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STANDING COMMITTEE ON ENVIRONMENT, COMMUNICATIONS AND THE ARTS
15/04/2009
Reporting of sports news and the emergence of digital media

CHAIR —Welcome. My apologies for being a little late in asking you to come forward. We thank all of you for coming to talk to us today. The committee has received the COMPS submission and has marked it as submission No. 26. Does anybody wish to make any amendments or alterations to that submission, before I ask for an opening statement?

Mr Sutherland —No, I do not think so.

CHAIR —Would somebody like to make an opening statement?

Mr Sutherland —Thank you. I will start by thanking you for this opportunity and also by noting that the Professional Golfers Association, a member of COMPS who also contributed to this submission, is not able to be here today.

CHAIR —They are busy elsewhere, I understand.

Mr Sutherland —Yes. In the first instance, I will hand over to Peter Friend to make some introductory comments, and Shane will follow up.

Mr Friend —Thank you for the opportunity to be here this morning. COMPS, the Coalition of Major Professional Sports, are the custodians at a national level in Australia and a representative on international bodies of our respective sports. Whilst the word ‘professional’ tends at times to place us into a category, ultimately, as previous comments in the earlier segment reinforced, we provide a wide range of public benefits and are responsible for the development and long-term sustainability of our sports in Australia not only at the elite level but also at the community level. As professional sports, we just happen to have developed over the years either our own professional leagues or to participate in domestic or international leagues that mean we are able to generate significant revenues through the sale of broadcast and other rights. That not only sustains the professional end of our sport but also provides a lot of the funding for the grassroots.

Overall, in our sports around Australia, we have approximately between 125,000 and 950,000 participants; we contribute per annum approximately $8.8 billion to the Australian GDP; and in excess of 110,000 people are employed through our sports; so, collectively, we are a large share of the pie. Many of the issues that we come together to discuss are ones that interest not only the sports represented here but all sports. These particular issues, as I mentioned earlier, are of relevance to the sports represented here, particularly because we either own rights or participate in competitions at the professional end of the game.

As our submission states, the sale of our media rights comprise between 70 to 80 per cent of our total annual revenues, and that funding is particularly important to us. As sports, we do not have the ability to just go out and generate more product, as we see fit. It is very difficult for us to grow the pie that we have to cut up amongst our participants to fund our games, et cetera. Sitting along this table, we have some fairly hefty competitors amongst the sports as well, and we do compete against each other and particularly the football codes. In terms of football codes, not only is Australia paramount in our world participation in our particular codes, but domestically we fight against each other and compete against each other for the viewing public in Australia. Our media rights are something that we value very highly, and they are a major source of our revenues. I would now like to hand over to Shane Mattiske from National Rugby League.

Mr Mattiske —Thank you again for the opportunity to talk today. Firstly, all the COMPS members respect the right of news and media organisations to access sports information for the purpose of reporting news. In fact, we welcome and encourage commentary, debate and analysis on sports news. We understand the value of sport to the media, and we also understand the value of media to our sport. However, the media landscape is rapidly changing. The new media landscape brings many opportunities, but it also brings several challenges to us. In particular, these challenges relate to maintaining the balance between the reporting of news and the commercialisation of this content. Our sports must grapple with how the digital media accesses and communicates our events, particularly given that many of the boundaries that naturally applied to the traditional media no longer apply to the new digital media. To illustrate that point—and it was touched on previously—in the old world, if one of the traditional broadcasters was accessing content that the incumbent rights holder thought infringed its rights it would just simply cut off the feed, whereas as James mentioned during his submission, in this digital world, once something is broadcast any organisation claiming to be a media organisation can pull that content off the air and publish it as news.

To step into a real example of this issue around clarity in news reporting, the new technology brings the capability for a media organisation to almost instantly publish a video news report of, for example, when a goal or a try is scored within a match. There is no doubt that there is an argument as to the instant publication of this item being news; however, the extension of the definition of ‘news’ to immediate reporting utilising vision from our events would significantly erode the value of our rights. This is an important issue for us, but it is also an important issue for our exclusive rights holders.

COMPS members are the creators of intellectual property rights relating to our events, and the protection of these rights is paramount to our sports and to the broadcasters and other media companies that purchase these exclusive rights. We all support the fact that these rights are subject to the reporting of news. COMPS members are united on the importance of bringing clarity to the fair dealing exceptions for the reporting of news. The COMPS members are united on the need for supporting mechanisms to protect our rights. We note that some of our members favour the establishment of a code of practice to supplement the existing media accreditation structures, while other members within COMPS want to move directly to a regulatory or legislative change. However, we all agree on the need for mechanisms to support this issue. We welcome the opportunity to present to you today, and through our submission we would encourage further government consultation on this issue. We have also brought along some supplementary notes that we would like to table today that support our submission. They have been prepared by our consultants. These notes provide examples of some of the issues that we face in relation to the reporting of news. There are specific examples in relation to how our content can be directly monetised by news organisation. For example, organisations taking video clips and selling those video clips on a subscription basis or on a pay per download basis. We also have examples across the other issues that we have presented. For example, the use of advertising to ambush our rights holders when other media organisations, particularly on the internet, are publishing video under the guise of news. The supplementary notes also include some statistics on our participation and some information in relation to the community spending that our sports also provide. There are also some examples of how non-official sites are starting to affect the market share, if you like, of the official sites that we maintain.

CHAIR —Does each of your organisations have its own website?

Mr Sutherland —Yes.

CHAIR —Other witnesses have said, to paraphrase it, that it is not so much the media organisations taking over the sports organisations’ business, which is to promote and run sporting events, but the sports organisations are taking over the media’s role of reporting those events. What do you say to those allegations? You all have your own websites. Clearly they are in competition with the other websites that provide sports news.

Mr McLachlan —If I might take that?

CHAIR —I know your website very well, Mr McLachlan.

Mr McLachlan —We are frustrated with it as well at times. Ultimately I guess there is the fact there are no barriers to entry to running your own website, and there are no barriers to entry and it is very cheap and easy. There is a proliferation of news websites, which in fact is the core of what the media companies are talking about. It is actually the core of our problem today. I do not think we have aspirations to become media companies, but the fact that news is able to be so easily disseminated and so easily reported, and the fact that these fair dealing provisions enable anyone really to grab copyrighted material and use it for the reporting of news means that we have this proliferation, and that is at the heart of this. Because it is a cheap and easy tool for which we do not need a licence, unlike a television station or the huge amount of capital that is required to run a newspaper, all sports will continue to run websites as a communication tool. I do not think they were aspiring ultimately to be media companies, although if you look overseas they potentially do as well.

CHAIR —Many Australians only read the sports pages of the newspaper, as we well know.

Mr McLachlan —We like that, too.

CHAIR —Is it not a little disingenuous to say that you are not setting yourselves up in competition against media organisations by having your own websites that we all have programmed into our PDAs or whatever?

Mr McLachlan —I did not say we were not competing with them in the online space. There is no doubt about that. Your comment was that we were aspiring to be a media company. In this space we do compete. There is no doubt about that. What we are trying to distinguish today is competing for the reporting of news and competing as a publisher and an online newspaper as opposed to someone who publishes our proprietary content, our intellectual property, and stuff that actually goes to the heart of our business. We are trying to find that distinction and that balance.

Senator LUNDY —On the issue of news reporting, do you all agree that it is in all of your interests that the news about your sport ought to be maximised, and that that is good for you?

Mr McLachlan —Yes.

Mr Mattiske —Yes.

Senator LUNDY —With full agreement on that point, we can draw down into what the definition of ‘news’ is, and that is I think what you are contending. If an organisation is a news organisation and its core business is writing and disseminating news, why are you so concerned about the definition of that news? It is not like there are new companies out there calling themselves news, or if there are and you want to contend that, but I am just talking about the current media companies whose business it is to report news on your sports.

Mr McLachlan —At the risk of jumping in, we are not in any way trying to define what is news. We love their reporting news. We love and survive on the whole myriad of different media companies in Australia reporting on our game. We promote it to the best we can. We service it the best we can. This is about copyright. The vision and the images in our game are our intellectual property, and our business is built on that. Where we believe they actually infringe that copyright in the process of reporting news is where we take umbrage. At the moment the legislation has not kept up with where the media has evolved, and in our view it is not a right they have to infringe our copyright, it is an exception to the Copyright Act. What they are doing when they are using it is abusing that, and that is the problem we have. We want them to report on our game. We do not tell them what to report. We never have and we never will. Where we object is when they use our intellectual property and our copyrighted footage in the process of reporting news.

Mr Sutherland —We do not have an effective tool or mechanism to deal with that, either, and that is where our proposal goes to having some sort of guidelines in place that can give some extra clarity and reduce the ambiguity.

Senator LUNDY —If you all agree that it is news, I am still confused how the media companies presenting the news in the best way they see fit is so offensive to sports organisations, if that is the business that they are in.

Mr Friend —I might just give a limited example that reflects a situation that rugby is encountering. Traditionally we have licensed photographers and allowed photographers into matches. Those who have been allowed in for news purposes have been able to take photographs, et cetera, and we have licensed other photographers to take photographs for the purposes of commercialising, and we generate a licence fee out of that. With the digital age, that is becoming increasingly less of a revenue source for us—not that it was an overly large one, but certainly it was a revenue source—and that is primarily because those that take news pictures or so-called news pictures, and come in under that authority are now able to upload those images and not only upload them for people to download for free but charge them for those. Our way of trying to deal with that is to say, ‘You can only use those images for certain purposes.’ That is part of the debate that we have with those news organisations. That is one example. From rugby’s perspective, we do not have a problem with their taking photographs. We have to fight for column inches. We would love to see the photographs there. What we do not like is those photographs being commercialised when they have been taken for another purpose.

Senator LUNDY —But you do not own the copyright on those photographs taken for the purposes of news, do you, and you never have?

Mr McLachlan —Yes.

Senator LUNDY —Because the news organisation owns it, if they publish them in their newspaper?

Mr Friend —Our position there is that we have allowed them access for the purpose of generating images for use in news. The problem that we have is that we have said, ‘Okay. Come in, take the images and disseminate the news’, but those images end up in the digital environment—

Senator LUNDY —I am sorry, Mr Friend, but that is not the way the law manages the copyright of those photographs. The law manages them under the Copyright Act, and the copyright is held by the media organisation regardless of what you assert as a sporting body. Whether that is right or wrong is another issue, but for the purposes of this discussion the copyright is held by the news organisation, and it is their right in that regard to do what they like with that photograph.

Mr McLachlan —It is not necessarily true that the news organisation holds the copyright. There is no copyright in a spectacle so generally whoever takes the image, either with a video or camera, owns the copyright. But the way we create broadcast rights and the way we create our commercial—

Senator LUNDY —I am just talking about photographs for the moment, and I understand the distinction.

Mr McLachlan —But it is the same issue. If we choose to—

Senator LUNDY —No, it is not under the law as the law is currently written. What you are contending is that it ought to be, or that it not ought to be.

Mr McLachlan —If we accredited people on the basis that we own the copyright on those images, if they wanted to come to the stadium, we could contract to do that.

Senator LUNDY —You are applying a condition to that accreditation that assigns the copyright differently from that to which the law assigns it.

Mr McLachlan —Yes, that is right, but then the copyright does vest in us.

Senator LUNDY —Yes, if you make that a condition of accreditation, which is what you are contending.

Mr McLachlan —Yes.

Senator LUNDY —But you seem to be asserting almost the opposite, that is, you have granted an additional right in allowing that copyright to be held by the media company in the first instance, and that is just not right. You are actually now trying to reach in and get it back.

Mr McLachlan —No. What we are asserting is we are allowing conditional access to report news. What is happening is that they are then abusing that conditional access where they have copyright for a purpose to actually monetise and commercialise that, whether it is in galleries, on-selling the photographs, very much in competition with us—

Senator LUNDY —I understand that, but in the context of the current debate you are now asserting that the media had an exemption applied to them with respect to copyright news. I am just trying to clarify this. Your contention is that you ought to be able to hold the copyright and can attach that as an accreditation condition; that the copyright was in fact held by the media organisations in the past and, for all intents and purposes, that suited everybody’s interests up until now?

Mr Sutherland —That is why the terms and conditions are there. As I said in my opening comments, the issue is much broader than simply photographs. In using the example Peter did say it is a small example, but it is an important one. In the context of our respective general revenues and what we are particularly concerned about, with absolute respect, the photograph example is something that is not significant relative to moving pictures.

Senator LUNDY —I appreciate that. But for the purposes of the application of copyright law and your contention that it does not translate effectively to moving images in an online context, if you use that analogy of the photograph and the copyright residing with the news organisation it still comes down to video clips, which seems to be pretty much at the heart of a lot of your concerns. We are still yet to hear of or understand what a definition of a news video clip is that would be acceptable or defined by sports for the purposes of being news reported. Could you respond to that?

Mr Sutherland —If we went along the line here, we would probably all have some sort of a different version. Every one of our sports is different in its own way. Some of them are high scoring, some of them are low scoring, some of them go for five days, and some of them go for a couple of hours. All of those things make it difficult to be quite specific about that, and that is where we encourage this committee in its findings to consider a further step where this can be discussed and considered in terms of an appropriate measure or guideline for what is news in the context of various major sports that are of public interest.

Senator LUNDY —But are we not at an inquiry because no agreement could be reached between the sports and news media organisations?

Mr Sutherland —Not in terms of moving pictures, because the scope within the terms and conditions in respect of moving pictures is quite limited. There are two markets, effectively. There is the market for those that are seeking accreditation to come into our grounds, and then there is everyone else. That is the point that Cricket Australia has tried to make. It is much broader than just simply looking at the reasonably blunt instrument that is a terms and conditions accreditation process. The issue for us is that the digital age has seen a proliferation of unfair use of our copyright, and to that end we are submitting that if not legislative change or regulation, then some form of guidelines are there to protect the interests of not only us as sports but ultimately the Australian sport loving public.

Mr McLachlan —I guess we are happy to be prescriptive. We think for an average game of football 30 seconds is about the right amount of time. There will obviously be games where incidents are more newsworthy than others, and that would be extended. We think 30 seconds is—

Senator LUNDY —As a continuous grab or as a package?

Mr McLachlan —In totality. There may be different pieces of image, but 30 seconds of match footage has certainly proven to be effective in the reporting of news on a terrestrial and subscription television, and on those platforms the news seems to be very adequately reported in that context. That is the sort of number we think is appropriate.

Senator LUNDY —In the context of hypothetically using that definition, would you agree that a news media organisation reporting news of your sport using moving images fitting within that description would then fall under the copyright of the news organisation and therefore be theirs to monetise in whatever way they saw fit as per copyright law provides? Do you accept that or are you contending that? I do not mean to put you on the spot, but can you see the point? Going back to the analogy of copyright being held by a news media organisation with respect to a photograph, if there was a definition hypothetically of a moving image for the purposes of news, do you accept that the copyright would be held by the news organisation and that, like photographs, they would be able to monetise that in the way that they have in the past?

Mr McLachlan —To answer your question, I need to go back a step. With respect to photos, ultimately the copyright is vested in those media organisations because, in a context of different mediums, the balance of power has meant that we have never been able to actually protect the copyright in those images to the extent that we would like. If we talk about the elephant in the room, we have never been able through accreditation—

Senator LUNDY —But the elephant in the room is also that you desperately needed those images to be taken to promote your sport within the news organisation, so let us tell it how it is.

Mr McLachlan —That is absolutely true. But at the heart of our business model is actually controlling access to our games, and that intellectual property created out of that spectacle and the marks that are running around on it, is how we make money. Newspapers have a different model where they actually report news and they sell advertising. In allowing them in and allowing them to take images and use them for the reporting of news we have not been able to control that because of the imbalance of power to stop their using those in a commercial sense. I philosophically believe we should be. We have just been unable to do that. We have been able to do that with respect to our vision and our broadcast rights, and I believe they are completely analogous. It is just the difference in market power. What happens is this is a different medium with a different set of circumstances, but the principle for me applies. To get to your specific question, the copyright law applies, and this is an exception to deal with another incident, which is the reporting of news. We love news, and it goes to the heart of our sport, but it should not be at the expense of the copyright which is at the heart of what we do.

Senator LUNDY —I will come back to that and let and other senators ask a few questions.

Senator BIRMINGHAM —Mr Sutherland, I think you just used the phrase the ‘blunt instrument of accreditation’. I am picking up from where we were discussing this previously, but applying it for others to comment. I get the impression from some of Mr McLachlan’s comments that you are less concerned about the blunt instrument of accreditation in that sense and that, if that is what it takes to protect the copyright of images in sport, that is the avenue you could and should use. What do you think of a relatively free market approach that applies on both sides of the fence that gives each of your bodies the opportunity to dictate who comes in, who takes footage and how that footage is used, but equally maintains a fairly free market such that those who take footage without such conditions imposed are able to use it as they see fit? Would you all rather have a tight set of legislated guidelines around this or would you rather have the flexibility of being able to accredit rights and restrict those rights as each of you individually sees fit?

Ms Roffey —We have around 1,600 accredited media that come in during the Open to do print journalist and radio. Because of our very strict security we can very clearly define where they can go through accreditation access. For our broadcast it is completely different, and our host broadcaster here in Australia, Channel 7, has specific access, as do our international broadcasters. Because of the nature of tennis and our very strict security access we can define through accreditation somewhat who can get footage. The problem comes once that footage, as James said before, moves into the public domain. Anybody can pick it up and utilise it, and in 2008 Net Result did some international work and found 59 sites that were streaming our intellectual property without making any contribution at all to the Grand Slam event. Some of that was as bad as actual live pirated streaming. Some of it was under the guise of news. Some of it was photographic clip footage.

I think we are just moving into this whole new digital world and I do not think we can even begin to comprehend what will happen out there. That is certainly starting to impinge on our intellectual property and our ability to generate interest from broadcasters and from media people who have supported our event and contributed back to something that costs a lot for us to put on and run. This is starting to impact, and we are actually looking at negotiating our broadcast rights now, and these are questions that our broadcasters are raising with them. The biggest problem is that we cannot police it. We cannot shut down these illegal sites. While I think it is great that we can talk about news and 30 seconds or 90 seconds, whatever the sport is, we cannot stop a P2P site next door from actually streaming our event live and having a significant impact on pay television or a broadcaster’s interest. We have seen examples not in tennis at this point in Australia but certainly in other sports where broadcasters under anti-siphoning have tried to on-sell the rights, and someone else has said, ‘We’re not interested because we know it is getting fed on to the internet’ and we think that is starting to impact the results. That is a much smaller sport than any of these sports that are sitting at the table here. It is having a much bigger impact than what we have even envisaged at this point.

We cannot really talk about the news broadcasting aspect of it without looking at the much broader thing. Whereas news could now technically on the internet be a 15-minute grab, that was impossible in the traditional media because there just was not the space. You would get five seconds, because sport went for 30 seconds out of a half-hour news broadcast. This whole digital space has just made the three-by-three-by-three provisions and things in the Copyright Act as it has sat to a large degree not relevant in this new space.

Mr Sutherland —As to your question and my point about the terms and conditions, what I am really trying to say is that the terms and conditions are really an inefficient mechanism because they do not deal with the changed landscape. Once upon a time we had basically a linear model where news was distributed out of a sporting event in a linear fashion. Now, as Kate just noted, once it comes into the public space the terms and conditions are virtually irrelevant. What we are saying is that the Copyright Act is not only ambiguous but without guidelines there is really no scope for any sort of protection for us as copyright owners.

Senator BIRMINGHAM —At the extremes, the problems you have just outlined, Ms Roffey, are almost impossible for us to regulate as well. Government regulation of the internet has proven to be extraordinarily unsuccessful when it comes to online gaming, pornography and whatever else, and the current government has an agenda that will attempt to filter certain content, and we will see how that goes. At those extreme margins of somebody who wishes to sit in Fiji, a country that does not even have a constitution let alone a legal structure at present, and pick up by satellite a sports telecast and then live stream it over the web, there is nothing anybody can do about that. To come back to what is achievable and where you want us to go with that, Mr Sutherland in particular has talked about wanting to see either a code of conduct or a legislated outcome. Can any of you tell me what it is particularly that you would like to see inserted in copyright law to address the problems that you are presenting to us today?

Mr McLachlan —I probably will not have to speak after this representing the AFL, but in our submission we actually put some proposed reforms to the inquiry. I am happy to talk to them if you like. Ultimately, we are specifically talking about vision but also other still images, and talking about the volume, the duration for which they can be held online, and also the frequency. The fourth point I would make is concerning restrictions with respect to the commercialisation and monetisation of those. They are the four key areas in which we think there should be some legislative reform, in our view, to deal with those issues and to put some proscriptions around them. As you know, it is very difficult for us to reach agreement with the media providers. There is no strategic imperative for them to do so. If accreditation is the only blunt tool that we have outside of litigation, which is too expensive and too grubby, it is not something that we want to do and we have never challenged it through accreditation. As Senator Lundy pointed out, we need the press and we want them there and that is why we have over 750 accredited journalists, because they are integral to our game and integral to all of our supporters consuming it. We do not really have an instrument other than hopefully this inquiry to deal with that issue.

Senator BIRMINGHAM —Have any of you discussed with your exclusive media rights holders whether they are interested in pursuing litigation around what any of them might perceive as unfair use of what they have paid good money for?

Ms Setright —It is fair to say we have not had that discussion in a sort of—and I use this word advisedly—constructive sense. We have certainly had the discussion when there have been instances of the sorts of things that Ms Roffey was talking about, but the expectation there is upon us, as the grantor of the rights, to effectively deliver the goods. Where there have been instances of abuse, our media rights holders turn to us to seek for us to try to protect those rights, enforce them and therefore deliver the value to them that they see as being eroded. It has not been in that sense of a forward looking, collaborative kind of way. That is not to say that we could not have that discussion; we just have not had it yet.

Mr Mattiske —In our instance we have already had a situation where one of our exclusive rights holders has commenced legal proceedings against another organisation for inappropriate use of content under fair dealing. That case was brought about Telstra in relation to protecting their exclusive internet and mobile rights, and they took action against Fox Sports, or the Premier Media Group. That case was settled out of court, but it is certainly an example of one of our exclusive rights holders attempting to protect their rights where they saw another entity using the content inappropriately under the guise of fair dealing.

Senator BIRMINGHAM —The terms of that settlement may or may not be confidential, but did it include an understanding or an agreement as to how future access would be shared or not shared between those parties?

Mr Mattiske —I am not privy to the detail, but from my understanding and from the information that was publicly reported, they reached agreement around some principles similar to what Gillon from the AFL has mentioned around the length of the highlight that could be taken, and the amount of time that highlight could be put up. I am not sure what other details were put in place. In relation to access, which was one of the points you just raised, I think access is one of these issues that we cannot really deal with because we cannot control whether or not they are getting a direct feed of the content or whether they are pulling this off the air. That is one of the biggest issues that we now have as sports. In the past we could effectively control anyone who came through the gate at our stadium, but in this new world, once that event has been broadcast to the public, we have lost control of that content.

Senator BIRMINGHAM —Maybe they would have done us all a favour if they had not settled and they had gone on and created a few common law principles around it. In terms of these proposals, Mr McLachlan, you said that these are the types of things you would like to see. It is a fraught area for parliaments and governments to start trying to legislate in, that is, getting into that level of detail of what this constitutes. In the end it does come down to some of the issues that have been canvassed today and our then trying to define what constitutes news footage versus what constitutes live broadcast. That is something that parliaments in good democracies have usually tried to steer well clear of. Is there any scope for an industry self-regulated outcome of the type that is an alternative that has been mentioned today, and any willingness from what each of you see for in essence the major media players in both the digital world and the traditional media, where there is an enormous amount of overlap, to sit down and try to negotiate some type of clear code of practice?

Mr Mattiske —Speaking for the National Rugby League, we believe there is scope to step towards a code of practice. We believe that at least the media organisations we have talked to would be receptive to that. This inquiry is potentially an important part of that process in that it could give some impetus to a code of practice being formed. It is an issue that we have considered in the past, but we have never really rallied around it. We believe we have seen a slow erosion in the value of our rights, but it has been a slow and gradual erosion, and we are now at a point where the digital media has become so prominent that at least from the National Rugby League’s point of view, looking forward into our next rights deal, if things do not change, if this scope of news reporting is allowed to continue to broaden, we think it will diminish the value of our exclusive media rights. Our view is there is scope to move to a code of practice and, if that were to fail, in consultation with government we think we could look at what other regulatory or legislative things could be put in place to support that. Having seen some of the submissions put forward by other sports, I know that is not necessarily the view across this table. However, I think we all do agree that something needs to happen, whether that is a code of practice or legislation.

Mr McLachlan —I respect Shane’s view. I guess our view is that these media companies are our partners, and we work very well with them on a whole range of issues, but this is strategically important to them as they try to grow their media businesses and look to monetise what we think is our content. We really think we need leadership in a legislative form on this issue. I understand how difficult that is.

Mr Sutherland —I think Gillon’s comments echo our thoughts on that through our experiences. Earlier on, when I spoke I did note the fact that in respect of news bona fide news agencies and organisations are having a problem with content aggregators who are effectively taking their copyright and uploading it onto their systems. It is not as if new bona fide news organisations are not in the same boat as us. It is not as if they would not and should not understand the challenges that we have. It is perhaps not impossible, but I guess in our experience, based on the discussions we have had, the scope is limited or the inclination at the moment is limited, and that is why we favour government taking a leadership position in this matter.

Senator BIRMINGHAM —With the exception of YouTube all of the examples listed in the document you have given us today relate either to traditional media organisations pretty much, or 3 mobile, which is not a traditional media organisation but one operating more like a media organisation. Is it fair to say overwhelmingly it is those types of companies that have traditional platforms or at least are large, well structured companies that pose the biggest problem to you all? It is not what I might choose to put on YouTube or on my website that at present is the greatest immediate threat?

Mr Sutherland —Yes, I think that is fair.

Senator WORTLEY —I am mindful of the time, so I will just ask a couple of questions. Under the current state of play, what level of concerns are there in relation to your sporting organisations’ ability to increase your revenue by capitalising in the future on digital media? Secondly, what is the level of concern about a possible decrease in the future on what you are able to secure in monetary terms because, in your view, the product is being devalued in the eyes of your exclusive media right holders because of the sport’s exposure through digital media?

Ms Roffey —From the tennis perspective, it is not necessarily the difference between our traditional and digital; it is in the digital space, which is an area that we can all do a lot more in, as Senator Lundy mentioned. It is the absolute lack of ability of anyone to police that space. I think we could on-sell our rights. Wimbledon has tried to do this. It has on-sold its rights to specific digital media providers, but meanwhile, in China, there are 70 P2P sites that are actually streaming live Wimbledon coverage all over the place. I think again it is not necessarily that we are so concerned with our traditional media and our broadcasters versus digital; it is that in that digital space and that digital environment we have an absolute lack of any ability to shut down these illegal sites. As Jo said, our best police person out there is Channel 7. If someone else comes up with a site or something and illegally presents a news broadcast that infringes their rights, they immediately let us know, but our ability to do something about that is very limited at this point in time.

Senator WORTLEY —Is there concern regarding your organisation’s ability to increase your revenue in the future?

Ms Roffey —I think it is working both ways. Yes, there is certainly a revenue component, but we are also getting feedback from our broadcasters and various other groups that are saying, ‘This is starting to impact on our exclusivity as well.’ I think you will find that probably the broadcast and media players in this space do not have dissimilar concerns in that digital media environment from what we do, which is other people stepping in that none of us can regulate starting to take space off both of us, which has a commercial impact on both entities.

Senator WORTLEY —How would you respond to a comment that greater exposure to your sports through the digital media will effectively result in greater interest in the sport, increase followers, build larger audiences and perhaps even increase membership?

Ms Roffey —I think there is that trade-off, but as we have mentioned here, we are certainly not heavily government funded, so much of our revenue that we generate goes back to our court rebate scheme, for example, where we provide $7 million of our own money to develop community based courts for tennis. As we start to lose that, we actually lose the real capacity to do something. While it is great to say we have a lot more people watching, we need that volume of income coming in to actually put facilities down on grassroots areas so we can play tennis.

Ms Setright —One of the key phrases in that quote that you read out was ‘larger audiences’, and obviously that is the objective of all of us, but it is the fragmentation of those audiences that is important. The answer is not simple, but certainly the issue is very simple for us. From football’s perspective, very clearly it is a matter of not just maintaining but increasing our media revenue. We are probably in a different position from my colleagues at the table here in terms of our evolution. Our media rights do not represent anything near 70 per cent to 80 per cent, and therefore we have a larger proportion of government funding at the moment. That is not something that we perceive, and I am sure the government does not perceive, as a long-term aspect of our sustainability. It is critical to our sport, and fragmentation of audience is critical to those to whom we are seeking to sell our rights.

Mr Sutherland —I agree with that comment. We cannot deny that. It is absolutely true, but it needs to be seen in the context of fair use of our copyright. Without that or with devaluation of those rights and the value of those rights our very livelihood is put at risk. Our livelihood is all about servicing the Australian community with sport.

CHAIR —I thank all of the representatives from COMPS. Thank you for your submission and for taking the time to appear before the committee today. We appreciate it.

Senator LUNDY —Perhaps if each organisation could take on notice what requirements, pressure, requests you are getting where relevant from your international sporting body about these issues? It is not relevant for every body, but I think it is a very important question for us to understand what is occurring internationally with respect to your sporting bodies, and any requirements or limitations they are asking for.

Ms Setright —I could comment on one that is very topical for us, and that is obviously our ability to host major international events, particularly the jewel in the crown, being the FIFA World Cup. It is fair to say that FIFA obviously exercises a fairly significant amount of power. There is a competitive struggle for something like the FIFA World Cup, which we estimate would have an economic benefit to Australia of $5.3 billion. That is the sort of power that they yield. There is no doubt that our ability to actually put in a compliant bid for the World Cup would be dependent upon being able to guarantee, just put very simply, exclusivity and control of their media rights. With all due respect, I turn to you in that sense, because it is not just us. It will not be FFA guaranteeing; it is actually a critical element of the tender process; it is the federal government and, to the extent required, also state governments that actually provide that guarantee, if necessary—and they are quite prescriptive about this—backed up by legislation.

Mr Friend —If I might add from a rugby perspective, the requirements for hosting Rugby World Cups are very similar, and I am sure that in the case of football the same applies, that there is also an additional obligation on the host union to support the policing of any breach of the commercial rights the international body holds in respect of the event. So, it does become a fairly onerous exercise in some jurisdictions to be able to police those rights, particularly in these areas. There are very black and white obligations on you as the host to do that.

Senator WORTLEY —We note your comments and your submission in relation to those issues.

CHAIR —Are there any examples of national governments that have implemented legislation that has satisfied FIFA’s requirements or international rugby’s?

Ms Setright —We will take that on notice. Certainly we do have copies of the actual agreements and guarantees that were entered into for the upcoming World Cup in Brazil. I do not know much about Brazilian law, whether it has actually required legislation to be enacted, but I can take that on notice.

CHAIR —Yes, it would be interesting.

Mr Friend —In the case of rugby, it is only a new requirement in respect of bids for the next couple of World Cups in respect of some of these issues, but I can certainly inquire as well.

CHAIR —It could make for very interesting legislation. Thank you. Just before we finish, I do note that the document you tabled, Mr Mattiske, is marked ‘Confidential’; do you understand that if the committee accepts this as a tabled document in fact it will not be confidential but it will be a public document?

Mr Mattiske —I do not think that is an issue amongst the rest of the group. No, that is fine.

CHAIR —Thank you very much. Again, thank you very much, all of you, for your submissions and for taking the time to appear before the committee today. We appreciate it very much.

Mr Sutherland —Thank you.

[12.31 pm]