further suggests that both PPCA and CRA are sophisticated, well-resourced organisations that have consistently had the benefit of legal advice and board oversight in the negotiation and renewal of their agreements. Their dealings were conducted at arm’s length and reflected an appreciation of their respective commercial imperatives. This was not a case of the proverbial “David and Goliath,” but rather one of two experienced industry participants negotiating enduring arrangements that advanced their long-term objectives.

8.4    The PPCA–CRA Agreement as a benchmark

395    The PPCA–CRA Agreement:

(a)    covers the same rights as are the subject of PPCA, and no others;

(b)    provides a blanket licence only for ‘protected’ commercially released sound recordings;

(c)    has the same parties as the parties to PPCA’s present s 154 referral; and

(d)    licence is subject to, and thus was negotiated under the shadow of, the 1% cap.

396    PPCA contends that the licence scheme adopted under this agreement is “no longer fit for purpose” given the “seismic shifts” caused by the advances of the internet and the digital revolution. PPCA relies heavily on the comments of the Tribunal in Simulcast 1, and submits that the adoption of the PPCA–CRA Agreement as the appropriate benchmark is inconsistent with the comments and findings of the Tribunal in Simulcast 1.

397    CRA contends that whilst the music industry has experienced significant change since the PPCA–CRA Agreement was entered into, the nature of the licence offered by PPCA and its use by commercial radio broadcasters has fundamentally remained the same. In the 40 years since the WEA Records decision, the parties have (as discussed above at [147]) entered into successive agreements pursuant to which commercial radio broadcasters collectively paid PPCA an industry licence fee of 0.4% (or less) of gross revenue since 2001. CRA submits that the longstanding arrangements should be given substantial weight in determining appropriate rate.

398    The scheme under the PPCA–CRA Agreement continues to operate under the interim scheme currently in effect, broadly as follows:

(a)    CRA members notify an independent auditor appointed by CRA of their gross revenue for the previous financial year;

(b)    CRA receives from APRA AMCOS a list setting out the percentage of airtime occupied by APRA works for each CRA Member station (their MUP);

(c)    CRA provides the list of MUPs to the independent auditor;

(d)    The gross industry revenue, the royalty rate payable on that gross revenue, the total royalty fee sum, and the allocation of the amount of the total royalty sum to be paid as between individual CRA members is calculated by the independent auditor, in accordance with CRA’s methodology for apportioning annual fees under a collection agreement CRA had with each of the CRA Members;

(e)    The independent auditor notifies CRA of the licence fee payable by each station to PPCA;

(f)    CRA collects the money in respect of the allocated licence fee proportion from its members and pays to PPCA a gross licence fee on a quarterly basis; and

(g)    In return for payment of the gross licence fee, PPCA grants to each of the CRA Members a non-exclusive licence to broadcast the protected sound recordings.

399    The PPCA–CRA Agreement contains a provision/includes a requirement for CRA to provide PPCA with a copy of the collection agreements it has with its members and notify PPCA of the licence fee payable by each member. It seems that CRA had not provided either to PPCA. Until the Simulcast Proceedings, it appears that PPCA, was unaware of the breakdown of payments by individual stations, and moreover, it had never requested this information from CRA.

400    Under the PPCA–CRA Agreement, an independent auditor determines the allocation between members to make up the 0.4% rate. Under the CRA allocation method, each station is assigned a fee as percentage of revenue which is expressed to six digital places (for example, 0.123456%).

401    Since 2003, the PPCA–CRA Agreement has rolled over without being renegotiated. Dr Reitman considered that the fact that the PPCA–CRA Agreement was renegotiated four times including increasing the rate, without getting to the 1% cap indicates that the two parties were able to agree on what would constitute reasonable rates for the PPCA broadcast license.

402    PPCA contends that the continuation of the agreement does not in itself indicate that the parties continued to compromise on 0.4% as a reasonable rate, but only that both parties considered the expected cost of renegotiating the agreement or referring it to the Tribunal to be greater than the expected benefit from the resulting change in rate.

403    While the PPCA–CRA Agreement was Dr Reitman’s preferred benchmark, Dr Eisenach disagreed. Dr Eisenach considered that the reasons articulated by the Tribunal in Simulcast 1 as to why it was not an appropriate agreement to use as a benchmark in that case, disqualified the PPCA–CRA Agreement as an appropriate benchmark to use in this case. Dr Eisenach considered that the 0.4% rate was a “artifact of the [1%] cap”. It did not reflect the market rate when he testified in Simulcast 1 in 2016, and Dr Eisenach considered that it was even further from an appropriate rate today.

404    Accordingly, it was Dr Eisenach’s opinion that the PPCA–CRA Agreement is not a sound benchmark and does not reflect the fair market value of the sound recording broadcast right. Dr Eisenach echoed the Tribunal’s conclusion in Simulcast 1 at [249] that “the current [APRA AMCOS–CRA Agreement] provides a better guide to the value of the broadcast right and the simulcast right together than any attempt to make adjustments to the [PPCA–CRA Agreement]”.

405    In contrast, Dr Reitman considered that the PPCA–CRA Agreement was a freely negotiated agreement which was entered into by both parties taking into account the economic and statutory environment pertaining to sound recording broadcast rights. The 1% cap was a factor in that environment, but was not determinative of the negotiated rate in the sense that the agreed upon rate could have been higher or lower and still satisfied the 1% cap. Dr Reitman considered that the fact that the license fee (set as a percentage of revenue) increased several times after WEA Records up to the time of the PPCA–CRA Agreement, more than doubling over that period. This, he said, supported the conclusion that the PPCA–CRA Agreement, and consequently the agreed rated between the parties in each iteration of the agreements leading up to the PPCA–CRA Agreement was a freely negotiated rate and not fixed by the operation of the 1% cap.

406    Dr Reitman also noted that to the extent that the PPCA–CRA Agreement reflects the earlier WEA Records decision, the parties in that decision (being, record companies and a radio station) correspond to the appropriate notional bargain for a license between PPCA and CRA. Further, the Tribunal’s stated goal in the determination in WEA Records was to identify “equitable or fair and reasonable remuneration” under s 152 based on bargaining between the parties with “each exercising their actual bargaining power”. In Dr Reitman’s opinion, a rate influenced by the WEA Records decision is therefore a more suitable benchmark than the APRA AMCOS–CRA Agreement which was negotiated without any apparent adjustment for the additional collective market power from negotiating a single blanket license from APRA.

407    Dr Eisenach considered that the 1% cap resulted in the rate in this agreement being set far below the fair market value of the PPCA licence. Dr Eisenach did not consider that the 0.4% rate represented a fair market rate as it was an artifact of the 1% cap.

408    Dr Reitman disagreed that a market with a copyright collective’s monopoly power was a competitive market. In Dr Reitman’s opinion, the effect of the WEA Records decision on the rate negotiated in the PPCA–CRA Agreement reflected a constraint on the collecting society’s power. Dr Reitman considered that the fact that the same statutory cap that governs the current rate also applied to the PPCA–CRA Agreement is a benefit of that agreement as benchmark, not a drawback, and certainly not a reason to reject that benchmark entirely.

8.4.1    Adjustments

409    PPCA relies on Simulcast 1 to contend that if the PPCA–CRA Agreement is used as a benchmark then a “strong upward adjustments” would need to be made to:

(a)    counter the artificial distorting effect of the 1% cap;

(b)    recognise the fact that the value of the sound recording right should in principle be at least equal to that of the musical works right;

(c)    to reflect the marginal role that radio now plays in the promotion of sound recordings; and

(d)    account for an increase in the size of the PPCA repertoire.

410    Neither Dr Eisenach nor Dr Reitman suggested any quantitative adjustments for these matters.

8.4.1.1    Any impact of the observations in Simulcast 1?

411    It must be recalled that the comments made by the Tribunal in Simulcast 1 in relation to the inappropriateness of the PPCA–CRA Agreement as a benchmark were made in the specific context of that referral—namely, to determine a reasonable rate for a new right, the simulcast right, which is not subject to any statutory cap. The reasons given by that Tribunal at [224] for preferring the APRA AMCOS–CRA Agreement—including the absence of the 1% cap and the irrelevancy of the issue of protected and unprotected sound recordings—are in the context of the present referral, reasons why the PPCA–CRA Agreement should be preferred as the more appropriate benchmark in this referral. My reasons for considering the APRA AMCOS–CRA Agreement to be an inappropriate benchmark are set out the next section.

412    The Simulcast 1 Tribunal observed at [193] that given the time, cost and effort involved in tribunal proceedings, “PPCA’s approach [of focussing its time and energy on lobbying for removal of the 1% cap] makes commercial sense” as the best it understood it could ever do was a percentage of 1%. In making this comment, that Tribunal may not have been aware of the PPCA’s vigorous pursuit of other referrals outlined above, during the same time period. Unlike the decisions in the Gyms and Foxtel cases, there was no discussion by the Tribunal of PPCA’s ongoing efforts to secure increases in relation to its other rights in Simulcast 1. The simulcast rights were, properly, considered in a vacuum, without reference to PPCA’s broader strategy or activities concerning other rights, which may have influenced the context in which the Tribunal assessed the commercial sense of its approach.

413    The Tribunal also observed at [197] that as until recently, PPCA did not know the internal division of liability as between CRA Members and had assumed that some may be paying close to the 1% cap, the “potential upside” of a referral was not known to PPCA. The purported mathematics of that rationale does not withstand scrutiny. The upside did not depend on the internal attribution of the fee between CRA Members. An increase in the industry wide rate from 0.4% to 1% or near that, would be a very substantial increase in the order of 150% from the current rate. Even assuming a discount for unprotected sound recordings, an increase to 0.8% would still give around double the current 0.4% rate. That upside should have been obvious to PPCA.

414    Even after PPCA was fully aware of the internal division of liability between CRA Members, including the higher rates paid by the higher MUP members following the Simulcast 1 hearing, it took over five years for PPCA to make the current referral.

415    The Tribunal further observed at [194] that it was “beyond the bounds of possibility” that the PPCA–CRA Agreement represented freely determined market rates unaffected by any constraints associated with the 1% cap. The Tribunal’s task in Simulcast 1 was to determine a reasonable or equitable rate in the circumstances of that referral. Those circumstances differed materially from the present matter—involving a new right, the absence of any statutory cap, no issue of protected or unprotected works, and the conferral of different copyrights.

416    As I discussed above, I consider that the statutory cap forms a fixed and enduring part of the landscape in the context of the broadcast of sound recordings. For present purposes, it must be treated as a permanent part of the landscape. Any determination of what constitutes fair and reasonable remuneration in the circumstances must acknowledge the existence of the statutory cap as a relevant circumstance attaching to the right.

8.4.1.2    Other adjustments

417    The Tribunal in WEA Records made an unquantified discount in the rate to reflect the promotional value of radio. As discussed earlier, it is clear that promotional value and new music discovery have diminished with the advent of streaming and social media. By way of illustration, in WEA Records at 46–7, the evidence from the record labels in that case included that:

(a)    “… if you are going to promote records and try to achieve success… the only place you are going to get it is from radio… radio plays the most vital part initially and, whether record charts or otherwise, radio is normally the means by which a record is promoted”;

(b)    “… a ‘hit’ record only occurs when radio picks it up and decides to play it. Once radio decides to play a record and consistently repeats the playing of it ‘particularly in a competitive market like ours where a couple of stations do get onto the record at the same time, that creates a hit, and the heat has a sociological impact, if you like, which is much more than the radio. The radio was the first measurement. But then runs out the juke boxes, artists in clubs sing the song, and it becomes an environmental occasion if you like”; and

(c)    “airplay is an integral part of the marketing of our product”. In contrast, Mr Campbell of SCA gave evidence that “in the 1980s and 1990s […] radio was the main platform through which consumers could discover new music”, nowadays, “radio is not the main platform for people to hear new songs”.

418    Moreover, Mr Maund presently acknowledged that the “vast majority” of the big singles have had a viral moment on social media; “a very high percentage” of new Australian artists need viral moments to have success; and whilst radio promotion continues to increase revenue for Mushroom, it is “not nearly as much as it used to”. Relevantly, Professor Waldfogel also explained that prior to digitisation, success depended on radio promotion and record store sales, whereas now streaming platforms both promote and distribute sound recordings. In particular, the inclusion of a song in streaming platform playlists is an important (sometimes career-changing) part of its launch, due to the promotional effect such playlists can have (at least within a platform and potentially more broadly).

419    Another pertinent change is the promotional effect of radio today versus in the era of WEA Records and at the time of entry into the PPCA–CRA Industry Agreement is that there is no longer a direct correlation between radio promotional effect and sales. 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 rightsholders (which in turn would justify a reduction in rate) in very limited circumstances—i.e., if that user obtains a subscription streaming service to listen to that song (which is unlikely); if there is a sufficient change in the activities of ad-supported listening to result in an increase in advertising revenue on those ad-supported services; or if it is played on a service that has a per-stream rate structure (which is not the case for subscription services).

420    However, I do not consider that an adjustment to take into account the unquantified discount in WEA Records translates into a “significant upward adjustment” in considering an appropriate rate in this referral. While it is appropriate to allow for a reduction in promotional effect, that does not justify a substantial increase in the rate.

421    On the other hand, Dr Reitman suggested that the PPCA–CRA Agreement benchmark rate should be adjusted down slightly to 0.39% to reflect the small decrease in the MUP of commercial radio stations from the [REDACTED] MUP value of [REDACTED] in 2003 (other than DAB+ stations which have an average MUP of [REDACTED]). I disagree with this suggestion. While some terrestrial channels focus more on talent, others continue to emphasis music, often with little to no talent. There is no current evidence to support reducing the rate contemplated by the PPCA–CRA Agreement, even marginally.

422    Dr Eisenach, who rejects the PPCA–CRA Agreement as the appropriate bench, considered that the industry has changed greatly since the date it was entered into and therefore, the rate should be updated based on changes in supply and demand that affect the notional bargain and underlaying benchmark rate.

423    For the reasons I discussed earlier, I consider that an adjustment is appropriate account for the increased volume of use of the PPCA repertoire as a result of the proliferation of DAB+ stations which were not in existence at the time of WEA Records or at any time prior to the last negotiated increase in the PPCA–CRA Agreement rate.

424    I also consider a slight adjustment to reflect the increased percentage of protected works in the PPCA–CRA Agreement, since it commenced is appropriate.

8.5    The APRA AMCOS–CRA Agreement as a benchmark

425    The APRA AMCOS–CRA Agreement, which is actually separate licenses with individual radio stations, grants licences for the broadcast and online communication of musical and literary works by commercial radio stations (and related reproduction of those works). The APRA AMCOS–CRA Agreement was entered into in 2010 and remains current and on foot. Both Dr Eisenach and Dr Reitman considered it at least a “plausible” benchmark. Dr Eisenach considered this agreement to be a comparable bargain for the current referral and was his preferred benchmark.

426    Notably, the key differences between the PPCA–CRA Agreement and the APRA AMCOS–CRA Agreement is that the latter:

(a)    has a different licensor to the present referral;

(b)    has the same ultimate licensees (radio stations);

(c)    licenses a different set of rights: musical and literary works, not sound recordings;

(d)    covers all works, and hence there is no issue of the ‘protected’ works classification;

(e)    licences additional rights to broadcasting: simulcast, webcasting, podcasting and reproduction, all bundled together into a single royalty rate; and

(f)    is not subject to the 1% cap.

427    Importantly, there is no compulsory licence regime such as in s 109 for literary and musical works. Nor is there any applicable statutory cap for any licence to broadcast in respect of literary and musical works.

428    The APRA AMCOS–CRA Agreement has a sliding royalty rate based on the gross revenue and the MUP of a particular radio station. The rates which are set out at [215] of Simulcast 1, range from (in licence years 2–6) 0.054% for each MUP percentage point for stations with a MUP of 0-9.99% rising to 3.76% for stations with an MUP above 80%.

429    Although he agreed that it was a “plausible” benchmark, the APRA AMCOS–CRA Agreement was not Dr Reitman’s preferred benchmark. This was primarily due to the differences noted above, but also due to it being negotiated without any apparent reference to the proper notional bargain under the willing but not anxious buyer and seller standard or constraint on APRA’s collective market power. Dr Reitman further observed that the APRA AMCOS–CRA Agreement dates from 2010, which was prior to the music industry being transformed by streaming. Dr Reitman considered that all of these factors made the APRA AMCOS–CRA Agreement a relatively unreliable benchmark, as a great number of adjustments or assumptions would be required to transform the benchmark rate into a rate for the target market. The more adjustments required, the less comparable the benchmark.

430    Dr Eisenach and Dr Reitman agreed, that if the APRA AMCOS–CRA Agreement was used as the benchmark, three quantitative adjustments would need to be made:

(a)    a reduction to reflect the proportion of ‘protected’ works in the PPCA repertoire;

(b)    a deduction to account for there being no simulcast right; and

(c)    if the rate was above 1%, then to apply the 1% cap.

431    Dr Reitman considered further adjustments would also be required, some of which were not quantifiable. One such adjustment, was to take into account APRA and PPCA’s respective exercise of market power. Dr Reitman considered that the different statutory environment gave more bargaining power to APRA than PPCA. Whilst both were subject to the constraint of a possible referral to the Tribunal, APRA’s bargaining power was not constrained by any possible compulsory licence or statutory cap.

432    The conditional ACCC authorisation of APRA, entitled “Application for revocation of A91367 - A91375 and the substitution of authorisation AA1000433 lodged by Australasian Performing Right Association Ltd in respect of arrangements for the acquisition and licensing of performing rights and communication rights in musical works” and dated 13 July 2000 describes APRA as a new monopoly with exclusive rights to its members’ works. It further notes that as the exclusive licensor of rights to what is an essential input to many users’ businesses, APRA has substantial market power in relation to its dealings with users in terms of licensing arrangements. This document also observed at p 57 that:

[…] the ACCC considers that while the Copyright Tribunal constrains APRA to some extent, it is far from completely constrained by the Copyright Tribunal in its ability to set prices, to extract monopoly rents from users, and offer licences on terms which foreclose copyright owners and users exploring ways of dealing with each other, other than through APRA.

433    Dr Eisenach considered that the parties to the APRA AMCOS–CRA Agreement had “reasonably equal bargaining power”, on the bases that both parties were near monopolies and both had access to judicial oversight via the Tribunal. Dr Eisenach also noted that there were benefits in collecting societies such as the efficiencies of a blanket licence. However, Dr Eisenach accepted that direct licensing of the radio stations by the record labels did not appear to be a viable or practical alternative, and after being shown the above remarks of the ACCC, he agreed that APRA had substantial market power in relation to its dealings with users like CRA, and that the Tribunal’s ability to act as a restraint on that power was limited by the cost and time involved in a referral.

434    The Tribunal in Simulcast 1 did not suggest that the rate under the APRA AMCOS–CRA Agreement was affected by an exercise of market power on the part of APRA, and did not apply any discount to account for an exercise of market power. PPCA contends any finding of market power on the part of APRA would be inconsistent with the reasoning in Simulcast 1 at [24]–[25], [44] in relation to precisely the same benchmark agreement, where no such adjustment was made.

435    Relevantly, in Simulcast 1, the following was said at [222]–[223]:

We do not consider the inference in para 331 of CRA’s submissions to be reasonably open. As to para 332, this is a choice made by radio stations and we do not see it as material to any difference in value between the musical work right and the sound recording right. In respect of para 330, the evidence Ms McGregor gave was limited. She said only that PPCA’s repertoire was limited to protected sound recordings, but this is not the case for simulcasts (in contrast to the broadcast right). She said also that the musical works right extends to public performances of the musical work, but we cannot see this fact as material. PPCA submitted, and it was not disputed that, “PPCA had about 1581 member licensors covering a vast recorded repertoire. They include the majors Sony Music, Universal and Warner and around 21,000 licensor labels”.

The total value which Dr Epstein and Mr Samuel reached for the sound recording right is substantially below the total value of the musical works right. It could be expected that the evidence would disclose some rational reason for the difference. The evidence discloses nothing but the 1% cap. It does not disclose any other reason why the sound recording right would be of any less value than the musical works right. Indeed, based on Mr Massarsky’s evidence, it might be expected that the sound recording right would be worth more than the musical works right. Other evidence dealt with in more detail below, for example, equivalent rates in Canada, New Zealand and the UK, support the view that there is no material difference between the value of the two rights.

436    APRA grants licences to individual radio stations, although CRA negotiates with APRA on behalf of those stations.

437    Dr Reitman noted the difficulty of moving from a market without a statutory cap to one with a cap in place.

438    Ms Small gave evidence that CRA paid approximately $30 million in APRA royalties for the 2022–23 financial year. The applicable percentage-of-revenue rates vary according to the proportion of music used by each radio station. CRA submits that the sound recording copyright regime has three unique aspects that make the broadcast right distinct from other rights, such as musical or literary works, all of which are subject to copyright protection. CRA argues that these features make the broadcast right licensed by APRA inherently more valuable. PPCA accepts that the Tribunal should proceed on the basis that the sound recording right is “at least as valuable” as musical and literary works combined.

8.5.1    Relevant adjustments

439    In arriving at its proposed licence rate in its proposed scheme, PPCA has applied only the two agreed adjustments, using the adjustment figures adopted by Dr Eisenach.

8.5.1.1    The simulcast right

440    The Tribunal in Simulcast 2 concluded that the value of the simulcast right could be disaggregated from the value of the broadcast right based on the simulcast audience share over the life of the agreement, which it estimated at [69] to be 16%.

441    Dr Eisenach adopts the Tribunal’s figure of 16% and says that it is a straightforward exercise to calculate the fair market value of the sound recording broadcast right (before the adjustment for non-protected sound recordings) simply by subtracting the Tribunal-determined simulcast rates from the total APRA–CRA rates for each level of MUP. Dr Eisenach considers that the result represents a lower bound estimate for the appropriate (unadjusted) broadcast rate, for two reasons:

(a)    the sound recording right has a value at least equal to the musical works right: Simulcast 1 at [261], [332(6)(a)]; and

(b)    the simulcast royalty scheme is a hybrid one, where stations can choose whether to pay via a percentage of revenue rate, or a per-stream rate. Dr Eisenach assumed that those stations choosing to track streams in order to pay a per stream rate did so as the rate would be less than a percentage of revenue rate. Thus, if it were solely a percentage of revenue rate, the total amount received would be greater than under the hybrid model.

8.5.1.2    Protected works

442    Even if its interpretation of ‘live performance’ is rejected (as it previously has been), PPCA proposes a discount of no more than 20%, as it contends that is the value of the blanket licence.

443    In Gyms, the Tribunal observed the following at [32]:

The tribunal also takes into account that obtaining a PPCA licence largely overcomes the problem of deciding whether a record is protected. A licence provides access to the whole PPCA repertoire. In practical terms, the need to seek the consent of the owner of the copyright to use a particular track on a record for the purposes of a fitness class is taken away. If a record is not protected, no licence to use it is required. If it is protected, the PPCA licence will in practice remove the need to seek permission to use it. While not all protected records are covered by the PPCA licence, it is pertinent to a consideration of the value of the licence to a fitness provider that PPCA is not aware of an instance where a licensee has been called to account for using a record not covered by the PPCA licence. Neither did the respondents identify any such instance.

444    A blanket licence in practice removes the need for commercial radio stations to inquire into whether each sound recording they broadcast is a or not, and to seek a licence for the former in each instance. Given the complexity of such inquiries, PPCA submits that the blanket licence is of considerable value to the commercial radio broadcasters.

445    As discussed at [131]–[136] above, I consider that the proportion of protected works in the PPCA repertoire is around 65%.

8.5.1.3    The 1% cap

446    Dr Eisenach noted that for the 382 CRA Member stations, [REDACTED] of them had MUPs above [REDACTED] and thus would pay the capped 1% rate, rather than the higher fair market value rate. He further noted that the average MUP across all stations is [REDACTED] which was [REDACTED] than the [REDACTED] MUP at which the 1% cap was imposed. On that basis, Dr Eisenach considered that the shortfall between the total royalties paid under the PPCA Proposed Scheme and the fair market value of the PPCA–CRA broadcast license as indicated by the APRA AMCOS–CRA benchmark would be significant.

447    This demonstrates why it is unrealistic to pretend the 1% cap does not exist when working out a so-called “fair market value”, only to add it back in afterwards. The 1% cap has always shaped how the parties negotiate, what they think is possible, and the rates that have actually been paid. Ignoring it for valuation purposes creates a market that does not resemble the real one, and risks producing a number that is detached from commercial reality.

8.5.1.4    Other adjustments suggested by Dr Reitman

448    As I do not consider that the APRA AMCOS–CRA Agreement is an appropriate benchmark for the reasons discussed above, I will only briefly mention the additional adjustments that Dr Reitman considered were required if the APRA AMCOS–CRA Agreement was to be used as a benchmark.

8.5.1.4.1    Market power

449    The proper notional bargaining framework for reasonable rates is one where neither the collective nor the user bargains as a monopolist, but instead it assumes some degree of competition between rightsholders and between licensees. However, the APRA license reflects APRA’s monopoly power as the exclusive licensing agent for musical works broadcast rights. As such, Dr Reitman considered that an adjustment was required for a proper notional bargain with competition between record companies and radio stations. To that end, Dr Reitman used a bargaining model to estimate the magnitude of this adjustment, resulting in an adjustment of between roughly 43% and 56%.

450    To the contrary, PPCA submits that such an adjustment would not be consistent with Tribunal precedent and overlooks the fact that in the Simulcast Decisions, the Tribunal accepted the APRA AMCOS–CRA Agreement as a benchmark reflecting competition: Simulcast 1 at [224]. PPCA maintains that CRA produces no evidence to suggest that the APRA AMCOS–CRA Agreement was anything other than an arms-length transaction. Moreover, PPCA contends that Dr Reitman has approached this adjustment with a fundamental misunderstanding of the Copyright Act in that he suggests that musical works are not subject to a statutory licence, which is incorrect.

8.5.1.4.2    Reproduction right

451    It was an agreed fact that the reproduction right is required for radio programs. Dr Reitman applies a downward adjustment of 8.5% to account for reproduction rights licensed by AMCOS, based on the proportion of the total licence fee paid to AMCOS for radio and television.

452    CRA contends that this adjustment is supported by the fact that APRA and AMCOS distribute 6% of revenues from commercial and public radio to mechanical copyright owners. Although that allocation reflects an agreement between the two collecting societies, CRA submits that it provides a reasonable indication of the attribution they consider appropriate for AMCOS rights, particularly given their respective obligations to maximise distributions for their members. CRA argues that it would be illogical for APRA to agree to allocate a greater proportion of revenue to AMCOS members than the value of the AMCOS rights would justify.

453    PPCA, on the other hand, submits that the adjustment is unreliable and materially overstated. The figure is derived from revenue reported by APRA and AMCOS across both television and radio, and for commercial and non-commercial radio, without any evidence of the relative contribution of commercial radio to those revenues. It also does not differentiate between AMCOS revenue for reproduction licences and for production music licences. PPCA contends that, in these circumstances, the figure provides no reliable basis for valuing the reproduction right utilised by commercial radio broadcasters over and above the ephemeral licence.

8.5.1.4.3    Webcasting rights

454    Dr Reitman considers a downward adjustment for webcasting rights included in APRA AMCOS–CRA Agreement is appropriate but unquantifiable.

455    In order to form a view as to the value of the webcasting rights, Dr Eisenach was provided with PPCA licenses with SCA and Nova for separate sound recording webcasting rights, was instructed to assume that the corresponding APRA rights are covered by the APRA AMCOS –CRA Agreement. The fees paid under those licenses accounted for just [REDACTED] of total PPCA fees paid by the commercial radio industry in the 2023 financial year. Accordingly, Dr Eisenach concluded that no adjustment to the APRA AMCOS–CRA benchmark is necessary to account for the sound recording webcasting rights because the value of those rights to CRA Members is not economically material

456    CRA contends that Dr Eisenach’s approach of comparing the webcasting fees to the total fees paid to PPCA by the commercial radio industry is “illogical” and inconsistent with PPCA’s own approach. PPCA has negotiated a licence fee for webcasts by radio stations that is highly confidential, but well above [REDACTED] of webcasting revenue.

457    Dr Reitman notes that the question is what value the webcasting right was assigned by the parties when the APRA AMCOS–CRA Agreement was being negotiated, when they did not know how much webcasting would occur. Any adjustment is necessarily imprecise, but Dr Reitman says it makes little sense to assume APRA gave the right to webcast away for no value.

8.6    Consideration of preferred benchmark

458    I consider that the PPCA–CRA Agreement is the more comparable benchmark of the two agreements put forward by the parties and considered by the experts.

459    The PPCA–CRA Agreement incorporates the constraints that form part of the relevant circumstances for the s 154(4) consideration in this case:

(a)    the same parties;

(b)    the same rights;

(c)    the same limitation of the repertoire to protected works; and

(d)    the statutory cap and compulsory licence under s 109.

460    I agree with Dr Reitman’s observation, that as the PPCA–CRA Agreement was entered into in a market that has the 1% cap makes it preferable as a comparable benchmark. No adjustment is required to account for its effect, to account for a proportion of unprotected works, or to discount other rights. Each of those adjustments are required for the APRA AMCOS–CRA Agreement, and each adjustment required takes that agreement further away from being a comparable benchmark.

461    Further support for the PPCA–CRA Agreement as the more comparable agreement, is the fact that it was negotiated in light of the decision in WEA Records wherein the Tribunal sought to determine a reasonable and equitable remuneration for the sound recording broadcast right, and assessed that as 0.45% of the gross earnings of 2MMM. There were no prior Tribunal decisions subject matter which could have been followed in Simulcast 1, Gyms, and Nightclubs.

462    Having found that the PPCA–CRA Agreement is the more favourable benchmark, it follows that the CRA Proposed Scheme should be preferred to the PPCA Proposed Scheme. Its structure more closely reflects the arrangements that have governed the parties’ relationship since the WEA Records era and is, in my view, more closely aligned with the rights presently in issue, rather than those considered in the Simulcast Proceedings. This conclusion provides the proper foundation/disposes of the parties’ competing positions on the appropriate form of the scheme for determining the remaining matters, namely the non-price terms of the licence and the appropriate licence fee rate.

9.    Non-price terms

463    CRA notes that if the PPCA Proposed Scheme is adopted, there are a number of non-price terms which it considers require amendment, and which should be able to be resolved by the parties. The non-price terms disputed by CRA were identified in a note provided by CRA on the second day of the hearing.

464    I have not adopted the PPCA Proposed Scheme. In the next section, I record the parties’ positions on each of the disputed non-price terms. Following my designation of the appropriate licence scheme and rate, the parties should be able to resolve any outstanding non-price terms.

9.1    Clause 5 – variations to the catalogue of PPCA Sound Recordings

465    PPCA contends that the purpose of sub-cls 5.1 and 5.2 is particularly relevant in situations where the ownership or control of a particular record label changes from a person who is a PPCA Licensor to one who is not. In those circumstances, sound recordings released by that label will no longer be subject to an input agreement with PPCA and PPCA will no longer have the right to license those sound recordings. It is not possible for PPCA to provide notice of or delay the withdrawal of recordings that PPCA no longer has the right to license.

466    PPCA submits that in all other circumstances, sub-cl 13.1 of PPCA’s Input Agreements ensures that it retains its licence for at least 90 days after termination, or even longer depending on when the termination notice is given. Accordingly, the obligation on PPCA in sub-cl 5.2 to update the relevant list on the PPCA website “as soon as practicable” provides sufficient notice to broadcasters of the removal of any sound recordings of particular record labels or licensors from the scope of the licence.

467    CRA submits that PPCA should not permitted to unilaterally withdraw sound recordings from the ambit of the licence during its term., with immediate effect and without any prior notice to licence holders.

468    In CRA’s view, this would cause obvious difficulties for the businesses of its members, which are compounded by the fact that the PPCA Proposed Scheme proposes that the withdrawal take immediate effect, and be notified only by publication on PPCA’s website. By CRA’s example, under the PPCA Proposed Scheme, it would be possible for the sound recordings of one of the Majors to be excluded from the scope of the licence immediately, without CRA or its members being notified at all. CRA Members would be forced to monitor PPCA’s website religiously and compare the lengthy lists of licensors. But even that would not tell them when they ceased to hold a licence for the works, because proposed cl 5.2 says the withdrawal takes effect on the date PPCA is notified of the withdrawal by its members. That date is unknowable to CRA. CRA posits that it will then be forced to negotiate with the withdrawing member with a metaphoric gun to its head: accept the price offered by the label, or immediately stop playing that label’s sound recordings.

469    A similar term dealing with the withdrawal of licensed works during the terms of the licence was considered in Isentia and found to be unreasonable: see [858]–[861], in particular [859]. The fee and other terms of the licence represent a total commercial bargain, the value of which, at the moment in time when it is struct, rests on the scope of the rights granted and the way in which those rights might be exercised once granted. The Full Court held on review that the limitation of CAL’s mandate and power to grant a licence did not bind the Tribunal , notwithstanding the terms of the contractual arrangements between the collecting society and its members: Copyright Agency Ltd v Isentia Pty Ltd (2022) 169 IPR 216 at [119]–[155] (as to the Tribunal’s power), [156]–[162] (challenge to conclusions as to unreasonableness failed).

9.2    Clauses 6.2, 6.3, 6.4 and 6.5 – tax invoices

470    These clauses in the PPCA Proposed Scheme adopt an approach of individualised licensing, consistent with the Tribunal’s determination in Simulcast 1 that the scheme in that proceeding should operate between PPCA and each radio station.

471    PPCA maintains that the various provisions under cl 6 are necessary to give effect to this individualised licensing model, in which PPCA collects payments from each broadcaster either directly or through CRA as the broadcaster’s agent. Sub-cls 6.2 and 6.3 provide flexibility for broadcasters that do not nominate CRA as their agent, as well as for commercial broadcasters that may not be CRA Members. Sub-clause 6.4 accommodates broadcasters that do nominate CRA as their agent. Similar provisions appear in sub-cls 7.2, 7.3, 7.4 and 7.6 of the scheme in the Simulcast Proceedings (the Simulcast Scheme), which has operated since 2016.

472    In CRA’s view, invoicing should be dealt with as part of pricing, with CRA acting as agent for broadcasters. PPCA responds that this position does not demonstrate that the invoicing approach under these sub-clauses is impractical or burdensome, nor is there evidence to that effect. PPCA argues that amending these provisions to assume that CRA will always act as agent would be inappropriate, inconsistent with the Tribunal’s reasoning in Simulcast 1, and would create unnecessary divergence between the invoicing requirements of the Simulcast Scheme and the broadcast scheme.

9.3    Clause 2 – term, and Clause 11 – termination

473    PPCA assumes that CRA no longer takes issue with the expiration date of the Initial Term under cl 2.2, being 30 June 2026, given that CRA’s amended s 152 application now contemplates the same expiry. PPCA considers this to be an appropriate term for any scheme determined by the Tribunal.

474    As to termination, PPCA submits that nothing in cl 11 impacts business certainty during the Initial Term. In summary:

475    Clause 11.2 applies only where there is a significant change to the statutory framework (namely, removal of the 1% cap), which would be well-publicised, foreseeable, and of such significance that the parties should not be bound by a pre-existing scheme after that change. PPCA says there are sound public-policy reasons for including such a clause, and notes that CRA’s expert, Dr Reitman, considered such a provision sensible and uncontroversial.

476    Sub-clauses 11.3(a) and (b) apply only in cases of default, and in PPCA’s submissions, it understands CRA does not object to these.

477    Sub-clause 11.3(c) makes explicit that a station’s infringement of PPCA’s (or its licensors’) IP rights under the scheme would constitute a material breach justifying termination. PPCA notes that this is uncontroversial and mirrors the Simulcast Scheme at cl 12.4(c).

478    Sub-clauses 11.3(d) and (e) apply only where either PPCA or the broadcaster becomes unable to continue its relevant activity (licensing or broadcasting).

479    Sub-clause 11.3(f), like cl 11.2, applies only where there is a significant legislative change (for example, addition of the United States to Schedule 3 of the CIP Regulations). PPCA says such a change would be well-signalled and poses no risk to business certainty.

480    CRA, by contrast, contends that the agreement should run beyond 30 June 2026, given the time and expense associated with licence disputes. It notes that this reference has already been on foot for two years. CRA submits that it is unclear whether PPCA intends the term to commence from the reference itself, which would cause the initial term to expire less than a year after the hearing. CRA maintains that termination should be limited to usual events of default, to ensure certainty for broadcasters.

9.4    Clause 8 – reporting and recordkeeping

481    PPCA submits that the requirements in cl 8 are necessary and appropriate to ensure that licence fees accurately reflect each licensee’s actual use of sound recordings. These provisions also allow for proper allocation of royalties corresponding to those broadcasts.

482    Ms Small gave unchallenged evidence that reporting under cl 8 is “critical to PPCA’s effective accounting and administration of the commercial radio broadcast licence” and would not impose any undue burden on licensees. CRA advanced no evidence to the contrary. Ms Young confirmed that CRA already provides MUP data to the Auditor for the purpose of the PPCA Industry Agreement. Clause 8 merely requires that this information also be provided to PPCA.

483    Similarly, PPCA notes that CRA Members already report the songs broadcast by their stations to APRA, meaning that music-use reports are readily available or easily generated. Neither Ms Young nor any of CRA’s network witnesses gave evidence suggesting that such reporting would be unduly burdensome. PPCA contends that including these straightforward and conventional reporting requirements is reasonable.

484    CRA, in resisting inclusion of this clause, submits that any reporting under a new scheme (whether for music use or licence-fee calculation) should replicate the arrangements under the longstanding PPCA–CRA Agreement. CRA argues that there is no need for additional or duplicative reporting requirements. It further submits that no weight should be placed on Ms Small’s affidavit, which contains broad and conclusionary assertions from a person without direct experience in radio.

9.5    Clause 9 – inspections

485    PPCA seeks the right to inspect records for the purpose of assessing reports and statements, through a nominated third-party representative. Ms Small gave unchallenged evidence that the right under cl 9 is appropriate to confirm that a licensee’s use of PPCA Sound Recordings and the licence fees paid in respect of that use are being correctly assessed.

486    PPCA also notes that CRA has previously agreed to similar inspection rights, including in the 1999 APRA Broadcast Agreement (sub-cl 8.2) and the APRA AMCOS–CRA Agreement (cl 7), neither of which imposes arbitrary limits on the number of inspections. PPCA further points out that no evidence was led to suggest that the inspection rights under cl 9 would be unduly onerous for CRA or its members.

487    CRA maintains, however, that the right contemplated by cl 9 is too burdensome, including because it contains no limit on the number of inspections. CRA argues that no evidence is needed to make the obvious point that such a provision is ripe for disruption. Inspection rights, it notes, have not formed part of the PPCA–CRA Agreement or the decades of dealings between the parties, and are not required now. As to PPCA’s reliance on its arrangements with APRA AMCOS, CRA submits that there is no evidence before the Tribunal explaining why those non-price terms exist, and that PPCA raised the point for the first time in closing.

10.    Other relevant matters

10.1    International rates

488    PPCA points to the remuneration for the broadcast right in other countries, in particular United Kingdom, New Zealand and Canada, and submits that 0.4% of gross revenue is low relative to other countries with a broadcast right. Canada, the country with the next lowest rate, has an upper bound of their rate at 2.10%, the rate for New Zealand sits at 3% and the United Kingdom at 5%.

489    The Tribunal in Simulcast 1 did not place great weight on relative international rates, observing at [201] “for what it is worth, Dr Eisenach’s review resulted in the conclusion that 0.4% was the lowest rate paid”. The Tribunal acknowledged that it did not know the constraints applying in the other jurisdictions and noted the fact that no one could identify a country with a lower rate than Australia was of “some relevance”.

490    Dr Eisenach accepted that some of royalty rates in the other countries with higher rates also cover simulcasting rights and non-protected works. However, his evidence was that the magnitude of the differences between these rates and the Australian rate is sufficient that the differences in rates cannot likely be explained by differences in coverage. Dr Eisenach remained of the view that the low comparative rate of Australia is well below the rate that would emerge from market-based negotiations between a willing buyer and a willing seller in the absence of a binding exogenous constraint.

491    Of course it will be recalled that the United States has no broadcast right for sound recordings, so if it were included in the comparison tables, its rate would be lower than Australia at zero. The evidence also suggested that Japan had a lower rate than the current Australian rate.

492    The ACCC Guidelines note that licensing arrangements for comparable schemes in other jurisdictions may be an appropriate benchmark in some circumstances. However, the Guidelines recommend some caution when using rates in other jurisdictions. There may be differences between the nature of the copyright material that is being licensed, the statutory scheme pursuant to which it is licenced, its use and the way in which remuneration is determined will need to be taken into account. The Guidelines note that in some jurisdictions there are multiple collecting societies for the same types of works, and that rates may be different in jurisdictions where there is competition between collecting societies, than in jurisdictions where the collecting society has market power.

493    The Tribunal in WEA Records said that it derived some assistance from the United Kingdom and New Zealand legislation and the situation in those countries, but considered that ultimately the questions for decision fall for determination in light of the particular requirements of ss 152 and 154.

494    No submissions were made as to the state of the relevant law in the United Kingdom, Canada or New Zealand and whether there was an equivalent statutory licensing regime, or any applicable statutory cap. I do not know the constraints applying in the other jurisdictions, nor whether there is competition between the collecting societies in those countries. The relative position of the Australian rate relative to the rates in other jurisdictions without a statutory cap provides little useful information in assessing what is a reasonable rate in the circumstances which pertain to the sound recording broadcast right in Australia.

10.2    Capacity to pay

495    PPCA submits that CRA Members have the capacity to pay an increased licence fee. PPCA focussed on the two most highly paid Sydney on air presenters, and submitted that their annual remuneration was [REDACTED] of the annual CRA Member fee paid to PPCA. PPCA also noted that not one regional SCA station paid more to PPCA than the typical award rate for individual talent on regional stations. In most cases, the yearly award rate for individual talent ($58,500) was considerably higher than the fees paid to PPCA by each of the regional SCA stations for the right to broadcast all sound recordings for the entire year.

10.3    Inflation and operating costs generally have increased

496    PPCA contends that a general increase in the rate is supported by the fact that all other costs of the CRA Member broadcasters have been increasing. In Simulcast 1, the Tribunal observed at [237] there had been an increase in the APRA–CRA rates by 7.6% over a 10-year period (notwithstanding it being a percentage of revenue). PPCA submitted that increase in the APRA–CRA rate is a reasonable increase to a higher and more reasonable rate, which likely reflected the increased use by CRA Members of music pursuant to the licence, as well as other factors such as increases in the APRA Repertoire.

497    To the extent that the increased volume of use of music or size of the PPCA repertoire warranted an increase in the rate, I have dealt with those above in the context of the adjustments to the comparable benchmarks.

11.    Conclusion

498    This referral does not concern the licensing of a new right (cf Simulcast 1), nor does it arise in the context of a transformative shift in the broadcasting environment of the kind considered in Foxtel. Rather, it concerns the broadcast right that has long been licensed under the PPCA–CRA Agreement, the latest iteration of which remains the most appropriate benchmark against which to assess the present licence fee.

499    As set out above, there have been several developments since the commencement of the PPCA–CRA Agreement that bear upon the value of the broadcast right. These include:

    the increase in the proportion of the PPCA repertoire consisting of protected works;

    the decline in the promotional effect of radio; and

    the increased volume of music being broadcast as a result of the advent of DAB+ stations.

500    Care must be taken not to double-count the impact of DAB+. While PPCA characterises DAB+ as a qualitatively new broadcasting model and CRA contends that no adjustment is warranted, I consider that only one adjustment is appropriate—namely, to reflect the increased volume of music now broadcast. At the time of the negotiations following WEA Records, DAB+ technology did not exist and its consequences for repertoire use were not contemplated.

501    Two discounts applied (or assumed) at the time of WEA Records are no longer justified. First, the promotional value of radio, which was acknowledged but unquantified in WEA Records, has plainly diminished since 2000. Secondly, the discount applied to reflect the then-lower proportion of protected works is no longer appropriate. As neither discount was quantified, their removal supports an upward adjustment to the rate.

502    Starting from the 0.4% rate reflected in the current PPCA–CRA Agreement, and 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. In my view, this represents a reasonable and proportionate revision.

503    Apart from the rate, I do not consider amendments to the broader scheme of the PPCA–CRA Agreement to be required. The only concern raised was the alleged lack of transparency in the allocation of fees between stations. However, the current agreement already provides for PPCA to be given each station’s internal allocation. There is no need for structural change; rather, that existing term should be fully implemented in practice.

504    In light of my conclusion that the appropriate licence rate is 0.55%, the parties should now confer with a view to preparing a revised proposed scheme, including non-price terms, that gives effect to this rate. The formulation of that scheme should take account of the observations made in these reasons, including those concerning transparency and the operation of the existing agreement. The revised scheme should then be submitted to the Tribunal for consideration.

Associate:

Dated:    10 December 2025