PPCA, Foxtel, and s.154(1)

On 13 May 2016 the Copyright Tribunal handed down its orders and reasons in the dispute between the Phonographic Performance Company of Australia (PPCA) and Foxtel.

The facts
The PPCA is the collecting society representing copyright owners for commercially released sound recordings. It grants licences authorising the exploitation of such sound recordings, including their public performance, and receives the fees for such exploitation to be distributed to copyright owners. Foxtel has a blanket licence from the PPCA dating back to 2001, covering the use of recorded music in its subscription television service. 
In 2015, the PPCA applied to the Copyright Tribunal for its approval of a new licence scheme covering Foxtel’s use of sound recordings. The new scheme, if approved, would replace the current scheme between the PPCA and Foxtel. Under the proposed new scheme, the licence fees paid by Foxtel to the PPCA would increase by a significant amount. The PPCA argued that such an increase was necessary as the rates obtained by Foxtel under the current agreement were “a massive undervalue”. Foxtel submitted that the proposed increase was “outrageous”. A key point of dispute was whether the current licence agreement between the parties gave Foxtel any right to ‘broadcast’ PPCA sound recordings in television programming communicated over the internet or a mobile telecommunications network.
Under the Copyright Act section 154(1), the Copyright Tribunal is authorised to approve new licence schemes, or, if the Tribunal considers it reasonable, substitute another scheme. The Tribunal can only do this after giving the parties involved an opportunity to present their cases.

The Tribunal’s conclusion
The Tribunal found that the current agreement, as drafted, did give Foxtel the right to use PPCA sound recordings in communications over the internet, and that the new agreement proposed by the PPCA did not bring about a change in that regard. However, the Tribunal also found that not only did Foxtel use a great deal of the PPCA catalogue, there had also been a change in the extent to which Foxtel used PPCA sound recordings, such as greater delivery of on-demand programing via the internet. The Tribunal found that this warranted an increase in the amount Foxtel was paying for its PPCA blanket licence, and that the fees payable should be calculated in reference to Foxtel’s revenue, rather than the current arrangement of per subscriber per month.
The Tribunal concluded that it would be reasonable to phase in this increase in increments over 5 years. The Tribunal also concluded that in calculating the fees payable on the basis of Foxtel’s revenue, the revenues from Foxtel’s pay-per-view sporting events should not be counted.

Navigating choppy streams

As with the WIN v Channel 9 decision WIN v Channel 9 decision , and the PPCA v Commercial Radio Australia decisions in which the Federal Court held that streaming services were separate from broadcasts, this latest case shows the issues faced by content creators and broadcasters in navigating a changing marketplace increasingly dominated by the internet. In reaching this decision, the Tribunal recognised that there were other, non-price related points of dispute between the parties, such as the definitions of various types of content, programming, and streaming, which were not fully explored during the hearings. The Tribunal has ordered the parties to submit a joint document identifying any such points of disputes that still remain. If these points of dispute cannot be resolved, it is likely that the Tribunal will hear further submissions, and further the debate in this area.