IMAGE: “No Gaps or Awkward Silences” by Maurice Powell (2020)

PART TWO : Governance and Scrutiny of Australian PROs

Catch up on PART ONE: The ambiguity of One Music’s ‘Copying Licence.” here.

Governance is not the most exciting topic or perspective of the music sector. It would be much more fun to dance and talk about our favourite new songs, bands, get back to live gigs and discussing remixes! Stay with me, as more than ever in the traumatic post-COVID19 rebuild of the Australian Music Industry interrogation is now required.

The Governance Institute of Australia defines governance as:

“…the system by which an organisation is controlled and operates, and the mechanisms by which it, and its people, are held to account. Ethics, risk management, compliance and administration are all elements of governance.”

Governance extends to relationships between a company’s management, its board, its shareholders (or members) and other stakeholders. Poor control systems expose an organisation to the risk of unfairly benefiting one group of stakeholders over others. Other risks include poor decision-making to benefit executives at the expense of the best interests of members and increased exposure to regulatory and reputational harm.

By law the music industry’s powerful, ‘not for profit’ collection societies are required to be accountable and ethical in their dealings with all their stakeholders — artists, industry, licensees and government.

An enmeshed trio of Performing Rights Organisations (PROs) and their ‘initiatives’ — APRA AMCOS, ARIA PPCA and ONE MUSIC AUSTRALIA hold immense power and influence. Collectively, they have dominated the advocacy narrative and regulation of the music industry for decades. Yet, their core business function need them only to be an effective clearing houses for royalties.

It is indisputable that these organisations deliver a vital financial function for copyright protection, collection and distribution. Additionally, their advocacy, development programs and promotional work on behalf of their members songs and recordings fulfills a purpose. Unfortunately, as well-resourced, multi-million dollar organisations their influence with government and regulators is too commonly the only voice of the music industry at the table with government and their agencies.

It is vitally important that all actors in the music industry, and all levels of government intersecting with industry advocacy, realise that COLLECTION SOCIETIES are NOT THE MUSIC INDUSTRY.

Why PROs’ Governance and Practices Matter in 2020

The UK’s Intellectual Property Office (2019) Music 2025 research reported that the approach of incumbents in the music industry has created ‘hierarchies and friction, which are not suited to realise the full potential of the value in digital music.” (14). The report identified an urgent need for change if the potential of the digital music economy is to be realised and that the most significant barrier to change will be from the “incumbents and inherited systems” of the 20th Century music industry. (11)

Sparse research or evidence of transparent practices or governance in the music industry exists. (Mogis 2020, 73) On the public evidence available it is clear that Austraian PROs preference the status quo and supress calls for reform. PROs have also proved unwilling to embrace the data capability of public performance streaming platforms that could maximise economic and cultural returns to Australian content creators. (FAIR PLAY Part 3 Coming Soon “Play Data and Licensing Solutions”)

At this point, please know that this piece is written considering the institutional practices of enmeshed PROs.This is not a criticism of any individuals. Many dedicated, hardworking humans work in these organisations.

However, the boards and leaders of industry MUST interrogate their own knowledges and organisational practices if any meaningful reform, access to resources, equity and fairness or the (re)evolution of the music industry is ever to occur.

Enmeshed PROs

An issue for the whole music industry ecosystem concerns the demonstrable enmeshment of governance within the collection societies and their affiliated ‘initiatives.’ As at time of writing following is a synopsis of the current ‘state of play’ from the publicly available information :

Australian Copyright Council (ACC)

Founded in 1968 as an ‘independent’, non-profit peak body for Australia’s major copyright collection societies. They now advocate for content creators working in Australia’s creative industries and Australia’s major copyright collection societies. Their self-declared mission is to ‘support a creative Australia by promoting the benefit of copyright for the common good.’

As at June 2020 the Vice-Chair of the ACC is the CEO of APRA AMCOS Dean Ormston, the Treasurer is the General Manager of PPCA, Ms Lynne Small and the Chair, Ms Kate Haddock is known as the external legal counsel for APRA AMCOS and the author of multiple submissions to the ACCC on behalf of APRA AMCOS. [1]

The financial auditor of both the ACC and APRA AMCOS 2018–19 Annual Reports is Anthony Travers, Partner at KPMG. [2][3]

With representatives of APRA and PPCA on the ACC board it raises the question of a clear conflict of interest when those organisations own practices become anti-competitive and ambiguous. How does the ACC navigate accountablity for their own members?

Australian Performing Rights Association Ltd (APRA) and Australian Mechanical Owners Society Ltd (AMCOS)

APRA was established in 1926 to manage the performance and communication rights of its members. This covers music that is communicated or performed publicly including on radio, television, online, live gigs in pubs and clubs etc.

AMCOS was established in 1979 to manage “mechanical royalties”, that is, the reproduction or copying and storage of music in different formats.

Before 1997, APRA and AMCOS were two separate organisations and in 1997 they formed an alliance. Today APRA AMCOS covers all the rights and uses of music, for both local and international songs, for the benefit of music creators and music customers. When songwriters and publishers join APRA AMCOS they are signing the authority in their works over exclusively.

Current board members for APRA and AMCOS are here.

Australian government funded initiatives with activities beyond the scope of collecting royalties, both the Live Music Office and Sounds Australia have no independent boards, industry governance or oversight. Both are housed within APRA.

As an Australia Council 4 year funded organisaton 2021–2024, Sounds Australia (APRA) receive significant government funding.

Edit 25/6/20 — the Australian Government announce a $250m relief package for the arts and entertainment sector. Details here and here:

  • $35 million for the Australia Council for the Arts to support theatre, dance, circus, music and other organisations. Making APRA (a collection society) eligible to apply for relief funding.

Edit 3/8/20 — The NSW Government through Create NSWfunded Sounds Australia for multi-year organisational funding of “$160,000 over four years.” Details here.

Edit 29/10/20 — APRA unveiled their National Aboriginal and Torres Strait Islander Music Office (NATSIMO) strategic plan, outlining its mission and goals for NATSIMO to function as peak body for Aboriginal and Torres Strait Islander music creators. Stating “NATSIMO is an Indigenous-led initiative of music rights management organisation APRA AMCOS.” Therefore, APRA now have an ‘initiative’ that is touted as a ‘self-determined’ ‘peak body’ for Aboriginal and Torres Strait Islander ‘music’ that is governed by a white institution, that will also now be positioning itself to receive Indigenous funding from the Federal Government. . . Launch Details here.

Australian Recording Industry Association Limited (ARIA)

ARIA is the national industry association representing the interests of its more than 100 members, ranging from small “boutique” record labels typically run by 1–5 people, to medium size organisations and very large companies with international affiliates. ARIA’s primary objective is to advance the interests of the Australian record industry.

ARIA play an active role in protecting copyright and the fight against music piracy and provide, in certain cases, a reproduction licensing function on behalf of its members for various copyright users

ARIA is administered by a Board of Directors comprising senior executives from record companies, both large and small. Denis Handlin AO (Sony Music Entertainment), George Ash (Universal Music), Niko Nordstrom (Warner) and David Vodicka (Rubber) all serve on both ARIA and the PPCA boards.

CEO Dan Rosen, General Manager Lynne Small, Senior Marketing and Communications Manger Danny Yau and Corporate Counsel — Commercial Rohini Sivakumar are all shared across the activites of both ARIA and the PPCA.

CEO Dan Rosen, is a sitting board member of the federal government agency Creative Partnerships Australia.

EDIT 30/9/20 — Dan Rosen announces stepping down as Chief Executive of ARIA and PPCA to take up the role of President of Warner Music Australasia from January 2021. Dan Rosen is now a sitting a board member of both ARIA and PPCA.

EDIT 27/1/21- Annabelle Herd announced as new CEO of ARIA and PPCA.

Phonographic Performance Company of Australia (PPCA)

A non-profit organisation that provides licences to Australian businesses to play recorded music in public. The net fees are distributed to record labels and registered Australian artists who create the recordings.

Current board members of PPCA are here.

One Music Australia (OMA)

A joint ‘initiative’ between APRA AMCOS and PPCA to give businesses easy legal access to all their works, sound recordings and music videos.

OMA is not a separate organisation. There is no independent board and is governed by APRA AMCOS and ARIA PPCA. There is no public information available on staff or management.

Support Act

Charity organisation delivering crisis relief services to artists, crew and music workers as a result of ill health, injury, a mental health problem, or some other crisis that impacts on their ability to work in music.

Four of the twelve board positions are reserved for APRA AMCO, ARIA and PPCA. Current board members are here. PPCA’s Lynne Small is currently Company Secretary and Treasurer.

Music Rights Australia

Formerly, Music Industry Piracy Investigations (MIPI), MRA work within Australia to educate and lobby for the protection of copyright.

There is no separation of governance, as with One Music, in that they are speaking for the members of APRA AMCOS and ARIA PPCA. There is a steering committee that includes legal counsel from APRA, Mr Jonathan Carter.

Resolution Pathways

APRA and PPCA self-report disputes to the Code of Conduct review annually.

Resolution Pathways are contracted, and currently receive funding from APRA. They aspire to be ‘fair, independent and transparent” facilitators of an alternative dispute resolution (ADR) process between APRA AMCOS and music creators and users. Being funded by APRA they acknowledged in their ACCC submission dated May 14, 2019 that “the funding arrangement presents a challenge to true independence.” [4]

Since August 2016 the governance oversight has been by a ‘consultative committee’ that meets twice a year. There are no public minutes nor line of sight to industry or government of this committee’s specific activities.

It would be reasonable to question the company’s level of independence in advocacy and regulation matters.

“The pace of technological change needs to be matched by the pace of policy review” ACCC Digital Platform Inquiry Report (2019, 3)

As per FAIR PLAY Part One, the two pressing reforms called for by background music companies relate specifically to the ambiguity of One Music Australia’s (OMA) “copying licence” and the anti-competitive practice of encouraging black-market usage of consumer music streaming platforms, Spotify, Apple Music and YouTube, in public performance.

Scrutiny to Date

The 2019 ACCC Digital Platform Inquiry, the Productivity Commission, a Senate Inquiry and the Trienniel Review of the Code of Conduct for Copyright Collection Societies have all grappled with issues pertaining to the Australian music industry, copyright and collection societies.

Productivity Commission

In December 2016 the Productivity Commission released a report on Intellectual Property Arrangements. Recommendation 5.4 stated :

“The Australian Government should strengthen the governance and transparency arrangements of collection societies. In particular:

· The Australian Competition and Consumer Commission should undertake a review of the current Code, assessing its efficacy in balancing the interests of copyright collecting societies and licensees.

· The review should consider whether the current voluntary code represents best practice, contains sufficient monitoring and review mechanisms, and if the code should be mandatory for all collecting societies.”

APRA made a submission against this recommendation.

As at June 2020 the ACCC has not proceeded with this recommendation.

Senate Inquiry

In March 2019 a Senate Committee handed down its findings from an inquiry into the ‘Economic and cultural value of Australian content on broadcast, radio and streaming services.” Chapter 5 addresses the Australian Music Industry’s current state of operations. It noted that although the industry had found solace from piracy through the provision of consumer streaming services, it is still grappling with ‘ongoing challenges arising from the digital disruption of traditional media platforms.’ (65–89)

The report noted the absence of a ‘direct relationship between consumer streaming services and collecting societies such as APRA AMCOS for public performance’ and the resultant absence of play data having a ‘negative impact on revenue calculation and repatriation accuracy, to the detriment of artistic communities.” (65)

At 5.91 it explicitly states that “the use of unlicensed music providers for background music is eroding the price for background music providers, and creating a smaller market for such services.” (88) Testimony called for more government oversight and regulation to protect the background music industry and reward Australian artists directly when their content is used in public performance. (88)

Current Scrutiny

There is an ongoing need for the wider music industry, and external regulators, to understand the enmeshed relationships of PROs and demand accountability for their demonstrable lack of transparency and resistance to change. (Mogis, i-6)

There are three current instruments of scrutiny for Australian PROs’ practices that could call for their accountability:

1.The Copyright Tribunal of Australia

2.ACCC’s reauthorisation of APRAs government sanctioned monopoly

3.The Code of Conduct of Collecting Societies (Review)

Suggested recommendations to consider could include:

  1. Copyright Tribunal of Australia

An independent body established under s138 of the Copyright Act 1968. The Act and the Copyright (Tribunal Procedure) Regulations set out its membership, functions, powers and procedures.

Ultimately, the Copyright Tribunal is the only authority that can provide a ruling on the ambiguity of the ‘copying licence’ about the mechanical/reproduction right.

The Australian Copyright Council could choose to refer themselves to The Copyright Tribunal for a clear ruling on mechanical reproductions and digital technologies.

2. Australian Consumer and Competition Commission (ACCC)

APRA’s membership, licensing, distribution and international arrangements are all the subject to an authorisation for a government sanctioned monopoly.

This monopoly granted to APRA — and by extension the public performance rights joint ‘inititaive’ One Music with the PPCA — puts the collective of PROs in an extremely privileged position.

APRA is currently seeking re-authorisation of its monopoly to continue its arrangements for the acquisition and licensing of performing and communication rights in music.

APRA’s last conditional authorisation was granted for a period of five years and expired on 28 June 2019. APRA lodged its current application for reauthorisation on 24 December 2018. Of the 47 before draft determination public submissions to the ACCC, 42 were critical of APRA. On 5 June 2019, the ACCC issued a draft determination proposing to re-authorise APRA’s arrangements for a period of 5 years, subject to the same conditions imposed in 2014 and some additional conditions relating primarily to issues of transparency. A further 29 submissions were received by the ACCC after the draft determination and of those 25 continued to be critical.

At time of writing, no final determination had been handed down from the ACCC to reauthorise APRA’s monopoly.

The ACCC, as part of their current reauthorisation, could choose to require APRA to immediately cease issuing a “copying licence’ for the usage of uncompliant consumer music streaming platforms in public performance.

The ACCC could choose to implement recommendation 5.4 of the Productivity Commission’s Report on Intellectual Property Arrangements and undertake a thorough review of the Code of Conduct for Collecting Societies.

EDIT 21/7/2020 — The ACCC’s Final Determination to Reauthorise APRA and the 48 conditions of reauthorisation of a monopoly in respect of arrangements for the acquisition and licensing of performing rights and communication rights in musical works Authorisation number: AA1000433 was published 13 July 2020 and is available here.

3. The Code of Conduct for Collecting Societies (The Code)

Seeking to ensure that collecting societies protect the interests of creators and users of creative works The Code was developed and adopted by Australian copyright collecting societies in 2002. The Code was developed by the collecting societies with input from the Commonwealth Government and whilst it is an industry code, it is not government regulated. It offers valuable ethical guidelines for APRA and PPCA.

Without meaningful review and adaptation to emergent technologies and external informed scrutiny, codes of conduct fall short of enforcing best practice to ultimately serve the greater public interest for all vested parties. (King 2010, 116)

The collecting societies appoint an independent Code Reviewer to review and report on their compliance. The current Code Compliance Reviewer is The Hon K E Lindgren AM, QC, a former judge of the Federal Court of Australia, and a former President of the Copyright Tribunal of Australia.

The Code itself is reviewed every three years, and the Code has been amended from time to time to take account of relevant developments. The Australian Government Department of Communications and the Arts has recently reviewed the Code, and released a report with recommendations for improving the Code. The collecting societies implemented those recommendations with effect from 1 July 2019.

The collecting societies report annually to the Code Compliance Reviewer on their compliance. Their members, licensees and other stakeholders can make submissions to the Code Reviewer.

The Code Reviewer could choose to require compliance reporting for APRA AMCOS and PPCA (OMA) on how they are managing the commercial risk and ethical harm to Australian small businesses caused by consumer streaming platforms usage in public performance.

The code itself was last reviewed in April 2017 and submissions to the annual review process on compliance or non-compliance here, and closed July 31, 2020. The current Code Reviewer is Hon K E Lindgren AM, QC, he will hand a report. Date TBA.

A FAIR PLAY response to the ACCC Determination to Reauthorise APRA July 2020 can be read here.

FAIR PLAY PART THREE : Play Data, Royalty Distribution and Equity is here.

REFERENCES

APRA. 2019. Code of Conduct for Copyright Collecting Societies Public report to Code Reviewer. June 30, 2019. https://apraamcos.com.au/media/corporate/2019/APRA_AMCOS_Code_Compliance_Report_2019.pdf

Australian Copyright Council. 2018. Annual Report. December 31, 2018. https://www.copyright.org.au/ACC/About_Us/Annual_Reports/ACC/About_Us/Annual_Reports.aspx?hkey=bc50fa66-a4ba-43c9-9996-4773f1955c13

Code of Conduct for Copyright Collecting Societies. 2019. Last amended July 1, 2019. https://www.copyrightcodeofconduct.org.au/

King, Cynthia M. and Deni Elliot. 2010. “Tall Tales: Ethical Storytelling in the Age of Infotainment” in Ethics and entertainment : essays on media culture and media morality, edited by Howard Good and Sandra L. Borden, 101–119. Jefferson, N.C.: McFarland & Company, Inc., Publishers.

Lindgren, K E. AM, QC. Hon. 2017. Review of the Operation of the Code of Conduct of the Copyright Collecting Societies of Australia https://www.copyrightcodeofconduct.org.au/triennial-reviews.

— -. 2019. Report of Review of Copyright Collecting Societies’ Compliance with their Code of Conduct for the Year 1 July 2018 to 30 June 2019. Last Amended November 20, 2019. https://awg.com.au/files/documents/Code%20Reviewer-s%20Compliance%20Report%202019%20Final%20-signed-.pdf.

Mogis, Jay Dr. 2020. “Transparency, technology and trust: Music metrics and cultural distortion.” PhD diss., Queensland University of Technology.

[1] https://www.accc.gov.au/public-registers/authorisations-and-notifications-registers/authorisations-register/australasian-performing-right-association-limited-0

[2] At time of writing there was no December 2019 ACC Annual Report available on their website.

[3] At time of writing APRA AMCOS had not made public their full 2019 Annual Report, only a Financial Report as at 30 June 2019 and a 2018 “Year in Review” Report, although the APRA AMCOS 2019 Public Report to Code Reviewer states at item 6.1 that the Annual Report and each company pertains to matters set out in the Code of Conduct 2.6e which requires APRA AMCOS to include public information on total revenue, total sum and nature of expenses and the ‘allocation and distribution of payments to members’.

[4] Quoted from Resolution Pathways response to the ACCC request for information May 14, 2019. Available here.

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’sHigh Rotation 30 Years of Brisbane Music” exhibition, and as a researcher for the Brisbane City Council30 Years of Riverstage.”

Leanne was the 14th most influential person in the music industry for 2019. (Source: The Music, 7 March 2019), 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.

Governance | Leadership | Advocacy | Strategy | Research | Undergraduate at UQ | music, books, conversation, alchemy, justice and champagne