This is a blog I originally wrote for Musicnsw, written in Sydney, 24 September 2009:
The Law and the PPCA
Under the copyright act, owners recorded songs (artists and record labels) are entitled to licence fees from any business that perform their recordings in conjunction with their business operations. The PPCA was set up as a non-profit organisation to collect these licence fees from all businesses around Australia that perform music to the public.
Tariffs and Lattes
Since its inception, businesses have been required to buy such licences or tariffs in order to play copyrighted recordings of music. The fees collected are then pooled by the PPCA and and the funds are divvied up between the labels and artists that are represented by the PPCA.
This blog discusses the proposed changes to the licence fee that must be paid by the restaurant/cafe industry. Since the beginning of the PPCA, they have required that restaurants and cafes pay a pretty much nominal amount for the right to play recordings in their business. According to the Sydney Morning Herald, a coffee shop with a seating 55 punters currently pays PPCA $69 a year.
The PPCA has finished a comprehensive review of this tariff and has decided to markedly increase this tariff (based on various scales and formulae). So this 55 seater coffee shop will have to pay $5,500 per year – thats something like a 7-800% increase in fees!
Is this Fair?
To figure this out – theres a couple of things the PPCA had to say on the issue:
“Music is widely used by the restaurant and café industry to contribute positively to the ambience and atmosphere of an establishment. For example, research indicates that more than 75 per cent of a sample of cafés and restaurants typically use music in their day-to-day operations.”
“Research also shows that where used effectively, music can lead to a significant increase in the time spent by consumers in restaurant and café environments, and an increase in their expenditure on food and beverages, in a range of between 10% to 70%. “
The Value of Music
Basically, what they are getting at is that there is a significant commercial value in music. Having music in a cafe or restaurant significantly impacts on how much a customer is going to spend and how long they will stay. Up until now, cafes have been getting such a valuable asset in their business for basically a nominal value. Now, after all this economic research the PPCA wants a fairer deal for artists and record labels so that what they get paid realistically represents the impact their music has on the restaurant industry.
In the eyes of the PPCA – the bottom line is this: if you don’t think music is commercially valuable to your business – then don’t use it.
Backlash
Obviously, a 7-800% increase in a cost for a business will not be taken lightly as most restaurants and cafes struggle to break even as it is. Essentially, what lobby groups say in opposition to the increase is that the PPCA has not adequately taken into account the impact these increased costs have on each restaurant’s books.
The PPCA argues that all a cafe has to do is add 10 cents or so to each of its products to alleviate such stresses. But its my opinion that the PPCA has no right to suggest such ‘advice’ as price considerations are purely up to each business and their competitive environments and types clientele. Generalisations on the industry may prove harmful for many cafes.
Many restaurants and cafes have suggested that many cafes will now be silent as they simply cannot afford the huge tariffs. And if restaurants do adhere to the new scheme, they will be forced to increase the costs of their goods/services – by much more than 10 cents. End result? Customers lose.
Potential Ramifications
1. A Boost for Live Music
The PPCA only collects fees from businesses that perform sound recordings in their businesses. So a potential unintended impact of increasing the tariffs by such a large amount may be that cafes and restaurants will be more inclined to hiring live acts to play at their venues. This may, in the end, be cheaper than buying a PPCA licence, and may stimulate Australia’s live music scene (for some genres of course).
2. Music Direct
Another potential impact is that cafes and restaurants (or their lobby group) may go directly to one or two record labels and bargain their own licence deals, thereby bypassing the PPCA. One detrimental implication of this is that such restaurants will only play music from that labels repertoire – thereby leaving small indie labels and artists unheard at such venues.
3. A Creative loophole?
Bit of an aside here – USA in the 1930s: radio took hold of the country and was this was the first time that songs could be sent all across a country to be heard and loved by everyone. Due to the success of the wireless medium in increasing the usage of music, ASCAP (the PPCA of the times) argued that their artists/labels deserved much more income when their recordings were played over the radio. ASCAP then increased their license fees payable by broadcasters by a huge amount.

Instead of complying with such requests, the broadcasters formed a group called Broadcast Music Incorporated. BMI would then collect license fees from radio stations at a rate at which radio stations could operate properly. So instead of playing songs that were licenced to ASCAP, the radio stations were playing music that was free and in the public domain – like old blues and country tracks.
Now, back in the naughties – an unintended ramification of increasing the tariffs by such a large amount is that cafes and restaurants may cancel their licenses with PPCA and in turn play free and public domain music.
The Sydney Morning Herald says that this would definitely suck as music that is currently in the public domain includes things like Elvis and other old stuff. But, the use of new music created under creative commons licenses may be a another source of ‘unrestricted’ music. Music under creative commons licences may waive any performance rights and could be an answer for cafes and restaurants looking for modern music for their customers.
Fairness
Its my opinion that a compromise may be required here. The PPCA have an extremely valid point – music does add significant value to the ambience and experience of a restaurant. The problem arises from the way in which such ‘value’ is calculated.
It is unfair to expect artists and labels not to get a slice of the pie when their music adds to the taste of that pie. But its also unfair to expect cafes and restaurants to take on such increased costs without interrupting or even stifling their cash flows. A compromise needs to be reached where sides can agree on some middle ground or price that is acceptable and valuable to all.
Posted by ishypop 

Posted by ishypop 



Posted by ishypop 
Many music industry commentators argue that this tiered approach is definitely the way in which artists can succeed in a digital world. For the classic examples, refer to the various Nine Inch Nails and Radiohead initiatives.




ottles of beer on the wall!











