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  • Analysis, Intellectual Property, Internet - Written by on Friday, February 15, 2013 7:28 - 20 Comments

    Battle royalty: Is this the end of online radio streaming?


    This article is by Karl Schaffarczyk, law student at the University of Canberra. It was first published on The Conversation and is re-published here with permission.

    analysis Online streaming of radio broadcasts may be a thing of the past after the Full Federal Court yesterday handed down a ruling that will result in radio stations paying higher royalties to the recording industry.

    The Phonographic Performance Company of Australia (PPCA), on behalf of recording artists and music labels, won a declaration that internet simulcasts of radio programs fall outside the definition of a “broadcast” under the Copyright Act and are therefore not covered by existing licences granted to commercial radio networks.

    Following on from a failed High Court bid to increase license fees, legal action was initiated in 2010 by PPCA to separate licensing for online radio programs from traditional broadcasts. The PPCA’s purpose seems to be clear: to create a new revenue stream from online license fees. This was at a time PPCA was aggressively pursuing increases in their revenues, such as fee increases of 4,729% for operators of cafes and gyms.

    The PPCA is one of a number of copyright collecting societies: when anyone plays recorded music such as a CD, MP3 or music video in public, permission must be obtained from the person or company that owns the copyright of that recording.

    The PPCA represents many copyright holders – both record labels and individual artists. It is then the job of the PPCA to issue licenses for the public performance of recorded music, and to collect license fees and return those to the copyright holder.

    Commercial Radio Australia (CRA) is the peak body representing commercial radio industry interests in Australia – it claims to represent 99% of commercial radio stations. In short, if you listen to commercial radio then the chances are the radio station is a member of CRA.

    In 2000, on behalf of its members, CRA obtained an “umbrella” license granting each member a license to broadcast recorded music, and those arrangements remain in place today. At the time, radio stations making their broadcasts available online was a new thing, and it’s likely online content was not contemplated as a threat in the context of the agreement.

    During 2010 the PPCA claimed that a CRA member radio station – NovaFM – had breached copyright in a work managed by the PPCA. The argument was that NovaFM had played a song that was both transmitted on the usual FM band and simultaneously made available on the internet. The PPCA claimed the broadcast license issued to CRA members did not cover broadcasts also being made available online.

    The PPCA based its claim of breach by referring to the wording of their agreement, which permitted members to broadcast licensed material. They went on to point out that making content available on the internet was not broadcasting, and therefore not covered under the terms of the license.

    In September 2000 the then-Minister for Communications, IT and the Arts Richard Alston made a determination that excluded certain services being defined as a broadcast, namely:

    a service that makes available television programs or radio programs using the internet, other than a service that delivers television programs or radio programs using the broadcasting services bands.

    Making an adjustment for the double negative (making an exception to an exclusion in the determination), we might interpret this to include as a broadcast:

    a service that makes available … radio programs using the internet and delivers … radio programs using the broadcasting services bands.

    In February 2012, when this case was first brought before the Federal Court, Justice Foster agreed with CRA’s reasoning on this point and dismissed the PPCA’s case on the grounds that a simulcast radio program was a broadcast, whether delivered using radiowaves or online.

    Yesterday’s ruling by the Full Federal Court overturned last year’s single judge ruling. Justices Emmett, Besanko and Yates took up the argument put forward by PPCA relating to legislative reforms designed to regulate datacasting (adapting broadcast services to provide internet) as being the motivating intention behind the issue of Minister Alston’s determination. On this basis, the judges considered that delivery of radio and television programs could be categorised in three ways:

    1. be delivered by the use of any means, including the broadcasting services bands
    2. be delivered or made available using the internet
    3. be delivered or made available using the internet and the broadcasting service bands

    The Court found the radio program by NovaFM was supplied to the public by two simultaneous but separate services: the first being a traditional radio broadcast falling into the first category, and the online version fitting the second category, but accordingly not a broadcast.

    In accepting the PPCA’s interpretation of the ministerial determination being for the purpose of regulating datacasting, we encounter wild inconsistencies within the law.

    Viewed through this lens of regulation of datacasting, the ministerial determination effectively makes any television or radio programs delivered over the internet fall into the category of a broadcast if the internet service over which it is delivered is a datacasting service (for example wireless internet using the analogue TV spectrum). Yet the same television or radio programs delivered on any other form of internet access (such as ADSL broadband) is not a broadcast.

    Effectively the ruling is saying that regulation is not applied on basis of content, or the originator of the content, but in how that content is delivered to a consumer, including distinguishing between methods of accessing the internet. Regulating television and radio in this fashion simply cannot serve any useful purpose.

    That said, if we consider the ministerial determination through a lens of regulating incumbent broadcasters while not stifling progress, efficiency and innovation, we find that radio and television programs can still be categorised in the same three ways. With the results being, respectively:

    1. incumbent broadcasters are caught and continue to be regulated
    2. “new media” services including YouTube, online movie and music services are not considered to be “broadcast” services, and so are not subject to broadcast regulation
    3. incumbent operators who simultaneously broadcast and stream their content are subject to technology-neutral regulation as broadcasters – without this provision, radio and television services would be subject to two distinct regulatory schemes. This may yield unexpected results – e.g. doubling of compliance costs, and doubling of sanctions for content which may breach a law

    Due to the high stakes involved it will be very surprising if the CRA does not seek leave to appeal to the High Court.

    Without a successful appeal against this court ruling, the PPCA is now in a position to demand fees above the present 1% regulated fee from any radio station that makes its broadcast stream available online.

    Given recent PPCA demands of huge increases in license fees for other users of recorded music, a likely scenario is that many broadcasters will simply stop making their content available online.

    Karl Schaffarczyk does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

    This article was originally published at The Conversation. Read the original article.

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    1. Rory
      Posted 15/02/2013 at 8:04 am | Permalink | Reply

      This is absolutely terrible. Why does it matter what sort of medium the radio is transmitted? I hope this gets overturned this is nothing but poor for the music outlets, hopefully triplej doesn’t get affected

    2. Zwan
      Posted 15/02/2013 at 9:14 am | Permalink | Reply

      Yeah… they ‘represent’ the artists. More like the represent their balance sheets, artists wont get any more money from this I bet.

    3. Jason
      Posted 15/02/2013 at 10:25 am | Permalink | Reply

      Artists won’t see a cent. This is just a money grab by a group of companies clinging onto a dead distribution model.

      It could be a good thing, really. If radio stations who are struggling make the deicison to only broadcast music from indepedant labels & unsigned artists – or make online radio stations that do exclusively that, it could really broaden the horizons of people who are forced to ilsten to commercial radio on a regular basis (think workplaces with a communal radio, pubs/cafes that just play FM/DAB+ radio to their customers, and so on)

      For the consumer, this will absolutely result in more piracy online, not less. Particularly if many people’s podcasts or online radio go out the window well they’ll just turn to bittorrent.

      Online radio is a great way to get music at random in a genre you like. So I also wonder what happens to pandora, spotify and rdio in Australia as a result of this?

      • NPSF3000
        Posted 15/02/2013 at 12:28 pm | Permalink | Reply

        “For the consumer, this will absolutely result in more piracy online, not less.”

        I fully agree! The best way to change things isn’t to listen to independent labels and unsigned bands, but to pirate the good stuff!

    4. Daniel
      Posted 15/02/2013 at 10:41 am | Permalink | Reply

      Yup pathetic – but nothing new, in the USA, if you want to live stream while listening to a online stream, you have to pay $1000 per month for a broadcasting license – this is very hard to do for someone wants to put something in the background while playing.

      Another example DMCA notices removes video’s, even though they have permissions, but what from what I am told this is due to the you are guilty till you proven innocent.

      This is how fucked up the system is,

      • RocK_M
        Posted 15/02/2013 at 4:11 pm | Permalink | Reply

        Believe me that could have ended up far far faaaaaar much worse if the studio folks got their way…

        I still remember back on the days of CARP when they were proposing fees to charge “per song *per* customer”. Which means paying a royalty everytime the song is played multipled by the amount of listeners everytime its played. Imagine how crippling that would be to any independant online radio station.

        That being said…. I cannot believe that nearly 12 years later we’re back to this money grubbing licensing schemes again…. actually scratch that I *can* actually believe it. Which is more of a tragedy as its still showing that the people “supposed” to be looking out for artists are still very much behind w/ the times and just concerned with one thing – money

    5. Glenn
      Posted 15/02/2013 at 12:13 pm | Permalink | Reply

      I read “fee increases of 4,729%”. Thought to myself, 4.729%, that pretty reasonable…

      Had to double check because cartels dont usually do “reasonable”. Cant we just disband the media cartels already…

    6. Quiet Observer
      Posted 15/02/2013 at 2:53 pm | Permalink | Reply

      The fact that the first P in PPCA is phonographic speaks volumes about their mindset and business savvy – in the interests of accuracy they should replace phonographic with prehistoric. I’d say that they’re deliberately shooting themselves in the foot, but I suspect that firearms are probably a little too high-tech for these chaps.

      • Tom
        Posted 18/02/2013 at 11:36 am | Permalink | Reply

        Phongraphic is an adjective meaning “of or relating to the recording of music”.

        Considering the industry that they’re involved in, its a very appropriate word. Should we really be looking to create the term “iPodographic” simply because a phonograph is now obslete?

        • GongGav
          Posted 18/02/2013 at 1:03 pm | Permalink | Reply

          In much the same way the awards for the music industry are known as the Grammy’s, in reference to the gramaphone, 140 year old technology.

          Initially there were fears the public wouldnt take to the idea of the Grammy’s, because they wouldnt associate with the terminology. History has shown that fear to be misplaced.

          Nothing wrong with refering to classical terminology in reference to an industry, it happens often enough.

    7. Goresh
      Posted 15/02/2013 at 6:23 pm | Permalink | Reply

      Just dump the online version of the broadcasts.

      In NZ they tried to hit the TV stations up for royalties for playing music videos.
      The TV stations simply dropped the offending programs, music sales plummeted and the TV stations were suddenly being begged to play the music clips for free.

    8. bdc
      Posted 15/02/2013 at 8:18 pm | Permalink | Reply

      Hmm, doesn’t this have a much broader reach than just radio stations?

      What about the television stations that put their content online…? Obviously some contracts would give them complete rights etc, but do they all?

      • GongGav
        Posted 18/02/2013 at 9:16 am | Permalink | Reply

        Like iView?

    9. Paul Krueger
      Posted 15/02/2013 at 8:55 pm | Permalink | Reply

      So at a time when radios stations are losing audience to other media, lets restrict their audience, getting local advertising to even less people. Less advertising surely would mean less remuneration for the copyright industry…

      Naturally, this in no way affects radio stations overseas, that listeners can now turn to.

    10. Posted 15/02/2013 at 10:56 pm | Permalink | Reply

      Terrible shame… All this will achieve is to work against local content.. Just at the very time we need to protect and uphold Australian culture, measures such as this will achieve the opposite, as streaming will just move to whatever jurisdiction is most supportive.

    11. CT
      Posted 16/02/2013 at 10:11 am | Permalink | Reply

      Very clever, shut down the messenger (internet streams) to achieve what? Cutting the artists throats again through less exposure for listeners who eventually buy the artists music if they really like it. Very much doubt artits would get any extra pitiful payments, gobbled up by record industry accountants and managmement fat cats instead, and less so if broadcasters cut their streams! Dumb, dumb, dumd is all I can say. Reminds me when the recording companies tried to get pay per play for music video clips in the late 80’s from the TV networks. A few programs went off-air in protest. rage on the ABC instead reverted to play video clips from independents and un-signed artists only. After a few weeks, the indepedents and un-signed artists started to show up in the music charts. It did not take long for the recording companies to back down and let the TV networks broadcast video clips under blanket aggreements again. Seen it all before, a greedy cash grab that will fail again and only end up hurting artists and no-one else.

    12. Trevor
      Posted 16/02/2013 at 12:57 pm | Permalink | Reply

      I’m reminded of computer games from the 80’s & 90’s that would copy the look of iconic products but would always create fake branding to avoid royalties and law suits. Then marketers wised up, realising games were newly unsullied real-estate for advertising – suddenly games are full of real brands and logos and car companies even work with game developers to get not just the look, but vehicle dynamics just right for in-game physics. And game companies, instead of paying to feature iconic brands, images and music, were instead being paid for advertising and product placement.

      I was going to say it’s unbelieveable that this is happening in 2013, but then when you consider the control that industry bodies like this had and how that power and income is eroding, it does make sense – it is trivial to determine the number of devices tuning in to digital radio or streaming media (if not the actual number of listeners) opening up the possibility for artists to recieve direct royalties. I think there will always be a place for some level of management or artist aggregation, but the old models of managers, promoters, labels and industry representative bodies taking 98% of the money are already dead, they’re just taking a little while to catch up.

    13. TechinBris
      Posted 16/02/2013 at 1:08 pm | Permalink | Reply

      One day, much to Humanity’s contentment and relief, someone is going to drive the stake of human decency through the hearts of insatiable Vampires, such as these.

      One day, someone is going to shine the light onto the greed and corruption of these blood-thirsty Vampires dwelling in our midst, to a purifying exposure to the sunlight, bringing into view their dark nefarious molestation of our hunger for the Arts. Their pall of persecution will evaporate in its light and their control of humanity will cease, freeing them from their weapon of greed.

      Someday, someone is going to no longer worry about their passion for the Arts or the craft of the Artist, attracting the attention of these Corporate Vampires that have taken our Elected Idiots into thrall and enslavement to them.

      One day, the Artists will be enjoyed once again for their talent to entertain, not crying to the Heavens to be able to have freedom to be creative for their followers and not only be servitude to these Vampires that dominate their craft.

      One day we will all grow balls to be rid of such greedy Vampirical scum such as these, who stifle human genius and creativity for their gain and profit alone.

      One day, Mankind will be allowed to evolve again and enjoy what we should.

      One day more, is too many with Vampires such as these!


    14. GongGav
      Posted 18/02/2013 at 9:22 am | Permalink | Reply

      Meanwhile, in other Govt departments, they have moved away from ruling through the precise letter of the law, and using the intent as the basis for a ruling.

      To me at least, its pretty clear that Alston was looking at shoring up the rules around the commercial relaying of music.and TV. It was the product that was being focussed on, not the method.

      The reason other departments look at the intent rather than the specifics is that laws cant be rewritten every time some new use comes along. So the newer uses (in this case internet streaming) is looked at in comparison to the more traditional methods. What are they doing? What is their intent?

      That should be enough for them to fall under the same banner, not some technicality thats just going to force a rewrite of an act.

      If it feels like a duck, walks like a duck, and quacks like a duck, then its probably a duck. It shouldnt matter whether its paddling in salt water or fresh water.

    15. Tom Anderson
      Posted 21/02/2013 at 8:51 pm | Permalink | Reply

      This finding should be reconciled with the recent “that Optus customers are able to view sporting matches minutes after they are streamed live without breaching copyright” (http://delimiter.com.au/2012/02/03/who-owns-footy-rights-optus-web-copyright-victory-explained/)

      Although the radio stations cannot broadcast on the Internet, surely customers could just be provided a service that allowed them to record the radio and listen back at a more convenient time on their mobile device (perhaps 2 minutes later).

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