Chapter 2
Discussion of key issues
2.1
The committee received 16 submissions to the inquiry, mostly from the
music recording industry, copyright groups and the commercial radio sector.
2.2
The Phonographic Performance Company of Australia (PPCA) and its
supporters in the music industry informed the committee that copyright holders
should be entitled to receive fair compensation for the exploitation of their
work.[1]
The organisations however requested that the committee not recommend any
isolated changes to the current broadcasting and copyright regulations. They
argued that no changes to policy should be considered until the Australian Law
Reform Commission (ALRC) completes its inquiry into copyright, and the impact
of the Federal Court's determination of the matter between the PPCA and
Commercial Radio Australia (CRA) has been assessed.[2]
2.3
Conversely the commercial and community radio sector urged the committee
to recommend that a new ministerial determination be issued that clarifies that
a radio or television simulcast is considered to be a "broadcasting
service" under the Broadcasting Services Act.[3]
The sector argued that the public benefit in maintaining the current interpretation
of a simulcast outweighs any benefits that may arise from considering a
simulcast to be a separate broadcast.[4]
Threats to the music industry
2.4
The music industry raised concerns that the profitability of many
artists and businesses are under threat from deficiencies in copyright law.[5]
Research prepared for the Australia Council was cited to show that the average
earnings of artists are low and considerably less than other occupations
requiring similar periods of professional training.[6]
The industry argued that it operates in a high-risk environment, with artists
and businesses investing both time and financial resources into the creation of
sound recordings.[7]
2.5
According to the Association of Artist Managers (AAM), if artists are to
continue to create and produce the quality content modern digital services rely
upon, 'they need the protection of a robust copyright law to provide certainty,
protection and a basis for investment in these inherently high-risk
endeavours'.[8]
The Australian Independent Record Labels Association (AIR) similarly contended
that for many small Australian businesses and artists to remain viable, strengthened
copyright laws are needed:
Their ability [small businesses and artists] to build
livelihoods, sustainable business models, and continue the cycle of investment
and creative output, is based on the protections afforded to rights holders
through Australia's copyright framework.[9]
2.6
In addition to the threat that poor copyright regulation may have on
small and independent recording artists, large record companies expressed their
concern for the music industry in light of technological developments.[10]
The digitisation of music and the unauthorised downloading and streaming of
recorded music have presented challenges to the industry. According to
Universal Music Australia (UMA):
The significant decline in the overall size of the recorded
music industry started when digitisation of music content began to take off in
the early 2000s. The prevalence of illegitimate music download and streaming
platforms in the digital space has led to a rapid decline in willingness to pay
for recorded music. UMA's view is that appropriate regulatory models that
support innovation and growth are critical in the digital age.[11]
2.7
UMA informed the committee that over the past ten years the total
revenues from legitimate recorded music sales have declined severely, both
globally and in Australia.[12]
The company claimed that in real terms, revenue has more than halved over the
same period.[13]
2.8
The music industry therefore concurred with the PPCA in arguing that Australian
copyright regulation needs to ensure that 'those who create and invest in the
creation of sound recordings can be remunerated fairly for the use of their
creative works'.[14]
Simulcasting
Arguments put forward by the music industry
2.9
The PPCA is a non-profit copyright collecting society that represents
the interests of Australian artists, record companies and labels.[15]
The PPCA is provided with a mandate by the artists and labels that it
represents to manage their specified copyright works. This arrangement provides
copyright owners with the ability to receive payments for the use of their
copyright works on a collective basis thereby minimising administration and
enforcement costs for the copyright owner. It also enables broadcasters to
enter into blanket licences which provide access to a wide range of recordings
without the need to negotiate separate licences with each copyright holder.[16]
2.10
The PPCA made a submission on behalf of its members which include 1200
record companies and copyright holders, 15 000 record labels and 2500
artists.[17]
The AAM, UMA, AIR, Sony Music Entertainment Australia (Sony) and the Australian
Recording Industry Association (ARIA) made submissions supporting the PPCA.
2.11
The PPCA, on behalf of its members, argued that amending regulations to
consider a radio simulcast as a "broadcasting service" as defined in
the Broadcasting Services Act would be to the detriment of copyright holders.[18]
The PPCA expressed the view that any legislative change that treated internet
simulcasts in the same way that current broadcasts are treated under the
Copyright Act would have undesirable outcomes, including:
- stifling innovation and fair competition in the emerging internet
streaming market;
- constraining the Copyright Tribunal in its ability to equitably
adjudicate licence agreements; and
- creating inconsistent treatment for copyright owners.[19]
Innovation and competition in the
internet streaming market
2.12
In the PPCA's opinion, radio broadcasts and their simultaneous streaming
online represent two different services and should be recognised as such.[20]
Terrestrial radio broadcasts are confined to particular geographic licence
areas, whilst their simulcast online is not restricted and can be heard around
the world. According to the PPCA, these services represent separate and
distinct activities with the online simulcasting of radio simply being 'another
way of increasing the revenue base for the shareholders of these broadcasting
companies'.[21]
2.13
The PPCA believed that any decision to not recognise a radio
broadcaster's online simulcast as a distinct service will provide a significant
advantage to terrestrial radio broadcasters at the expense of businesses solely
concerned with providing content online.[22]
Currently, customised streaming services that provide music over the internet
enter into voluntary, commercial licences with the PPCA or other copyright
owners to play their material. If radio broadcasts and simulcasts are
considered to be the same service, radio broadcasters would not be required to
enter into a separate copyright licence agreement for any content they stream
online. The PPCA commented that this creates different rules for two
competitors operating in the same market:
Online streaming services such as linear internet radio and
customised streaming services operate in the same digital market as radio
broadcasters that simulcast their terrestrial broadcasts over the internet. In
terms of the delivery of these two services—there is nothing dissimilar.[23]
2.14
Furthermore, the PPCA argued that when negotiating agreements to
transmit programs online, the ability of online streaming services to negotiate
fees is not constrained by the price caps contained in section 152 of the
Copyright Act.[24]
The fees payable by holders of a broadcasting licence who provide terrestrial
radio broadcasts and simulcasts are currently capped at one per cent of gross
earnings (or for the ABC, one half of a cent per Australian). No such cap on
fees would apply to businesses that choose to communicate recordings via the
internet alone.[25]
2.15
The PPCA expressed concern that the advantage provided to radio
broadcasters over customised streaming services would distort the market and inhibit
the development of new businesses in the digital economy.[26]
The PPCA stated:
...providing radio broadcasters with an advantage in the
internet streaming industry will stifle competition and the development of new
online only services. Ultimately, audiences may miss out on innovative new
services that cannot fairly compete with commercial radio giants that have the
protection of a statutory cap.[27]
Constraining the Copyright Tribunal
2.16
A second undesirable outcome from not recognising radio broadcasts and
simulcasts as distinct services, according to the PPCA, is that it will further
constrain the Copyright Tribunal.[28]
2.17
At the moment, the legislative cap on fees payable to copyright owners
as set out in section 152 of the Copyright Act is only made available to the
holders of a broadcasting licence (such as radio broadcasters) and the ABC.[29]
The PPCA argued that treating radio broadcasts and simulcasts as the same
service would extend the legislative caps beyond the arena of traditional
terrestrial broadcasting and into the developing market for online digital
services.[30]
The PPCA believed this would constrain the Copyright Tribunal by 'limiting its
ability to require equitable remuneration for the use of copyright material in
the online environment'.[31]
Inconsistent treatment of copyright
holders
2.18
The PPCA argued that another undesirable outcome of treating online
radio simulcasts as a "broadcasting service" would be the enforcement
of inconsistent treatment of classes of copyright holders.[32]
The PPCA pointed out that other copyright industries (such as photography,
literature and motion picture) are able to negotiate separate copyright
licences for different activities.[33]
Treating radio broadcasts and their internet simulcast as the one service would
prohibit copyright owners from granting or withholding licences for the
broadcast of their work on a discretionary basis.[34]
2.19
The PPCA noted that:
For example, book publishers are able to separately licence
the production of paperback and hardback book formats. Similarly, different
agents or representatives may be granted rights to exploit content in different
defined geographic areas.[35]
Policy recommendations
2.20
Despite the PPCA's concerns for ensuring that radio broadcasts and
simulcasts remain separate services, they requested that the committee should
not make any recommendations relating to simulcast regulation until the ALRC
inquiry is completed in November 2013:
In light of the extensive reviews already on foot, in PPCA's
view the Committee should not, at this time, recommend any isolated regulatory
amendments.[36]
2.21
This view to continue to recognise radio broadcasts and simulcasts as a
separate service was supported by the AAM, UMA, Sony and AIR.[37]
Arguments put forward by the
commercial and community radio sector
2.22
The ABC, CRA, Community Broadcasting Association of Australia (CBAA),
and the Special Broadcasting Service (SBS) (the broadcasters) authored a joint
submission, highlighting that the issues forming the subject of the inquiry
directly affect all of the broadcasters.[38]
2.23
The broadcasters submitted that radio simulcasting has taken place in
Australia since approximately 1999, and that until the recent decision by the
Federal Court, it was accepted by many participants in the broadcasting
industry that a simulcast of a radio program was a "broadcasting
service" within the meaning of that term in the Copyright Act and
Broadcasting Services Act.[39]
2.24
The broadcasters expressed concern that the Federal Court's new
interpretation of a "broadcasting service" could have the consequence
of removing copyright protection for broadcasts which are simulcast online,
making it more difficult for broadcasters to obtain copyright clearances for
underlying rights, and effectively double the payment required for the same
program to be transmitted at the same time, via two different technology
platforms.[40]
The new interpretation may also result in broadcasters ceasing to simulcast,
thereby depriving some members of the public access to programs on the devices
of their choice as well as creating a regulatory regime that is not technically
neutral.[41]
Broadcast copyright
2.25
The broadcasters argued that their broadcasts are copyright protected
under section 87 of the Copyright Act. [42]
Section 87 provides that copyright in the case of a sound broadcast is the
exclusive right of the broadcaster.[43]
The broadcasters noted that third parties are not able to copy a broadcast
without the permission of the broadcaster, thus protecting broadcasters against
third parties who might wish to copy and distribute programs illegally.[44]
2.26
The broadcasters argued that the Federal Court's decision to consider radio
broadcasts and simulcasts as separate services ensures that online simulcasts
will no longer be protected by copyright as it is not deemed to be a
"broadcast".[45]
The broadcasters believed that that this in turn could create the potential for
whole programs to be copied and distributed without their permission.[46]
2.27
It was claimed that the most vulnerable programs to be copied without
authorisation are those with no underlying copyright, including live sports
broadcasts, live classical music concerts and live news and current affairs
programs.[47]
2.28
The broadcasters asserted that the Federal Court's new interpretation effectively
legalises an act that would previously have been an infringement of copyright.
They stated that 'the removal of such significant copyright protection may make
it difficult for broadcasters to continue to simulcast their broadcast programs
online'.[48]
Underlying rights holders
2.29
The broadcasters contended that if copyright protection is removed from the
broadcast itself, underlying rights holders may be reluctant to grant broadcast
simulcast rights.[49]
It was argued that currently, content creators (such as musicians, composers,
artists and writers) may rely on the broadcasters to take action to prevent
copyright infringement of the content contained within the program. The
broadcasters are concerned that as a result of the Federal Court's new
interpretation, content creators will no longer be able to take such action and
this will leave them with the responsibility of enforcing their copyright
themselves.[50]
The broadcasters explained that:
In many cases, content creators do not have the resources to
pursue legal action and may be unable to enforce their own copyright. If they
can no longer rely upon the [b]roadcasters to enforce copyright in the
broadcast as a whole, they may prove unwilling to grant the [b]roadcasters the
right to simulcast the program.
This is likely to affect a wide range of broadcast programs
and would be to the detriment of the listening public, who would be deprived of
the choice of listening to their program online.[51]
Double payments to copyright owners
2.30
Another concern for the broadcasters, should radio broadcasts and
simulcasts be considered separate in regulations, is that copyright owners would
be enabled to charge broadcasters twice for the simultaneous use of the same
copyright material merely because the device on which it is received is
different.[52]
2.31
They asserted that 'no single listener can listen to two devices
simultaneously; they are either listening to the radio or listening online
through a computing device'.[53]
The broadcasters noted that approximately 9.5 per cent of a radio broadcaster's
audience choose to listen to a broadcast online, a percentage that has been a
consistent trend over the past five years.[54]
Different regulatory regimes
2.32
The broadcasters also believed that the Federal Court's new
interpretation of a radio simulcast is in conflict with the policy objectives
of the Broadcasting Services Act.[55]
2.33
Subsection 4(1) of the Broadcasting Services Act sets out that:
The Parliament intends that different levels of regulatory
control be applied across the range of broadcasting services, datacasting
services and internet services according to the degree of influence that
different types of broadcasting services, datacasting services and internet
services are able to exert in shaping community views in Australia.[56]
2.34
The broadcasters claimed that a program exerts the same degree of
influence on its listeners, irrespective of its means of delivery. They stated:
A person who listens to a broadcast on a car radio is no more
or less affected by the broadcast than a person who listens to that program at
exactly the same time through an online simulcast. Accordingly, the program
should be regulated in the same way, irrespective of its means of transmission.[57]
2.35
Furthermore, the broadcasters believed that the new interpretation is in
contradiction to subsection 4(2) of the Broadcasting Services Act that states
that broadcasting services should be regulated in a way that will readily
accommodate technological change, and that public interest considerations
should be addressed in a way that does not impose unnecessary financial and
administrative burdens on providers of broadcasting services.[58]
The broadcasters maintained that in accordance with the policy objectives of
the Broadcasting Services Act, 'any regulation should encourage the provision
of broadcasting services via new technologies, such as online simulcast'.[59]
2.36
The broadcasters warned that failure to correct these policy
inconsistencies will require broadcaster who wish to simulcast programs to be
subject to two sets of regulation. They stated:
This places a substantial administrative and financial burden
on broadcasters, which is unlikely to encourage the provision of broadcasting
services via new technologies and does not accord with the policy objectives
set out in the [Broadcasting Services Act].[60]
2.37
The broadcasters also believed that the new interpretation is not
consistent with the growing recognition amongst media stakeholders that
legislation which governs broadcasting and communications should be
technologically neutral where possible.[61]
2.38
It was also pointed out that the charters of the ABC and SBS have
recently been amended to specifically include the provision of digital
services.[62]
Copyright Act
2.39
In respect to the Copyright Act, the broadcasters asserted that it
provides the maker of a broadcast with the exclusive right to make a recording
of the broadcast and to re-broadcast it or communicate it to the public.[63]
They contend that no such protection is given in respect of online
communications and a broadcaster could not prevent a person from copying or
communicating a simulcast program which has been received online.[64]
Policy recommendations
2.40
The broadcasters argued that many participants in the broadcasting
industry have traditionally operated on the basis that the online portion of a
simulcast is a broadcast.[65]
They argued that maintaining the status quo would be a 'benefit to the public
as audiences will continue to be able to choose to access broadcasts using an
online device'.[66]
2.41
The broadcasters urged the committee to recommend immediate action to
overcome the 'significant adverse consequences' of the Federal Court's new
interpretation.[67]
They requested that the minister make a new determination which has the effect
of revoking the September 2000 determination made by the former minister and
creating a new definition that ensures that the following services do not fall
within the definition of a "broadcasting service":
a service that makes available television or radio programs
using the Internet, unless that service is provided simultaneously with a
service that provides the same television program or radio program using the
broadcasting services bands and both services are provided by:
(i) the holder of a broadcasting services bands licence
for radio;
(ii) the Australian Broadcasting Corporation, or
(iii) the Special Broadcasting Service.[68]
2.42
The broadcasters believed that the proposed new determination will
reflect the current use of technology by media consumers and the trend towards
platform neutrality of regulation. They contended that it is a straightforward solution
that requires no amendment to the Copyright Act or the Broadcasting Services
Act.[69]
2.43
The broadcasters also expressed a view that the subject matter of the
committee's inquiry is distinct from that currently being undertaken by the
ALRC and is distinct from the issue currently before the Federal Court. They stated:
This is not an issue that should be delayed pending the
outcome of much wider reviews of the regulatory framework governing copyright.
Instead, it should be addressed as quickly as possible, so that broadcasters
may continue to provide the services that consumers have enjoyed for the past
10 years, namely the ability to access broadcast programs of their choice over
the internet in accordance with the objectives of the [Broadcasting Services
Act].[70]
International perspective
2.44
The International Federation of the Phonographic Industry (IFPI), an
organisation representing the recording industry worldwide, advised the
committee how copyright relating to online simulcasts is treated internationally.
2.45
The IFPI indicated that the World Intellectual Property Organisation's
(WIPO) Performances and Phonograms Treaty, of which Australia is a
party, stresses that simulcasting does not constitute "broadcasting",
but rather constitutes a form of "communication to the public".[71]
2.46
The IFPI also pointed out that many countries have taken the view of the
Federal Court of Australia—that internet simulcasts of radio programs fall
outside the definition of "broadcasting". The IFPI stated:
In many markets, including Austria, Finland, Greece, Hungary,
Ireland, Italy, Romania, Spain and Sweden in Europe, as well as Brazil, Canada,
Hong Kong, Israel, Japan, Singapore, Taiwan and the US, radio stations pay a
separate fee for their simulcasting activities. In other countries a
simulcasting licence may be bundled into the traditional broadcasting licence,
with one single tariff and no separate simulcasting tariff.[72]
2.47
The IFPI however stressed that the absence of a separate tariff for
simulcasting does not mean that simulcast falls within the broadcasting
definition and it does not deny copyright holders being paid additional
remuneration.[73]
2.48
Conversely, it was argued by the broadcasters (ABC, CRA, CBAA and SBS)
that any changes to the interpretation of radio simulcasts would be in
contravention of the International Convention for the Protection of Performers,
Producers of Phonograms and Broadcasting Organisations (the Rome Convention).[74]
They stated that the Rome Convention provides that broadcasting organisations
shall enjoy the right to authorise or prohibit the rebroadcasting or the
fixation of their broadcasts and that allowing anything less is contrary to the
terms and spirit of the Convention.[75]
2.49
With regard to the regulation of broadcasts and simulcasts in
international jurisdictions, DBCDE cautioned that:
Direct comparison between the situation in Australia and
other jurisdictions is difficult because of the different regulatory regimes
and market structures that apply to broadcasters and online services in each
country.[76]
Copyright Council perspective
2.50
The Australian Copyright Council (ACC), an independent organisation that
represents the peak bodies of Australian creators as well as major collecting
societies (including the PPCA), argued that copyright law is a complex policy
issue that underpins the creative economy.[77]
2.51
The ACC was of the opinion that broadcasting and communication via the
internet are different in three important ways: broadcasting is tied to the
broadcast signal and therefore confined to a geographical area; broadcasting
relates to a particular kind of technology which limits the potential audience;
and not all sound recordings are covered by a broadcast right.[78]
The ACC believed that for these reasons, 'broadcasting and communication via
the internet are different and should be renumerated separately'.[79]
2.52
The ACC also argued that these are difficult and complex issues, raising
matters of both domestic and international law. They therefore suggested that
'in the ACC's respectful submission, the regulatory regime for simulcasting is
better dealt with under existing government processes'.[80]
Response from Commonwealth
government departments
2.53
In response to the broadcasters' proposal that the minister make a new
determination, the Department of Broadband, Communications and the Digital
Economy (DBCDE) outlined a number of 'legislative and other legal issues
associated with the proposal'[81]
and argued that:
The proposal that the Minister issue a determination to the
effect of ensuring that television and radio simulcasts are considered to be a
'broadcasting service' under subsection 6(1) of the BSA would give rise to a
number of (potentially unintended) consequences.[82]
2.54
DBCDE was concerned that unintended consequences could impact out of
area and unlicensed broadcasting; control rules and media diversity; the
anti-siphoning scheme; and copyright and commercial / contractual issues.[83]
2.55
DBCDE highlighted the complexity of broadcasting and copyright law,
advising that:
...the apparent simplicity of the proposed amendments offered
by the radio industry masks the more complex policy question of whether
fundamental realignment of the nature and value of copyright in internet
simulcasts is appropriate, and if so, whether making changes to broadcasting
law is the best way to achieve this.[84]
2.56
DBCDE continued:
...this proposal would, in essence, seek to modify a
broadcasting regulation to address a copyright issue. Specifically, the
proposal would amend broadcasting legislation, via legislative instrument, to
address a dispute over copyright royalties between the CRA and the Phonographic
Performance Company of Australia (PPCA). This approach risks unintended
consequences in terms of the scope and interpretation of broadcasting
legislation to address what is essentially a commercial dispute, which may be
better addressed through commercial negotiations between the parties.[85]
2.57
The Attorney-General's Department (AGD) has responsibility for copyright
matters and provided the following analysis of 'issuing a narrow determination
to the effect outlined by CRA of ensuring strictly radio simulcasts are
considered to be a "broadcasting service"':
The potential copyright implications of a new determination
limited only to radio broadcasts remain significant...these implications include:
- Overturning settled law that radio broadcasts and internet
transmissions of content are fundamentally different. This law is consistent
with other jurisdictions and international copyright treaties.
- Conflating broadcasts (ie content broadcast within a limited
geographical or licence area) with internet transmissions (ie content
transmitted to the world without geographical limitations) in the Copyright
Act. The effect on the Copyright Act would be to fundamentally alter the
carefully-balanced existing structure of the Act that supports the radio
broadcasting industry.
Another effect of the proposed
determination would be to extend all licences, protections and exceptions in
the Copyright Act to commercial radio broadcast activity on the internet.
-
Fundamentally distorting the market for licencing sound
recordings on the internet. An effect of the proposed declaration would be that
radio broadcasters could avail themselves of the statutory licence in section
109 and the one per cent cap in section 152(8) for transmitting sound
recordings on the internet, providing a significant competitive advantage over
other services that transmit music on the internet.[86]
2.58
AGD further advised that '[t]he overriding implication of the Minister not
issuing a new determination is that the status quo remains. This would result
in commercial and legal stability for industry' and '[t]he Department notes the
intent of the existing regulatory structure in the Copyright Act 1968 is
to give effect to international copyright treaties to which Australia is a
party'.[87]
Legal advice provided by broadcasters
2.59
The broadcasters sought and supplied to the committee the opinion of Mr John
Hennessy SC (the Hennessy opinion) 'in relation to the commentary made by the DBCDE
and the Attorney-General's Department on the draft Determination proposed by
the radio broadcasters, the ABC and SBS'.[88]
2.60
In their summary of the Hennessy opinion, the broadcasters contended
that the issues raised by DBCDE and AGD were 'without foundation, and unlikely
to occur'.[89]
The summary further stated that the Hennessy opinion had:
-
[drawn] attention to the fact that the Departments had both
failed to acknowledge that the draft determination proposed by the Broadcasters
did not apply to commercial television broadcasts, rendering baseless many
concerns raised, such as anti-siphoning, retransmission and copyright.
-
addressed out of area broadcasting, noting that this had been
occurring for many years and that, in his considered view, simulcasting would
be likely to be found to be permitted under the BSA. Mr Hennessy pointed out
that the fact that the ACMA has taken no action in relation to simulcasts over
many years supported this view. In addition, he made the obvious point that
failure to make the Determination would not prevent simulcasting in any event.
-
noted there would be no flow-on implications for the operation of
copyright laws.
-
advised that no contractual/commercial issues would arise as
simulcasts can be, and in fact are already in some instances, precluded as part
of the agreement with the content supplier.
-
noted there would be no interference with 'settled law' as the
recent interpretation given by the Appeals Court of the Federal Court is very
new.
-
noted that the Attorney-General's Department had agreed that if
the draft Determination is not made, copyright protection would be lost for
broadcasts which are simulcast online. This is a serious issue.[90]
2.61
On this last point, AGD responded that this was an 'overstatement' of
their position and that it had acknowledged that:
...there may be a risk that material ordinarily unprotected by
copyright that makes up a broadcast (for example live content) may not be
protected as a broadcast where it is transmitted on the internet rather than
broadcast. The Department considers this risk may be mitigated through industry
practices. The Department notes that all copyright protection in underlying
content (films, sound recordings, musical works, and literary works) would
continue to apply irrespective of whether the transmission is described as a
broadcast or a communication to the public.[91]
2.62
AGD further noted that these 'industry practices' may involve:
...a broadcaster making a recording of the broadcast before or
at the moment of simulcast. The simulcast material would then not lose its
status as a 'broadcast' as the material being communicated would be protected
as a cinematographic film or sound recording of the initial broadcast.[92]
Legal advice from the Phonographic
Performance Company of Australia
2.63
The PPCA subsequently obtained and provided to the committee an opinion
from R Cobden SC (the Cobden opinion) 'to provide a response to, and comments
on, the written opinion of Mr Hennessy SC' as given to the committee by CRA.
Some of the key points made in the Cobden opinion included:
- In seeking to expand the specific exceptions and limitations that
apply in the Copyright Act to 'broadcasts' to cover internet streaming
activities, the broadcasters advance no real reason why their special
historical treatment should be so extended. If they do wish to advance such an
argument, the proper forum is the inquiry currently being conducted by the ALRC
into 'Copyright in the Digital Economy'.[93]
- Not only would the proposed determination fail to achieve the
so-called 'platform neutrality' that the broadcasters claim it would, it would
add a further layer of complication. It would require one to look at who is
providing the service and then whether the content of that service also happens
to be delivered at the same time via a specific subset of the radiofrequency
spectrum (to the exclusion of all other frequencies and broadcasting platforms)
in order to determine whether a service is a 'broadcasting service'.[94]
- The inconsistent treatment of internet simulcasts would also have
flow-on effects for copyright law in Australia, as the definition of
'broadcasting service' from the Broadcasting Services Act is imported into the
definition of 'broadcast' in the Copyright Act. These flow-on effects were
recognised by the various answers to questions on notice given by the DBCDE and
AGD. Creating further confusion and inconsistency in the operation of the
Copyright Act ought to be avoided, especially in the context of the current
ALRC review.[95]
2.64
The Cobden opinion concurred that the AGD's observations with respect to
copyright had been 'mischaracterised' in the Hennessy opinion.[96]
Finally, the Cobden opinion agreed with DBCDE's assessment that 'various
problematic broadcasting and regulatory implications' arise from the
broadcasters' proposed determination'.[97]
Other views
2.65
The Copyright Advisory Group (CAG) to the Standing Council on School
Education and Early Childhood made a submission to the inquiry concerning the
impact that changes to broadcasting copyright would have on educational
institutions.[98]
2.66
CAG observed that Australian schools rely on an exemption under the
Copyright Act to be able to view broadcast educational material (such as news
programs, documentaries and drama).[99]
Under the exemption, educational institutions are able to copy and communicate
broadcasts for educational purposes, without having to seek the permission of
the copyright owner, provided they agree to pay remuneration.[100]
2.67
Australian schools paid $17.7 million dollars in 2012–13 for the rights
to view educational broadcasts.[101]
The CAG expressed concern that any changes to the definition of "broadcast
service" could have a significant impact on how schools access broadcast
material.[102]
One per cent cap
2.68
The music industry, PPCA and the ACC put to the committee that any
consideration of changes to simulcast regulation should not occur without an
examination of the legislative caps that apply to broadcasting licensees and
the Australian Broadcasting Corporation.[103]
2.69
The ACC contended that the one per cent legislative cap is 'completely
arbitrary and does not involve any analysis of economic efficiency'.[104]
Consequently they believed that:
...the cap places an artificial ceiling on the remuneration a
copyright owner can receive for the commercial broadcast of sound recordings.
The ability of copyright owners in sound recordings to receive equitable
remuneration for communications via the Internet needs to be viewed in that
context.[105]
2.70
The PPCA argued that the legislative caps are distortionary, arbitrary,
anachronistic and unnecessary.[106]
The PPCA was concerned that the caps ensure that Australian recording artists,
in effect, provide an annual subsidy to the commercial radio sector and the
ABC.[107]
The PPCA stated that:
...there is no characteristic inherent in the broadcast right
for sound recordings that supports the figure of 1% of revenue or 0.5 cents per
person as constituting equitable remuneration for the use of that right.[108]
2.71
The PPCA suggested to the committee that, if it is of a mind to
recommend limited reform to the broadcasting and copyright regulation, the only
compelling case for change relates to the removal of the artificial caps.[109]
The PPCA concluded that:
It is the combination of the compulsory licence in section
109 of the Copyright Act and these outdated caps which have given rise to the
current inequalities in relation to broadcaster's' use of sound recordings,
which are magnified in the evolving digital music economy.[110]
2.72
The commercial and community broadcasters did not pass comment on the
legislative caps.
Committee comment
2.73
Since 2000, not only has there been an increase in the number of
Australians with access to a computer and the internet, but there has been a
significant rise in the variety and number of devices that can access online
content. These new devices, combined with innovation in digital media services,
have presented challenges to the regulatory landscape. It is no longer possible
to consider communications in terms of the traditional distinctions of
broadcasting and telecommunications.
2.74
For over thirteen years, technological developments have made the
simulcasting of radio programs online possible, with a core group of listeners
choosing to access radio programs in this manner. The Commonwealth government clearly
sought to address these issues, to some extent, in 2000. The result was a
determination that appears to have been accepted by both broadcasters and
rights holders as facilitating simulcasts under broadcasting agreements until
legal action was commenced in 2010.
2.75
The 2000 determination established an 'exemption' from the definition of
a "broadcasting service". Section 109 of the Copyright Act then provides
an exception from copyright laws for certain broadcasting services. Creating an
'exception' to the 'exemption' has been found to be ambiguous, as evidenced by
the commencement of legal proceedings in this matter and the different verdicts
in the original judgement on this matter and the judgement of the appellate
court.
2.76
While responsibility ultimately rests with the ministers responsible for
creating the ambiguity and, subsequently, failing to address it, the committee
is particularly concerned at the respective attitudes shown by DBCDE and AGD
that this is a 'commercial dispute, which may be better addressed through
commercial negotiations between the two parties'[111]
or that doing nothing 'would result in commercial and legal stability for the
industry'.[112]
It is correct that this is a commercial dispute, but it is a dispute with the
interpretation of an ambiguous legislative instrument at its heart, which
rather than providing stability has seen the practice of a decade overturned by
a recent court judgement.
2.77
The committee believes it is unsatisfactory that the policy issue of
whether radio simulcasts are a "broadcasting service" under the
Broadcasting Services Act has—via recent legal proceedings—become a matter for the
Federal Court to resolve. The Commonwealth government should have been
proactive in ensuring that stakeholders in the music industry and radio
broadcasting sector have certainty on this matter.
2.78
With regard to this inquiry, the committee contended with arguments and
counter-arguments from the proponents in the ongoing legal dispute about the
definition of a "broadcasting service", including legal advice
rebutting information provided by Commonwealth government departments and legal
advice refuting alternative legal advice. While it is the role of Senate
committees to "shine light in dark corners" and provide a forum where
ideas can be contested and analysed, it is not the role of Senate committees to
act as quasi-courts or mediators. In this regard, this inquiry raises the
question of the appropriateness of referring such disputes to a parliamentary
committee, albeit in the guise of addressing a broader policy issue.
2.79
That said, the committee is sympathetic to both the argument of the
radio industry that the ambiguities surrounding the disputed determination
should be settled by government policy rather than having established practice
not simply overturned by legal proceedings, and the arguments of rights holders
that related matters are being considered in a far more comprehensive way through
the ALRC review, as flow-on to the equally comprehensive Convergence Review.
2.80
The committee is mindful of differing arguments from stakeholders on
both sides of this dispute and the relevant government departments about
potential unintended consequences stemming from either doing nothing or
stemming from making a new determination, but it is not entirely convinced by
some of these arguments and suspects they may be overstated. In any event, it
is a matter for the agencies of government to work through such consequences to
find satisfactory policy outcomes, not use them as excuses for inaction.
2.81
Ultimately, it is the committee's view that if it has been established
practice for simulcasts to be permitted under a single licence agreement with
rights holders for the better part of a decade then it is unsatisfactory for
this to be abruptly overturned by a court ruling. It is, however, equally the
committee's view that with the advance of new technologies and increasing
convergence of content across different platforms that much of the regulation
in the broadcasting and copyright space is failing to keep pace with changes in
technology and that it would be preferable not to be dealing with individual
areas of regulation for different mediums of transmission in a piecemeal way.
2.82
The committee also notes the arguments about the application of the one
per cent cap, which limits the amount paid to rights holders, and the PPCA's
valid argument that simulcasting increases the potential audience for radio
broadcasters far beyond their terrestrial broadcasting reach. While for the
commercial and community broadcasters, the percentage-based nature of the cap
means that the actual payments made to rights holders would increase as any
increase in advertising revenue associated with increased audience occurred,
the committee can understand why previous reviews have recommended the
abolition of such a cap. The committee believes the findings of the ALRC review
should be considered by government as quickly as possible.
2.83
The committee urges the government to address both the short- and
long-term issues that exist within the existing regulatory framework.
Recommendation 1
2.84
The committee recommends that the Minister for Broadband, Communications
and the Digital Economy seek to resolve the ambiguity in the existing
determination, either through a new determination, having regard to any other
potential consequences of such action, or by negotiating a satisfactory
agreement between the two key stakeholders pending a comprehensive response at
the earliest opportunity to the findings of the Convergence review, ALRC review
and other outstanding issues regarding the interaction of broadcasting and
copyright law.
Recommendation 2
2.85
The committee recommends that the Minister for Broadband, Communications
and the Digital Economy and the Attorney-General fully and urgently address in
a comprehensive and long-term manner all of the related broadcasting and
copyright issues identified in numerous reviews, and by many stakeholders, following
receipt of the ALRC review later this year.
Senator
Simon Birmingham
Chair
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