FAIR PLAY Part One
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PART ONE : The ambiguity of One Music’s ‘Copying Licence.”
Australian Background Providers of Music (BPMs) are calling for a ‘level playing field,’ copyright clarity and fair competition for music streaming platforms in public performance.
Revenue from playing live, songwriting and recordings are what sustain the livelihoods of your favourite bands and artists. As Australian venues open back up to audiences post-COVID19 much rightful attention is being placed on getting artists back on stages in live music venues across the country.
When an artist plays live and earns an income from ticket sales that is not the only music you hear in venues. As important to earning a living from live shows is the income generated from public performance of Australian artists songs and recordings.
APRA’s June 2019 Annual Financial Report listed consolidated revenue from public performance at AUD$93,645,000. This total ‘bucket’ of money includes money APRA collect from licences that allow for songs to be played in public (not including televsion, radio or digital). PPCA’s June 2019 Annual Report declared AUD$56,848,843 revenue from licence fees for the public performance of recordings. That combined revenue of AUD$150+ million is collected through the joint initiative One Music Australia (OMA). A one stop shop where a “OneMusic licence gives permission to play music in business, while supporting the people that make the music.”
AUD $150m+ is a lot of money extracted from the Australian economy to be returned rightfully to the owners of songs and recordings. How much of that is returned to Australian artists is unclear. Research shows that up to “90% of revenue going to 10% of rightsholders and between 20–50% of all performing rights data being inaccurate, there is much room for improving these systems.” (Mogis 2020,6)
Licenced Background Music Suppliers
Background Providers of Music (BPMs) are legitimate Australian businesses, and employers, that navigate the complex landscape of copyright and music rights licencing whilst investing in innovation and technology. Not often ‘visible’ in wider music industry advocacy these businesses invest in returning revenue to thousands of Australian artists’ songs and recordings when played in public — gyms, restaurants, retail, nightclubs, bars and pre/post show and during the breaks at music venues.
Technological advances over the past 15 years have afforded the opportunity for music distribution to evolve — from downloading a MP3 music file to the creation of platform infrastructure, resulting in the successful rise of consumer music streaming services, Spotify, Apple Music and YouTube. The internet has also created an innovation opportunity for niche music streaming platforms to connect business with music in public spaces — commercial music streaming services.
These commercial music streaming services, BPMs, hold a unique place in the music industry value chain — their businesses input licenced music into their platforms, creating a product whereby businesses pay to legitimately stream music for public performance of songs and recordings. At their core, is increasing the value of music in public performance through deeper customer engagement with apps like CrowdDJ, enhancing a venue’s atmosphere and increasing patron dwell time — all honouring the power and value of music.
The successful, cooperative market culture of the BPMs is becoming a threat to “the incumbents of the industrial information economy.” (Benkler 2006, 2) In the Australian music industry, these incumbents are — APRA AMCOS, PPCA and their joint ‘initiative’ One Music Australia (OMA).
As the BPMs strive to reboot and rebuild their businesses post-COVID19 there is an urgent need for certainty with regard to the ambiguous practice of One Music Australia’s “copying licence.” The BPMs are calling for a ‘level playing field’ with regard to the market power of OMA and the impact on the supply of commercial music streaming for public performance. A ‘level playing field’ would enable fair competition between online music services and increased revenue potential for Australian rights holders.
Public performance rights are complex and often obscured in the context of the interests of both rights holders and market participants.
To understand the complex area of public performance rights a quick copyright 101 is required for the novice.
Copyright History— A Quick Guide
History shows “copyright aims not at promoting innovation, but rather creativity.” (Malevanny 2019, 322)
International copyright law dates to the 1886 Berne Convention (last amended in 1979). The Australian Copyright Act 1968 came into force on 1 May 1969. The Copyright Tribunal was established under the Copyright Act 1968 and has certain powers relating to royalties and licencing, and its operational support is forthcoming from the Federal Court of Australia.
The Australian government established a Copyright Law Review Committee in 1983 to advise on copyright reform — it was disbanded in 2005.
The Copyright Amendment Act 2006 made changes required by the US-Australia Free Trade Agreement. It closely modelled the US Digital Millennium Copyright Act and was designed to prevent technology from circumventing the rights of copyright owners. It is notable also for amending the law to allow ‘format shifting’ for consumers ie. to make copies of their CDs onto portable music players.
The 2012 Convergence Review considered the emerging problems of global platforms and digital rights; however, no action was taken regarding copyright.
In 2019, the UK Intellectual Property Office identified an opportunity for urgent change for the full potential of the digital music economy to be realised — the most significant barrier to the change required is to the “incumbents and inherited systems” of the 20th Century music industry. (p11)
APRA’s self-declared objectives in their 2019 Annual Financial Report were to contribute to public policy that affects their members and licensees. APRA’s board of directors declared their intention to work with both sides of government to focus on the ‘creator’s rights of innovation, economic and cultural wealth’ and to participate in the ‘review of copyright law as it applies to the ‘Digital Economy’.(6)
The first area requiring urgent clarity concerns what is known as the mechanical or reproduction copyright.
Mechanical (Reproduction) Copyright
A right often overlooked by the writers (Mogis 2020, 29) the ‘mechanical’ or ‘reproduction’ right — is when songwriters and composers exclusively assign the right to have their songs and compositions reproduced or copied.
When members assign their rights to APRA AMCOS they agree to:
· have their music used for a film’s soundtrack,
· have their music copied onto a CD, DVD or reproduced online for sale,
· have their lyrics and music reproduced as sheet music
ARIA sub-licence reproductions only for sound recordings represented by the limitations of their members catalogues. [3] These mechanical rights though do not extend by proxy to the rights for public performance of the song and recording. (Schoonmaker 2020)
All BPMs are required to have both mechanical (reproduction) rights licenced to reproduce in digital format from AMCOS and for ARIA sound recordings. BPMs pay their mechanical royalties as a % of revenue to record companies and a fixed price per venue to AMCOS.
Spotify, Apple Music, YouTube include payment of the ‘mechanical’ royalty at their end when ingesting a track into their platform — it is certainly ambiguous in copyright law if a further ‘mechanical copy’ is being made when the platform then streams the track.
Since the Berne Convention of 1886 (last amended in 1979) the idea of a ‘mechanical reproduction’ has been accepted as meaning a permanent copy and questions exist if this covers “temporary or transient copies typically made in the course of streaming.” (Malevanny 2019, 15)
Contested viewpoints in international copyright law include that the concept of reproduction “in any manner or form’ is abstract enough to include streaming” (UNESCO 1982) althought there is no consensus if Art. P(1) of the Berne Convention covers temporary copying of works into a computer memory. The recommendations from WIPO in 1982 have no binding power, were conceived long before online streaming existed as a viable form of distribution, nor consideration of public performance of a transient bit of code.
Malvenny (2019) considered all the evidence and concluded it remains unclear if, when streaming music, there is enough stability to ensure a copy of the work that is subject to the user’s control. (16) He also contends that with the advent of mobile phone, tablet and wireless modes of communicating music for public performance the approach taken by the Berne Convention is ‘hopelessly outdated.’ (18)
All consumer and commercial music streaming platforms are required to have mechanical licences for songs and recordings. (Cooke 2017)
A separate license from OMA is required directly from APRA AMCOS for digital and online music subscription services that includes the broadcast of music on consumer streaming platforms, such as Spotify, Apple Music and YouTube.[2] Note that this income collected for members is NOT included with public performance revenue but consolidated with revenue from broadcast with televsion, radio and digital.
“83% of businesses are streaming a personal music service for public use — and it’s costing the music industry $2.65bn a year.” Arwa Mahdawi, The Guardian
What’s the difference between personal/consumer and business/commercial streaming licences?
“Business licences give music creators fair, and typically much higher, compensation when their music is used to benefit commercial activity. Consumer streaming services don’t include those rights and that’s why they aren’t allowed to be used in places of business.” (Nielson Music Report 2018)
Background music companies are niche companies with licences for the commercial streaming of audio and video of songs and recordings in public performance. They could be considered the ‘indies’ of music streaming platforms when compared with the dominant market products of the consumer streaming services ie Spotify, Apple Music, YouTube
APRA AMCOS endorse 31 licenced background music suppliers, businesses founded on respecting the value of music creations whilst building a market that supports the compliance of a possible 145,000 Australian and New Zealand locations that play music in public spaces. [1]
An end-user license agreement (EULA) or terms of service (ToS) are used to self-govern, regulate and articulate any platform’s explicit rules. They inform a contractual agreement between the platform and the user and although often left unread, streaming services ToS include clauses that prohibit the use of the platform in commercial settings.
It is the OMA practice of issuing a further, second ‘copying licence’ that encourages businesses to breach the ToS that is highly ambiguous, highly suspect and anti-competitive.
One Music’s “Copying Licence”
The introduction of the One Music ‘copying licence’ in 2019 requires interrogation on two fronts. Firstly, the ambiguity of what constitutes a mechanical reproduction or ‘copy’ of a musical work. Secondly, the resulting anti-competitive market behaviour of issuing a ‘copying licence’ for public performance.
Although OMA can license a consumer service for businesses, they cannot license the service itself. If a business accepts this risk, OMA are willing to offer a license for the music they represent. The impact of this license poses a real legal risk to any business.
“Our approach with applying a copying fee to digital music service users in a commercial setting is exactly the same approach adopted when CDs came to market. It is about covering all rights in all settings.” https://onemusic.com.au/faqs/#1683
A distinct ‘grey area’ is being exploited here by OMA with this statement, given the lack of certainty when transferring a principle from CD technology to digital streaming. On the surface it may appear sensible, however it is not logical nor fit for purpose and is inherently an ambiguous and uncompetitive practice.
APRA argued in their submission to the Department of Communication and the Arts Copyright Modernisation Review in 2018 “Australian copyright law is clear. If a person does or authorises the doing of an act comprised in the copyright without the licence of the owner of the copyright…that will be an infringing act.” (Carter 2018)
Usually copyright infringement would mean not having the required licence or permission to broadcast, use, adapt or alter copyrighted works. Therefore, OMA could argue they are required to licence the user so as not to infringe under the Copyright Act. BPMs could counter-argue that this practice is clearly an exploitation as the mechanical ‘copy’ happens at the point of ingestion into the platform and not at the point of the end user ‘doing’ the streaming. A clear meaning of ‘copying’ cannot be determined in this context.
OMA are collecting public performance revenue from thousands of Australian small businesses whilst also encouraging black-market streaming in Australian venues.
Edit: 29/7/20 For another great piece on this subject and the implications for when a business owner/licencee takes out this licence they could in fact be playing tracks that are covered under APRAs catalogue but NOT under the ARIA/PPCA’s and as a result are more than likely infringing copyright as a result of this licence >>> The Elephant in the Room : Part 2.
Anti-Competitive Behaviour
A key finding of the ACCC Digital Platform Inquiry is in regard to the “impact of regulatory imbalance on competition.” (189)
OMA’s granting of ambiguous licences for businesses to use Spotify, Apple Music and YouTube in public performance grants themselves a distinct competitive advantage, therefore engaging in anti-competitive behaviour with the BPMs.
As an ‘inititiave’ of APRA AMCOS, OMA are granted an ACCC government sanctioned monopoly and yet compete with BPMs by licencing businesses to use consumer platforms as outlined above.
Although the perception may be that Spotify, Apple Music and YouTube belong in the same market as BPMs — it is most definitely not a ‘level playing field.’
OMA’s ‘copying licence’ affords global consumer streaming platforms the ability to compete in a market they are unlicensed to participate in. The Terms and Conditions of consumer streaming platforms clearly state this.
By issuing a ‘copying licence’ OMA is exploiting the market to the detriment of the common good — they are encouraging a ‘norm’ for Australian business owners to ‘choose’ to be uncompliant and trade in black-market music.
OMA justifies the ‘copying licence’ as a mechanical royalty to ‘copy’ music at $400 per year. The royalty obtained per public performance licensee is comparable. However, as OMA has no cost of sales or investment in technology it is effectively undercutting the BPMs.
Should this practice be allowed to continue unabated BPMs will be disincentivised to participate in the Australian market.
A regulatory approach is required to ensure both groups have an equal chance of market entry to compete on equal terms and level the playing field.
Part 2 Governance and Scrutiny of Australian PROs is HERE
Part 3 Play Data, Royalty Distribution and Equity is HERE.
[1] Figures quoted from APRA AMCOS Submission 28 to the Senate Inquiry 2019
[2] Further detail available from https://apraamcos.com.au/music-customers/licence-types/ and https://apraamcos.com.au/music-customers/licence-types/digital-and-online-music/subscription-funded/
[3] ARIA Sound Recordings means the sound recordings controlled by ARIA listed which are listed on the ARIA website, the rights for which ARIA has authorised OneMusic Australia to administer. https://onemusic.com.au/about/. ARIA membership costs $550 and is not inclusive of all Australian labels, independent or First Nations artists. (Mogis 2020, 98)
REFERENCES
ACCC. 2019. Digital Platforms Inquiry Final Report, Sydney: ACCC. June. Chapter 4 “Digital Platforms and Media — Regulatory Frameworks”, 165–192.
Benkler, Yochai. 2006. The wealth of networks how social production transforms markets and freedom. Edited by ProQuest. New Haven Conn.: Yale University Press.
Carter, Jonathan. 2018. APRA AMCOS Copyright Modernisation Consultation Paper. July 5, 2018 Submitted to Copyright Law Section, Department of Communication and the Arts.
Cohen, Julie E. 2017. “Law for the Platform Economy.(Future-Proofing Law: From rDNA to Robots).” U.C. Davis Law Review 51 (1): 204.
Cooke, Chris. 2017. “Spotify questions whether mechanical royalties are even due on a stream.” Complete Music Update. .
Intellectual Property Office. 2019. “Music 2025 the Music Data Dilemma: issues facing the music industry in improving data management.” UK : Ulster University
Flew, Terry. 2019. “The Platformized Internet Issues For Internet Law And Policy.” Journal of Internet Law 22 (11): 3–16.
Malevanny, Nikita. 2019. “Relevant Rights and Their Applicability to Online Music Uses.” In Online Music Distribution — How Much Exclusivity Is Needed?: A Study of International, European, German and U.S. Copyright Systems and Their Objectives. Edited by Josef Drexl and Reto M. Hilty. Vol. 12., 13–69. Berlin, Heidelberg: Springer Berlin Heidelberg.
— -. 2019. “Promoting a Level Playing Field Among Rightholders.” In Online Music Distribution — How Much Exclusivity Is Needed?: A Study of International, European, German and U.S. Copyright Systems and Their Objectives. Edited by Josef Drexl and Reto M. Hilty. Vol. 12., 317–339. Berlin, Heidelberg: Springer Berlin Heidelberg.
Mogis, Jay Dr. 2020. “Transparency, technology and trust: Music metrics and cultural distortion.” PhD diss., Queensland University of Technology.
Parliament of Australia. 2019. “Report Australian content on broadcast, radio and streaming services.” March 26, 2019.
Rethink Music. n.d. “Fair Music: Transparancy and payment flows in the music industry” Boston USA : Berklee ICE. .
Schoonmaker, Henry. 2020. “How Spotify Streams Turn Into Royalties “. Songtrust.
Vazquez, Ricardo R. Alerez. 2017. The music industry in the dawn if the 21st century Networking for a thriving music industry. The Netherlands : Kunnskapsverket.
Leanne de Souza is a Non-Executive Director of Nightlife Music, (her husband Tim de Souza, is a co-founder and programmer), a trustee of the Queensland Performing Arts Trust (QPAC) and co-founder of the Rock and Roll Writers Festival.
Her recent work included the role of Curatorial Advisor (Music) for the Museum of Brisbane’s “High Rotation”, a contract as a Researcher for the Brisbane City Council “30 Years of Riverstage.” Leanne was the 14th most influential person in the music industry for 2019. (Source: The Music, 7 March 2019)
Leanne is a life-member of Q Music, a Legacy Member donor to the Association of Artist Managers and an advocate for gender equity, cultural diversity and inclusion in the Australian music industry.
Twitter: @rebelbuzz
I pay my respects and acknowledge the Turrbal and Jagera/Yugera Peoples as the Traditional Owners of the lands where I work, study and live.
