Could other industries be hit by increases to music license fees?

While the fitness industry is fuming over the Copyright Tribunal’s decision to increase license fees by 1,500%, other industries where recorded music is used may be wondering whether they will be hit next.

The Tribunal decided on Monday fitness classes would be slugged $15 per session for playing licensed music. The Phonographic Performance Company of Australia said the decision delivered fair value for copyright holders, and argued the previous scheme undervalued recordings.

But given music is an important part of the offering in many industries – retail and hospitality are particularly prominent examples – there are probably many entrepreneurs wondering if their sector might be targetted next.

A PPCA spokesperson said decisions to pursue a traffic increase are made when “we consider that the tariffs have not been properly valued… all of the tariffs are subject to periodic review”.

The PPCA said a review for an industry would be issued whenever they consider circumstances to have changed so that copyright holders are not receiving a fair return. This is not necessarily dependent on a period of time, the spokesperson said, and could be subject to external circumstances.

The licensing regime is complex, with a large number of separate tariffs covering a large number of different industries. Tariffs typically depend on how music is used in that sector.

Outside of the gym industry, retail is one sector which uses music regularly to provide atmosphere to a shopping experience.

Most retail businesses would think nothing of plugging in an iPod to play over the store’s sound system, but they are actually required to pay tariffs when doing so.

“As a general statement, recordings made in countries such as Australia, New Zealand, the UK, all European countries and Canada are usually protected under the Copyright Act and a public performance licence will be required if you want to play them in your business,” the PPCA states on its website.

“Recordings made in the US may also require a licence, depending on the details of the recording and the application of the international copyright laws. All music videos are protected and, when they are used as music on hold, all sound recordings are protected.”

According to the PPCA, retail businesses actually need two licenses. This is because music is covered by two different copyright agencies – the PPCA, which covers the actual copyright of the recording, while a license from the Australian Performing Right Association covers music and lyrics.

While a blanket license is available from the PPCA which covers the majority of commercial recordings released in Australia, there are also licenses available for specific business categories.

Retailers would need to purchase a license for “commercial premises“, which covers locations such as function rooms, elevators and motels.

The tariffs change depending on the size of the business:

• Up to 140m2 – $67.21
• 141m2-465m2 – $90.42
• 466m2-930m2 – $123.09
• Over 930m2 – $155.00

These rates apply from July 1, 2009, and are payable in full annually in advance.

Businesses also need to obtain a license from APRA, which divides businesses into “tiers” based on how they intend to use recordings.

Tier 1 businesses are using one device, and a radio or television, Tier 2 businesses use one device, CD/DVD players and a video player, Tier 3 businesses use up to four music devices, along with multichannel devices of up to four streams and a jukebox, while Tier 4 businesses use five or more devices along with multichannel devices of five or more streams.

Most smaller businesses would be classed within Tier 1, which means they would need to pay:

• Up to 150m2 – $66
• 150-499m2 – $77
• 500-999m2 – $110
• 1000-1999m2 – $165
• 2000-4999m2 – $308
• +1000m2 – $110

Businesses wanting to play music publically need to check both the PPCA and APRA websites to determine what category in which they fit and what licenses they may be required to purchase.