Australian Content Requirements for Broadcasters

Background

There are requirements of Australian broadcasters, radio, television and cable television, that they support the product of Australian artists. In music, these apply most importantly to free to air radio. They are administered under regimes of self-regulation, reinforced by the possibility that if self-regulation is inadequate, government regulation will be re-introduced. The requirements are made of the commercial and community radio sectors and essentially take the form of assignment of a specified minimum percentage of music broadcast time to Australian musical content. The ABC is governed only by the generalities of its Charter requiring support to Australian culture but ABC radio has adopted voluntary quotas to at least match the commercial radio quotas.

The system for commercial radio is administered by the trade association, Commercial Radio Australia, and overseen by an industry committee including members from ARIA, APRA, the Musicians’ Union and others, the [phttp://www.commercialradio.com.au/index.cfm?page_id=1171 Australian Music Performance Committee] (AMPCOM); its responsibilities and prerogatives are described under Code of Practice 4 of the regulations. The percentage requirements are in a tiered system of genres with percentages in 5% decrements from a top of 25% to a bottom of 5%. There are also requirements on the top three tiers for broadcast of tracks released in the previous 12 months (‘new music’). For details, see the MCA website.¹

The system for community radio is administered by the Community Broadcasting Association of Australia. It is more briefly stated than the commercial code and can be read here.² The key paragraph is this:

3.1 Community broadcasters will ensure a proportion of the total number of musical items broadcast consist of: (a) not less than 25% Australian music items for all community broadcasting licensees except ethnic and classical stations as cited Clause 3.1(b) below; (b) not less that 10% Australian musical items for ethnic and classical stations. (c) (a) and (b) to be determined over one month.

Prior to the introduction of government requirements on broadcasters, there was almost no Australian music on Australian commercial radio. The commercial industry has resisted the imposition of content requirements on the grounds that it interferes with free action in pursuit of profits. While it now offers cooperation, there are reasons for lack of confidence that in the absence of regulation, local content would be maintained.

It is a curiosity of the situation that since there are no broadcast royalties from the copyright in the recording in the USA, and since royalty collection and payments on foreign copyrights are internationally on a reciprocal basis, there is no royalty payable in Australia when a US recording is broadcast whereas a royalty is paid for broadcast of an Australian recording. This could be one reason that Australian content requirements are resisted by commercial radio. The Australian recording is therefore in that sense at a commercial disadvantage. We have even seen a situation in the past where Australian radio broadcasters refused to broadcast Australian recordings and broadcasted US recordings as a strategic ploy in negotiations about content requirements.

(On the other hand, if the US introduces such a royalty, there will be a net outflow of funds from Australia to the US.)

There has been a clear correlation between airplay and record sales. MCA conducted a little study on the Australian situation. The report, by Paul Mason, is available on the MCA website.³ These circumstances may be changing with the shift to online distribution.

Domestic repertoire in Australia achieves normally sales of around 25% – 28% (say) of total market. This happens to approximate with the top level of local content requirement, which applies to those genres in which most records are made. The implication of the above research report is that this may not be a mere coincidence.

The local industry tends to express satisfaction about this market share but in global terms it is fairly ordinary. I do not have current figures but data from the late 90s show the world average for domestic repertoire around 70%. Only one Latin American country had domestic repertoire sales of less than 50% and most were around 70%. Figures for Africa and Asia were generally even higher. Many European countries were higher than Australia, some were similar. France was 47%, Greece 38%, Germany 40%, Spain 36%, Sweden 29%. (World Culture Report, UNESCO 2000)⁴

Issues

Intervention of Free Trade Agreement

Under the Free Trade Agreement with the USA (AUSFTA), Australian content requirements are capped at the level pertaining at the time of the agreement: viz. 25%. The limit was imposed by the USA and accepted under duress by the Australian government. The requirements for any genre may be changed, as can the ‘new music’ requirement, provided that the cap is not exceeded. This percentage cap applies for the period of the agreement, which essentially is open-ended, and thus applies essentially for all time, although that was never even a concept in the discussions leading to its calculation. It should be noted that a) in some other countries with local content requirements, the percentage is much higher and b) in many countries, even without the local content requirements, local content is much higher and may make up 80 or 90% of broadcast time. Australian local content levels are among the lowest in the world. Therefore, it would be appropriate to be able to remove the constraint imposed by AUSFTA to allow upwards negotiation of content requirements, even if change is not a foregone conclusion.

New Music Requirement

The ‘new music’ requirement was instituted because radio stations broadcast mainly old releases and the record companies found it difficult to gain a market for new releases. The requirements are 25% of the 25% tier must be new music, 20% of the 20% tier, and 15% of 15%. So say that a station devotes 10 minutes in an hour to advertising, the amount of time it is required at the bottom of the three levels to give to Australian new music is 15% of 15% of 50 minutes = 1.125 minutes. This is hardly going to shake the ratings charts. Even 25% of 25% of 50 minutes is only 3.125 minutes. Nevertheless, the record industry claims that there has been a benefit. There is an argument for upward negotiation of the new music requirement.

Obsolescence of Free to Air Radio and Regulation of the Digital Realm

There are those who think that local content issues on free to air radio are yesterday’s battle because it will give way to other media, especially online media. No-one so far seems to be dealing with whether there is a sufficient Australian music presence on music-on-demand online services such as iTunes. It also is not clear whether there is any feasible way of regulating for Australian content on such services. Obviously, customers cannot be required to take some percentage of Australian music among their purchases. However, there was a proposal during the AUSFTA negotiations that would permit a requirement of ‘shelf-space’ for Australian music: a percentage of the music offered should be Australian. The US refused this point blank. The language of AUSFTA as it applies to ‘interactive media’ permits government regulation, but there are so many US-inspired stipulations obviously intended to make it difficult that it would be a brave Australian government that ventured into that field. Be that as it may, nothing need or will be done if there is no demonstration of disadvantage.

Author

Richard Letts. Part of briefing paper for MCA summit: Australian Musical Futures: Towards 2020, Sydney 5 September 2008.