The Phonographic Performance Company of Australia (PPCA) has released a report by economic advisory firm Mandala that suggests lifting caps on sound recording royalties paid by radio could result in a 78% increase in income for artists played on the radio.

Key findings include a potential additional $4.8 million in royalties paid to Australian artists in 2024-25, and up to $19,100 in additional income per year for artists played on radio. The report also suggested top commercial radio stations could maintain profit margins of 15% if they paid the same rate for sound recordings as they do for musical works, while the broader radio industry margin would be slightly reduced from 13% to 11%.

Paying sound recording royalties at the same rate as musical works would account for less than 0.3% of the ABC’s total annual budget. If caps are removed, increased reinvestment from record labels could see double the number of new local artists played on radio for the first time.

The PPCA's report follows Senate Committee hearings held on 7 March this year regarding the Copyright Legislation Amendment (Fair Pay for Radio Play) Bill 2023, introduced by Senator David Pocock. The Bill amends the Copyright Act 1968 to remove restrictions limiting the Copyright Tribunal’s ability to determine the amount payable to rights holders in sound recordings when music is played on commercial and ABC radio.

Commercial radio earns around $1 billion a year in advertising revenue and pays only around $4 million in copyright fees for the broadcast use of sound recordings. Australia is the only country in the world with this sort of copyright law, and such a cap does not exist for any other type of copyright in Australia.

“Radio companies are well-resourced and capable of paying higher rates," Mandala's report stated. “Removing the radio caps is an effective, low-cost way to deliver on the Government’s objective to support the arts industry and promote Australian talent”.

PPCA CEO, Annabelle Herd, said Australian artists are doing it tough at the moment.

"Removing these caps is the single most effective way to increase fair compensation for artists when they need it most...Radio has benefitted from decades of financial windfall from these provisions in the Copyright Act at the expense of local artists and labels," she said. "The heavy burden of subsidising Australian radio – a profitable and successful industry – cannot continue to fall on struggling local artists.”

Mandala Director, Tom McMahon, noted a clear finding from the research is the system in Australia is well out of line with comparable jurisdictions.

"The actual royalty rate for sound recordings paid by commercial radio stations in Australia is just 0.4% of broadcast revenue, compared to countries such as Canada, the UK and Germany, which have rates of between 3% and 7.5%," he said.