Royalties row comes to a head

The majority of the money PPNZ earns goes to international record labels and bands like Coldplay. Photo / Richard Robinson

A festering copyright row between the record and radio industries came to a head yesterday with industry rights body Photographic Performances (PPNZ) calling for a threefold increase in music royalties.

Lawyers for the two media sectors met for a standoff in a Copyright Tribunal hearing in Auckland that is scheduled to last for a month.

PPNZ is a rights monopoly dominated by multinational record companies, while the radio sector is made up of the duopoly of MediaWorks and The Radio Network.

The Radio Network is half-owned by APN News & Media, publisher of the Herald.

At the heart of the dispute are record company attempts to overturn a rate that has been the foundation of radio royalties for 13 years.

PPNZ wants to increase the radio industry royalty for music stations from 1.75 per cent of gross revenue each year.

Under a complicated and confidential proposal, PPNZ has asked for royalties of 6 per cent of gross advertising revenue for music stations and 1.25 per cent for talk stations, which play less music.

If PPNZ succeeds, based on last year's revenue of $268 million it might divert around $8 million to $9 million from commercial radio each year to the record industry. It is not a huge increase but both the radio and record industries are enduring tough times.

The tribunal will be hearing economic arguments over who gets the benefit of music.

Record companies through PPNZ say music helps radio to attract ads and profits.

Radio companies - essentially a duopoly that controls 92 per cent of radio advertising revenue - say airplay promotes music.

The commercial radio industry body, the Radio Broadcasters Association (RBA), largely MediaWorks and The Radio Network, says airplay increases record sales.

The RBA has resisted calls for change and says the existing system is working.

PPNZ says it includes 61 labels and more than 900 Kiwi musicians and publicity has promoted the impact on local bands.

But the majority of the money PPNZ earns goes to international record companies, not local ones.

PPNZ has fought hard to keep the value of royalties secret, saying it is commercially sensitive. It is understood the body had sought to restrict all reporting of the hearing, but radio stations had objected to the degree of the suppression.

Yesterday the tribunal issued a suppression order that limited coverage of large swathes of information that would be raised in the hearing.

In 2005, PPNZ indicated to the radio networks that it would be looking to review the royalty tariff based on economic evaluation of the value that PPNZ's members' repertoire delivers to the radio businesses. But the radio industry has resisted change and PPNZ calls to embark on an industry analysis.