ACCC’s scrutiny of APRA’s licence fees and royalties is music to some businesses’ ears

Everybody will be familiar with hearing music playing in the background in shops, bars, cafes and restaurants or on the radio and TV. Unless there are alternative licensing arrangements in place, these businesses are required to obtain and pay for a licence from Australasian Performing Right Association (APRA) to do so. The fees from these licenses are then distributed by APRA to its members. However the manner in which licence fees are calculated and distributed in the past, has left a sour note for some businesses and songwriters.

It is generally more efficient for copyright collecting societies like APRA to collectively manage copyright rather than having songwriters independently negotiate and collect royalties directly from businesses that play their songs. However exclusivity provisions, such as those that apply to APRA, can mean higher licence fees.

On 24 December 2018 APRA applied to the Australian Competition & Consumer Commission (ACCC) for re-authorisation to continue its arrangements for the acquisition and licensing of performing and communication rights in music, for a further five years. Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010 (Cth). In essence, the ACCC can grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment. APRA’s arrangements were first authorised with conditions by the Australian Competition Tribunal in 1999. They were re-authorised by the ACCC in 2006, and then in 2010 and 2014 subject to additional conditions.

A key issue raised in submissions to the ACCC during the consultation process involved the licence fees that APRA charges. Respondents also expressed concern about APRA’s lack of transparency and accountability, both to its songwriter members and to businesses from which it collects licence fees. While the ACCC does not have a role in approving or regulating APRA’s arrangements as a whole, or in approving its licence fees themselves, it is able to assess whether APRA’s collective licensing arrangements are likely to result in an overall public benefit.

On 13 July 2020, the ACCC granted re-authorisation for a further four years, but this time subject to further conditions relating to greater transparency around licence fees and royalties. The conditions require APRA to publish its methodologies for calculating the rates for each category of licence it offers. APRA will now also be required to publish an explanation each time it increases licence rates by more than the change to the CPI for the relevant period. The conditions also require APRA to publish more detailed information about its royalty distributions to its members; to publish an annual transparency report with information on rights revenue, operating costs and payments to members, and to continue the ‘Resolution Pathways’ alternative dispute resolution scheme set up in response to a previous ACCC condition. If the information APRA publishes about how it calculates its licence rates is not sufficiently clear and detailed, the ACCC is able to require that an independent report be prepared.

While the outcome of the re-authorisation will not necessarily result in reduced licence fees, Australian businesses now can take some comfort that APRA will now have to justify its calculation of licence fees and provide greater transparency around royalty distributions and rights revenue more generally. If the ACCC is not satisfied that the conditions have been met, APRA risks independent investigation.

Authored by:

Antoine Pace, Partner
Alana Long, Senior Associate