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Environment and Communications References Committee
01/08/2018
Australian content on broadcast, radio and streaming services

CARTER, Mr Jonathan, Head of Legal, Corporate and Policy, APRA AMCOS

ORMSTON, Mr Dean, Chief Executive, APRA AMCOS

Committee met at 09:30

CHAIR ( Senator Hanson-Young ): I declare open this public hearing of the Environment and Communications References Committee in relation to its inquiry into the economic and cultural value of Australian content on broadcast, radio and streaming services. This is a public hearing and a Hansard transcript of the proceedings is being made. Before the committee starts taking evidence, I remind all witnesses that, in giving evidence to the committee, they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee, and such action may be treated by the Senate as a contempt. It is also contempt to give false or misleading evidence to a committee.

The committee prefers all evidence to be given in public, but under Senate resolutions witnesses have the right to request to be heard in private session. It is important that witnesses give the committee notice if they intend to ask to give evidence in camera. In addition, if the committee has a reason to believe that evidence about to be given may reflect adversely on a person, the committee may also direct that evidence be heard in a private session. If a witness objects to answering a question, the witness should state the ground upon which the objection is being taken, and the committee will determine whether it insists on an answer, having regard to the ground which it is claimed. If the committee determines to insist on an answer, a witness may request that the answer be given in camera. Such a request may, of course, also be made at any other time. On behalf of the committee, I would like to thank all those who have made submissions and sent representatives to us here today, for their cooperation in the inquiry.

I now welcome representatives from APRA AMCOS. Information on parliamentary privilege and the protection of witnesses should have been given to you. We have your submission. Would you like to give a short opening statement, and then we can go to questions.

Mr Ormston : I'd like to thank the committee for the invitation to give evidence at this public hearing of the inquiry into Australian content on broadcast radio and streaming services. By way of background, APRA AMCOS has been around since 1926. We have a membership of over 95,000 Australian and New Zealander songwriters, publishers and composers. We administer certain rights on their behalf, both locally and globally, and have relationships with around 145,000 licensees. For the purpose of this hearing, that's everyone from free-to-air television, subscription television, the public broadcasters, commercial and community radio broadcasters, audiovisual streaming services, music streaming services, and everyone else in between.

This inquiry comes at a critical time for our industry. It comes at a time when Australian music is more popular than ever before both domestically and internationally. It comes at a time when jurisdictions around the world are reviewing the copyright and regulatory frameworks that support the creation of local content, and it comes at a time when the economic models that support industries like music are shifting dramatically.

We're incredibly excited about the potential of our industry locally and globally in live music venues around the country and in the digital space. It's very difficult to argue in 2018 that Australian music is not as compelling as that produced by our international competitors. Aside from the early 1980s, it used to be that there was a wait of many years between Australian artists breaking internationally. From the Little River Band to ACDC, Air Supply Men at Work, INXS, Savage Garden and more recently Gotye, Iggy Azalea and Sia, there are now more Australian artists across a diversity of genres succeeding in international markets than ever before. The profile and growth of Australian music over the last few years has been simply amazing to watch and to support. Some have already become globally recognised household names: Sia, Courtney Barnett, Vance Joy and Flume. Many are touring internationally and adding to the momentum of the Australian wave. RUFUS, Alex Lahey, Alison Wonderland, Middle Kids, Tash Sultana, Amy Shark and Stella Donnelly are just some of the Australian artists who have written and recorded and appeared live on stages and screens across the world.

Earlier this year at South by Southwest, the world's largest film, interactive media and music industry event, 52 Australian artists appeared under the banner of Sounds Australia, the government and industry partnered export music program. Australia's music industry was standing alongside the powerhouses Australian exports—food, agriculture, wine and tourism. We need to ensure policy settings remain relevant. We need copyright frameworks to provide certainty for investment in local creators and we need to foster a government and industry investment partnership that supports the contemporary music ecosystem, from music in education to music export, to take advantage of the full cultural and economic benefits of Australia's potential as a music powerhouse.

In terms of regulatory support, we know that broadcast quotas are incredibly important for the local industry. Australians want to hear their own sounds and voices, and quotas ensure both new and long loved Australian music is heard across the country. APRA AMCOS's strong view is that local content requirements continue to remain highly relevant in the Australian broadcast media landscape. Ensuring that Australian content remains easily accessible to all Australians helps to develop and reflect a sense of Australian identity, character and cultural diversity. In particular, our local songs are a vital means of expressing our ideas, perspectives, values and identity and, equally, a means of projecting that voice to our fellow Australians and the world.

The existing quota levels, which are already low by comparative international standards, mean we advocate in the strongest possible terms that the Australian content requirements that currently apply to the various broadcast sectors be neither removed nor decreased. In fact, given the talent we see, they should be easily achieved. However, compliance with radio quotas needs to be considered very carefully to ensure the code remains relevant. APRA AMCOS's key concern is that under the existing code radio broadcasters are able to self-categorise which format for the purposes of determining which Australian music quota applies to their service. For example, if a station categorises itself as falling within the classic rock format, a minimum quota of 20 per cent Australian music will apply, whereas if the same station categorised itself as gold, encompassing classic hits, an Australian music quota of only 15 per cent would apply, and if the category of easy gold were chosen, the quota would be only 10 per cent. The various format categories are not defined anywhere within the code and are out of date. They have not been updated since at least 2001.

Compare this with a jurisdiction like Canada, which sets a 35 per cent quota for all commercial radio stations. The Canadian quota requires that 35 per cent of all music selections played by the station must be Canadian. This domestic policy setting underpins the enormous domestic and international success of Canadian artists, such as Drake, Justin Bieber, The Weeknd, Arcade Fire, k.d. lang and Celine Dion, who happens to be touring Australia at the moment. We question why the format of a service ought to be determinative of the applicable Australian music quota percentage for that service. APRA AMCOS proposes that all music focused services ought to be subject to the full 25 per cent music quota, which is not only achievable but also internationally reasonable.

In the streaming space, we need to take a more creative approach, as it is not a linear medium like radio. Music streaming services have local curation teams in Australia and have already demonstrated some very good support for Australian artists. We're in conversation with music streaming services around the concept of benchmarking locally curated playlists to ensure there is always an opportunity for Australian music to be heard and discovered by local audiences and to mitigate the risk of foreign artists unfairly dominating local charts. In fact, promoting playlists featuring increased levels of Australian music to Australian consumers in an on-demand environment may even prove to make good business sense. Our stats show that local works are streamed at least twice as much as foreign works. We don't think it's a terribly complicated conversation, and right now there's a lot of goodwill from the parties. Our strong preference is that we're able to arrive at an industry agreed benchmark for Australian content on locally curated playlists. Otherwise, we refer the committee to APRA AMCOS's written submission to this inquiry dated 16 February 2018 and welcome any questions.

CHAIR: Thank you.

Senator URQUHART: Can you talk about the impact of digital piracy? Do you think that the market continues to be affected by digital piracy?

Mr Ormston : Digital piracy has certainly had an impact on our industry over many years. Essentially over the past decade, our industry has been faced with numerous disruptions—piracy is one form of disruption, but moving into a digital format and a digital space has been another form of disruption. I think it's fair to say that music is always really the first form that is subject to that form of disruption. Certainly, moving to streaming services and the widespread adoption of streaming services like Apple Music and Spotify, for example, have been wonderful in terms of assisting the change in consumer behaviour—people becoming familiar with the concept of paying a regular amount of money on a monthly basis for access to music. Whilst there have been other strategies around mitigating piracy—through site blocking, for example—on the proactive side in terms of content provision subscription services in particular have been a wonderful way of us channelling the general consumer market into a paid music service.

Senator URQUHART: Do you think that the current copyright laws are adequate or are their reforms that you think would be necessary?

Mr Carter : I'd just like to add one piece to Dean's previous answer, and that is that piracy doesn't discriminate between international and local content. So on the pirate services, you see just as much Australian content as you do international content. So where piracy has an impact it's undermining Australian content creators just as much as it is overseas content creators. In terms of the regulatory response to piracy, I think the key point is that there's no silver bullet—there's no single solution to turning consumers away from pirate services. The new commercial models, such as streaming services, assist, but also the recent website blocking injunction provisions in section 115A of the Copyright Act have certainly assisted. In particular, the parliament's recent decision to not extend the safe harbour provisions to allow some pirate sites to rely on safe harbours as a means of avoiding their copyright obligations is a very comforting decision and will also continue to assist the ecosystem that's developing.

Senator URQUHART: In your submission you say:

APRA AMCOS is in ongoing discussions with the major music streaming services as to how they can demonstrate their commitment to Australian music on their Australian services.

Can you just expand on that? How are those services currently promoting Australian music, and do you think that those efforts are sufficient?

Mr Ormston : Without question, all the streaming services based here in Australia have shown support for Australian artists. They have local curation teams, which is really important to make sure that we're not receiving a homogenous global package. So we're very positive about those locally curated teams. There is a lot of great work done with individual artists, supporting the specific development, reach and careers of individual artists. So that's all positive and we're appreciative of that.

I guess the point we make is that you do need something in place that ensures there is the opportunity for Australians to be heard. Irrespective of what the current policy position of a commercial entity or streaming service is, there should be a provision to say, 'In your locally curated playlist we'll ensure a degree of Australian music is always heard,' so there's an opportunity for Australians to be heard in those playlists. That's really our conversation with those services at the moment, which is to say it doesn't necessarily need to be framed as a quota. We recognise streaming services are different to the broadcast medium, but you do need to ensure some space. Otherwise you can have times where there's a major international act—say, Ed Sheeran—which is a phenomenon, but during that time it's very easy for the content in a curated playlist to be overwhelmed by that foreign domination. There's a risk that you have a period of time of a few weeks where there's less opportunity for Australian artists to be heard. That's really our point—how do we provide some level of certainty?

Senator URQUHART: If you don't have a quota, how do you do that? How do you achieve that level?

Mr Ormston : Part of the conversations we've had with services is around this idea of a benchmark. In the broadcast space it's very fixed. There's the Australian performance period, a weekly measure between 6 am and midnight, so it's quite prescribed. Maybe in the streaming space we could look at something that provides a little more latitude, that recognises there are peaks and troughs, and maybe it's recognised and reported on over a quarterly period. for instance. We're trying to be open in that space to say, 'Let's find a way that's reasonable and that works.' We're conscious of data issues and ensuring everybody knows what's meant by 'local'. There needs to be further conversation in how you define 'local', for instance.

Senator URQUHART: What's your definition of 'local'?

Mr Ormston : Currently in the broadcasting space there is a definition around local which refers to the performing artists. Essentially it's if the artist is identified as an Australian citizen or primarily a resident here.

Senator URQUHART: Is that adequate? Is that what you're hoping for?

Mr Ormston : In the broadcast space we think that works. In the streaming space we're saying there's an opportunity to think about it differently. It could be based on the songwriter, for instance, which is APRA ACMOS's constituency. There could be a conversation that looks at the songwriters in the work. Canada, as an example, looks at a number of measures. You essentially choose two of the four measures, which might be the recording artist or the songwriters, for instance. So there's space to have a conversation around that.

CHAIR: In relation to the regulations or the voluntary rules that currently exist for the industry, how long have they been in place and how many times have they actually been tweaked over the years?

Mr Ormston : I'd need to take on notice to check how long they've been in place. In terms of commercial radio and the code that exists there, my understanding is that was reviewed approximately 18 months ago. In our submission we have said that there are parts of the code that we think need further review. In the opening remarks I just made I referred to the categorisations within the code. We think they are outdated. We think that does need to be looked at. Those categorisations, we don't think, have been reviewed since 2001. Over the last 18 months there's been a lot more conversation and analysis of data in this space to look at the implications of the categorisation and what's happening in that context. So whilst there was a review 18 months ago around the code, it's really in the last 18 months that some of this data has come to light. In our capacity, we've been looking at what that data tells us and what would be a better way to go.

One of our strongest asks at the moment is a consideration around the categories. By way of example, in community radio there is really a consideration for 25 per cent local content across all formats of community radio, except where it's an ethno music based station or a news based station. It's very simple and community radio's compliance with that benchmark is very good—our understanding is it sits around the 37 per cent mark, from our conversations with commercial radio.

We don't think there's a problem in stations being able to comply. There's enough Australian content to do it. Our primary issue, as I've said, is around these categories, which seem outdated now and arbitrary in nature.

CHAIR: Why wasn't that looked at during the review 18 months ago or wasn't that the focus of it?

Mr Ormston : It wasn't really the focus at that point and wasn't raised. This is a discussion that's been ongoing for a while with commercial radio. I think there's just been greater light brought to the discussion and more data supporting the concerns we've got around the categories. It's possibly that greater information is to hand now, but we would certainly look at the next earliest opportunity to review those parts of the code.

CHAIR: What's the process at the moment in relation to that code? It's an industry code. If this committee were to, for example, recommend some type of government regulation, that would obviously override that. What's your preference: an industry voluntary code or something that's a bit more legit?

Mr Ormston : I think an industry code is a great thing when everyone's heading in the same direction and has a similar view as to the direction. The code helps provide a framework around that. It can be difficult. If there are certain areas where there isn't consensus on the direction we are heading, a degree of independence might be required—'Okay, we've got a difference of opinion here. How do we get to an end point?' I think part of the problem at the moment is that there isn't really a framework that provides any independent thought or assessment or determination, if you like. That would certainly be useful.

CHAIR: Some type of oversight.

Mr Ormston : That's right. At the moment, as I said, we're having regular conversations with commercial radio to say, 'Here are our concerns.' There's a conversation around compliance with the existing code and then, separately, there's a question around the code itself. The conversation around compliance with the existing code is, in a sense, easier to have. It's more difficult to have a conversation around the nature of the code without a degree of independence and somebody helping you arrive at what the end solution might be. Obviously, in the TV space there's a different construct given there's a standard. We're conscious of those different mechanisms and the relevance and appropriateness of those different mechanisms, and we're open to either of those, really, in terms of being able to achieve an end objective.

CHAIR: In terms radio, whether it's commercial or community, are the audience numbers relatively steady or are they in decline as people find their music through streaming services?

Mr Ormston : I don't have data specifically on radio audience numbers here today. Our feeling is that radio remains an incredibly important part of the ecosystem and that people find their music in different ways. There's a crossover in how the ecosystem works. No longer is it solely the domain of commercial radio to break a new artist, for instance; it's a much more complicated relationship. Community radio, commercial radio and the streaming services play an incredibly important function. We know that streaming services, through their different forms of playlists, provide an opportunity for many more Australian artists to be heard, but that is still a struggle. It's still a struggle for your average Australian artist to be heard somewhere, which is partly why we call for the space in the streaming services, but we also know that radio curation is very much related to what's happening in streaming services, so there's a crossover between all of those players. For our members, it's a much more sophisticated game to play and problem to solve in terms of: what's your presence in each of those areas and how do you get heard? I'm not sure that directly answers your question.

Mr Carter : I'd only add that our experience has been that, whilst the streaming services are growing very quickly and we're seeing subscriber numbers increase rapidly, we don't see that at the expense of or the cannibalisation of the radio broadcast market.

CHAIR: The reason I'm asking is that that is a different perspective than what's been put forward to us in relation to the screen industry, for example. Television broadcasters are saying, 'Everyone's moving to demand and streaming services, and therefore it's too hard to meet our existing quotas.' That's the argument that's on the table. But what you're saying is that in the music industry there are still a lot of people finding and listening to music through the traditional radio services.

Mr Ormston : Absolutely. Just to give you a more localised example, in our own business, the royalty earnings through radio play are still an incredibly important part of the mix for an Australian songwriter or artist. The revenue for us from that area is incredibly important. We don't see it as a diminishing area. We see it as a very strong area and think it will remain so for the foreseeable future. Streaming services just provide another avenue to market, which is great. I think it's fair to say that more Australians are listening to more music than ever before. The complication for everybody in trying to be heard is what we refer to as the long tail. There is just that much more music being listened to, albeit not as concentrated as it might have been in the past. Radio is a concentrated format, and streaming is not so.

CHAIR: Can I pick up on this point about royalties, because I would imagine, if there were a proper guide or a code that really dealt with the categories as you have described, that would allow more Australian artists to be played on radio, and that in itself would mean more Australians were getting royalties for the music that was being broadcast, therefore investing in Australian jobs.

Mr Ormston : Certainly, yes. You're absolutely right. You're feeding our own ecosystem.

CHAIR: As opposed to paying royalties to artists who are simply overseas and may never even visit Australia.

Mr Ormston : Correct. APRA AMCOS's role and responsibility is to administer rights in this territory, which includes the remuneration of the works of international artists played on radio here. If there are 100 works played on radio, we are collecting the licence fees from the radio station and paying those royalties out against those works. We also have a remit to support local Australian writers. So, to your point, licence fees are being paid and royalties are being paid out in any case, but, where there's a greater contingent of Australian writers in that mix, then more of that money is retained in this territory rather than going offshore.

CHAIR: What do you think is the biggest barrier to changing or increasing Australian content on radio services? If you were to name one thing, what would be the barrier?

Mr Ormston : I think the quotas are an opportunity. If they're in place, they're not a barrier; they create an opportunity. We know how hard it is to get picked up on commercial radio. We hear it from artists and managers all the time. There are so few new songs added to rotation on commercial radio in any given week. It's a highly, highly competitive area. We are not saying for a minute that you should be putting up works that aren't of a standard to be played. This is not about giving Australians a false support. You've got to compete in an international and global marketplace now. If you're a kid in a bedroom and you've created something and put it out there, you're competing on a global stage. But what having that quota in the radio format does—as I said, radio is such an important medium, and the broadcast capacity, in having you heard by a wider community, is so important. It's beyond just being heard on radio. It feeds the live touring market and the festival market. So the ability for people to hear something local on radio and at the same time realise that that artist might be touring feeds the entire ecosystem, whether it's live, digital, local or international. It's all part of that ecosystem. So the quotas become incredibly important. As we've said in our statement, any reduction or watering down of quotas would have a detrimental effect.

Mr Carter : Can I just add one thing to that. You asked what are the key impediments. We don't pretend to be experts in commercial radio music supervision, but in my experience commercial radio stations can be quite conservative in their choice of broadcast playlists. They will tend to lean towards pre-established hits and recognisable music. Because, by its nature, new Australian music hasn't yet been tried and tested in a market, it's a riskier proposition for a commercial broadcaster to use it, whereas, if you know that you've got a platinum record in the States or in the UK, that's a more bankable hit. So they'll lean towards the more conservative option to base their commercial model around. That's why quotas are so important, because it counterbalances that imperative. Again, I just want to stress that that's me speculating. I'm not an expert in that area, but that's my observation.

CHAIR: What do you think the radio broadcasters' response would be if, for example, we went with a 35 per cent quota, which Canada has, or even if we were to maintain what's on commercial radio across all categories, the 25 per cent? Do you think they would be open to this, or is there resistance to change?

Mr Ormston : It's probably stronger than a guess. My feeling would be that there would be resistance. We're conscious of that sentiment of, 'Don't tell us how to run our business,' and we're certainly not trying to do that. But, when you look at the role that radio plays generally in the community, we think there is a public benefit that needs to be considered and balanced against the business format of the radio station. In a sense, we're not calling for 35 per cent. We're merely saying this is what happens in Canada, by way of example. There's a whole range of things to look at there that bring you back to the fact that what we're asking for here is not unreasonable. It's not difficult to comply with. Thankfully, there's no suggestion, I think, from commercial radio that there's not enough good Australian content to put up. We haven't heard that argument for a long time, which is great. If that's the case, it really is a matter of saying, 'Well, let's run with 25 per cent.'

If there are five different categories with different percentage levels currently in the code, we're saying that it seems arbitrary in the current climate to look at the way those categories are defined. It's also complicated. There doesn't seem to be an independent way of determining how stations are categorised. It's really up to the station. So we think there should be a degree of transparency and independence around that process. In a sense, we're calling for a simplification and a degree of transparency where we're all on the same page and we all know what we're heading towards. We don't think that's an impost on the radio business, and we don't think it's us telling them how to run their business.

CHAIR: What about the public broadcaster? ABC Radio has huge reach across the country, with multiple stations. What's their role in promoting local artists and content?

Mr Ormston : It's obviously incredibly important. We have some stats recently to hand from the ABC. The ABC sets its own benchmarks and measures of what it feels should be playing on its different formats. From the information we're looking at, which we can provide, it is doubling those benchmarks. So across the ABC you're looking at around the 50 per cent mark in local music content. On triple j it exceeds 50 per cent, and it's 40 to 50 per cent on some of their other formats. We look at that and go: 'That's great. That's fantastic.' If we were being a little pushy, it would be nice to have that benchmark publicly stated. At the moment it's an internal benchmark. The investment and support of Australian content on the ABC is, I think you'd have to say, fantastic.

CHAIR: These statistics that you're referencing, where are they from?

Mr Ormston : From the ABC.

CHAIR: Are you able to table that document?

Mr Ormston : Ithink we are; we asked if we were able to cite those stats today.

CHAIR: Thank you. Can I go back to streaming services. You've referenced Canada a number of times in your submission and also in evidence today. That 35 per cent quota in Canada is for broadcast. What are they doing in Canada in relation to streaming services? Obviously, that's not unique to Australia.

Mr Ormston : No, the streaming services obviously aren't unique. We're currently not aware of whether there are detailed conversations around a concept of quotas or benchmarks for curated playlists in Canada. We would presume that, given Canada is in a similar context to Australia as a market, it's probably not outside the realms of possibility that there are conversations being had, but we're not party to those conversations.

CHAIR: Is there anywhere else in the world that's doing that well or starting to have those conversations?

Mr Ormston : It's interesting because, in some ways, you could argue that Australia and Canada are unique territories, because in any language-based territory this wouldn't be a discussion. If you're in France, no doubt the degree of local French content would be over the sorts of benchmarks we're talking about. It's not relevant in the UK or the US, because of the dominance of their own local content in those markets. When you look at it from that perspective, we think that what we're talking about around benchmarking is not necessarily unique to Australia, but Australia and Canada would be examples of territories where that might be relevant to that conversation. We've said that to the local streaming services. We've said: 'You are global players. You are working in many territories. We're conscious that decisions made in one territory impact other territories.' We're conscious that that might be a consideration, but we do think there's an argument to say that this territory is slightly different. We are dominated by US culture and English culture. We need to make sure we've created space for our own culture. We think there's a degree of uniqueness to that.

Mr Carter : The only thing I'd add, and I don't have figures to hand, is that we do know that the Canadian government invests very heavily in the Canadian music industry both by way of direct grants and—is there some tax?

Mr Ormston : There's enormous investment. In another conversation, the investment in the ecosystem, if you like, in Canada dwarfs anything that we are doing here in terms of local support and their export market. It's the combination of those factors, with their radio support et cetera, in Canada that has seen amazing acts and artists coming out of Canada over the last few years. As we've said to government more generally, it's not a matter of just one fix; it's a matter of looking at the ecosystem and going, 'What do we do in each of these spaces to ensure the benefit of the greater whole?'

Mr Carter : My colleague has just reminded me that the CRTC, in Canada, has just announced a review into streaming services for both music and audiovisual, so there should be some interesting evidence coming out of that process. We can provide more detail on the timing of that review.

Senator DUNIAM: You may not be able to assist, but I wonder whether there are any projections around the growth of streaming versus other mediums—television, radio et cetera. I was looking at appendix 2 of your submission, where it talks about streaming revenue versus gross revenue. It seems to effectively double every year. Do you have a projection of how much streaming revenue you will have in the next few years? Is it the same sort of trajectory or do you not model those sorts of things?

Mr Ormston : Thank you for the question. It is close to our heart, obviously, in terms of revenue projections. Yes, we've really just finalised our 2018 financial year results, which, at this point, are unaudited. But what I can say is that in the financial year 2017-18 against the previous year, there was 127 per cent growth in the value of streaming revenue coming in to APRA AMGOS. At that point last year, as you referred to that chart in appendix 2, streaming represented 16 per cent of our gross revenue. In the figures that we've just finalised for the 2018 financial year, it's 19 per cent. So it's a significant increase as a percentage of our gross revenue and we see that growth continuing along that sort of path for the next few years. We are nowhere near having reached a mature market for streaming in Australia yet and we think there's enormous capacity for growth.

Senator DUNIAM: Sure. I was just trying to get a sense of where the focus between TV broadcast, radio broadcast and streaming, would be in terms of trying to channel Australian content. That's helpful, but I am cognisant of time and I won't hold the committee up.

CHAIR: Thank you, gentlemen, for giving us your time today. If there's anything that you think you need to correct, please just contact Hansard and the secretariat and we can get anything clarified. For those questions that you want to take on notice and get back to us, the secretariat will be in touch.