Copyright Tribunal Out Of Tune, Says Fitness Australia
Australian music licensing fees set to increase by 1,500%
SYDNEY, AUSTRALIAThe Australian fitness industry says it is extremely disappointed with the Copyright Tribunal decision to substantially increase copyright fees for the use of music in group exercise classes, following the outcome of a fierce battle with the Phonographic Performance Company of Australia (PPCA).
The current PPCA license fee is 96.8 cents per fitness class with a capped annual maximum of $2,654. The Copyright Tribunal has increased this substantially, to either $15 per class or to $1 per participant.
For an average-size fitness centre with 1,500 members with 30 fitness classes per week, this decision represents an annual cost increase from the current $1,510 per year to $23,400 per year – an increase of 1,500%. The PPCA had sought an increase in fees of approximately 4,000%.
“The international record companies have shot themselves in the foot by demanding outrageously high copyright licensing fees from the fitness industry,” says Lauretta Stace, chief executive officer of Fitness Australia, the country’s national non-profit health and fitness industry association. “To mitigate the impact of such a decision, Fitness Australia members are already beginning to use music in their gyms that is free of PPCA copyright. Les Mills, the largest provider of choreographed exercise classes, has already developed a product that is PPCA-copyright-free. The reaction from gym members has been highly supportive so we now expect that all gyms will move to alternative music options.”
Club owner Susan Kingsmill says, “The fitness industry has traditionally provided a great platform for promoting Australian performing artists. But the record companies, driven by greed, seem intent on destroying this relationship. This decision will lead all fitness centres to seek more affordable music alternatives to the detriment of Australian performing artists.”
Fitness Australia responded to the claim by the PPCA in a fierce battle culminating in a six-week tribunal hearing in April 2009.
“Fitness Australia’s evidence clearly demonstrated that a substantial increase to the tariff could not be justified under any circumstances, particularly as the fitness industry has access to high-quality alternative music that gym goers are perfectly happy with and that is not part of the PPCA repertoire,” says Stace.
Clubs must have additional and separate music licences to play background music, music videos and television programs (which may have background music) in a fitness centre.
Where to from here?….
On 17 May 2010, the Australian Copyright Tribunal handed down a decision to substantially increase copyright fees for the use of protected sound recordings in group exercise classes, following the outcome of a lengthy battle between the Phonographic Performance Company of Australia (PPCA) and Fitness Australia.
The current PPCA license fee for Tariff V is 96.8 cents per fitness class with a capped annual maximum of $2,654. The Copyright Tribunal has decided to substantially increase this to either $15 per class or to $1 per attendee per class, which equates to an increase of 1,500% for the cost of a PPCA license in a typical fitness centre running 30 classes per week.
This decision has several ramifications for the fitness industry and the way in which music is purchased and used now and into the future.
As a consequence of this decision, some members are considering using only sound recordings which are not controlled by PPCA (Non-PPCA Recordings) and are asking for advice in this regard. To assist the industry, Fitness Australia has prepared an Information Sheet for Members with the help of Minter Ellison Lawyers. This document titled “Guidelines for Use of Music in Fitness Centres and Studios” has been developed to explain the way music may be used in fitness centres and to provide some further information on how to gain access to sound recordings that are not controlled by PPCA.
During the determination hearing, the Tribunal stated that they “reject the principle evidentiary basis put forward by PPCA in the form of the gym survey as a reliable indicator of willingness to pay for protected music in fitness classes.” However, the Tribunal relied on other evidence and “judicial estimation” to arrive at the new Tariff rate of $15 per class. The Tribunal also ordered the parties to re-convene prior to 30 June 2010 to ratify a date for the new tariff to become effective.
The new rate – effective date
The effective date for the new Licence Scheme and Tariff is yet to be determined by the Tribunal.
The PPCA and Fitness Australia are able to negotiate a Phase-In Schedule for the new Tariff which will be ratified by the Tribunal. This process is underway and will be confirmed as soon as possible.
Existing Licence Agreements
Fitness Australia will obtain greater clarity around the effect on existing licence agreements with PPCA. If you cancel a current licence the PPCA will be obliged to refund monies paid in advance for the current Licence Scheme. New agreements will be issued and effective from a date yet to be determined by the Tribunal.
Options available to the industry
Fitness Australia has prepared guidelines for the use of music without the need to hold a PPCA licence for Tariff V. We encourage industry businesses to contact their suppliers of pre-choreographed group exercise programs and suppliers of music for exercise classes to discuss these options in more detail.
An industry leaders group has been convened to review the judgment in more detail and take advice from our legal representatives on whether there are grounds for an appeal. If an appeal was to proceed, it would be held before a full bench of the Federal Court later this year.
Download the Guidelines for use of music in fitness centres and studios from Operation M.U.S.I.C’s website (PDF 88kb).
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