Australian Health Club Chain Fights 3000% Hike In Music Royalties

from the gym-members-only-exercise-for-the-free-music dept

We've seen plenty of occassions where, in an attempt to offset falling revenues from music sales, the recording industry chooses to attempt to extract royalties from 'performances' which have actually added value to the music. In yet another such situation, Australian health clubs are faced with a 3000 percent rise in their royalty rates for playing music during exercise classes from the Phonographic Performance Company of Australia (PPCA). Currently, the rate is $0.90 per class, with an annual cap of $2,654 ($0.80/$2,302 USD); the proposed increases are to $31.67 ($26.89 USD) per class with no cap, or a monthly fee of $26.08 ($22.55 USD) per member. The drastic nature of these increases has prompted one Australian fitness club chain has partnered with the International Health, Racquet and Sportsclub Association (IHRSA) to resist the changes.

The chain's president said of the action, "We have no choice. If we don't fight this, we won't have an [Australian health club] industry left to fight for." While an increase of 30 times would undoubtedly negatively impact the clubs, it seems somewhat hyperbolic to suggest the industry would disappear as a result. More interesting is IHRSA president Joe Moore's observation that the change "has serious implications for clubs in other countries" - that is to say the change, if successful, would be used to argue for similar rises in performance royalties across the world - a tactic we have already seen from bodies purporting to represent musicians.

One factor neither side is really discussing (beyond the "our industry will collapse" rhetoric) is the potential consequences of these royalties being sufficiently high to cause health clubs and similar businesses to seek out alternative sources. Their core business is not to provide licensed music for their customers, so there's no reason why they couldn't play royalty-free music instead, simultaneously lessening the control the PPCA exerts over the music business, cutting off the existing income from royalties and promoting the competitors of the artists it supposedly represents. Perhaps the health clubs might lose some business through customers disliking the change of music in their classes (although that seems unlikely), but it would at least be a more powerful way to convey their message to the PPCA than to plead complete dependence.



Reader Comments (rss)

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  1.  
    identicon
    Anonymous Coward, Nov 12th, 2008 @ 11:54am

    Sounds good stop playing the songwriters. They don't deserve it.

     

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  2.  
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    Anonymous Coward, Nov 12th, 2008 @ 12:11pm

    Name some royalty free Australian music.

     

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  3.  
    identicon
    Stephen Finch, Nov 12th, 2008 @ 12:14pm

    Re: Idiocy

    It would be one thing if the songwriters got the money. They won't see any appreciable amount of it.

     

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  4.  
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    Pete Valle, Nov 12th, 2008 @ 12:14pm

    Silly Anon...

    The post isn't arguing NOT to pay royalties, the argument being made is that if you overprice royalties, people will stop buying your product and choose royalty-free alternatives. In other words, the PPCA is shooting itself on the foot.

     

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  5.  
    identicon
    Anonymous Coward, Nov 12th, 2008 @ 12:22pm

    Lyrics
    American Pie


    Verse 1
    A long long time ago
    I can still remember how that music used to make me smile
    And I knew if I had my chance
    That I could make those people dance
    And maybe they'd be happy for a while
    But February made me shiver
    With every paper I'd deliver
    Bad news on the doorstep
    I couldn't take one more step
    I can't remember if I cried
    When I read about his widowed bride
    But something touched me deep inside
    The day the music died

    {Refrain}

    So, bye-bye, Miss American Pie
    Drove my chevy to the levee
    But the levee was dry
    And them good old boys were drinkin' whiskey and rye
    Singin' this'll be the day that I die
    This'll be the day that I die

    Verse 2
    Did you write the Book of Love
    And do you have faith in God above
    If the Bible tells you so
    Do you believe in rock n' roll
    Can music save your mortal soul
    And can you teach me how to dance real slow
    Well, I know that you're in love with him
    'Cause I saw you dancin' in the gym
    You both kicked off your shoes
    Man, I dig those rhythm & blues
    I was a lonely, teenage broncin' buck
    With a pink carnation and a pickup truck
    But I knew I was out of luck
    The day the music died
    I started singin'

    {Refrain}

    Verse 3
    Now for ten years we've been on our own
    And moss grows fat on a rollin' stone
    But that's not how it used to be
    When the Jester sang for the King and Queen
    In a coat he borrowed from James Dean
    In a voice that came from you and me
    Oh, and while the King was looking down
    The Jester stole his thorny crown
    The courtroom was adjourned
    No verdict was returned
    And while Lenin read a book on Marx
    The quartet practiced in the park
    And we sang dirges in the dark
    The day the music died
    We were singin'

    {Refrain}


    Verse 4
    Helter Skelter in a summer swelter
    The birds flew off with a fallout shelter
    Eight miles high and falling fast
    It landed foul on the grass
    The players tried for a forward pass
    With the Jester on the sidelines in a cast
    Now the half-time air was sweet perfume
    While the Sergeants played a marching tune
    We all got up to dance
    Oh but we never got the chance
    'Cause the players tried to take the field
    The marching band refused to yield
    Do you recall what was revealed
    The day the music died
    We started singing

    {Refrain}

    Verse 5
    Oh, and there we were, all in one place
    A generation lost in space
    With no time left to start again
    So come on, Jack, be nimble, Jack be quick
    Jack Flash sat on a candlestick
    'Cause fire is the devils only friend
    Oh, and as I watched him on the stage
    My hands were clenched in fists of rage
    No angel born in Hell
    Could break that Satan's spell
    And as flames climbed high into the night
    To light the sacrificial rite
    I saw Satan laughing with delight
    The day the music died
    He was singing

    {Refrain}

    Verse 6
    I met a girl who sang the blues
    And I asked her for some happy news
    But she just smiled and turned away
    I went down to the sacred store
    Where I'd heard the music years before
    But the man there said the music wouldn't play

    And in the streets the children screamed
    The lovers cried, and the poets dreamed
    But not a word was spoken
    The church bells all were broken
    And the three men I admire most
    The Father, Son and the Holy Ghost
    They caught the last train for the coast
    The day the music died
    And they were singin'

    {Refrain}

    Bye-bye, Miss American Pie
    Drove my chevy to the levy
    But the levy was dry
    And them good old boys were drinking whiskey and rye
    Singing this'll be the day that I die

    They were singin'
    Bye-bye, Miss American Pie
    Drove my chevy to the levy
    But the levy was dry
    And them good old boys were drinking whiskey and rye
    Singing this'll be the day that I die

     

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  6.  
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    Anonymous Coward, Nov 12th, 2008 @ 12:25pm

    We are all witnesses to the murder of music by these organizations.

     

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  7.  
    identicon
    Mike B, Nov 12th, 2008 @ 12:27pm

    royalty collecitons

    I think part of the issue may be like what we have with Sound Exchange. As a musician, I give away all my music, however sound exchange will still collect royalties because people MIGHT play music that they take in royalties for. So it really comes down to if you play ANY music, these agencies want money and will extort it out of you, regardless of the musicians requirement of any royalties to be paid.

     

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  8.  
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    Dalton, Nov 12th, 2008 @ 12:30pm

    Licensing music for commercial use, like in health clubs and dance clubs, makes a lot of sense. If the music labels feel their music is worth more to these businesses than they are currently paying, they can and should ask for higher prices. It's up to those businesses to decide whether to pay the higher prices, negotiate, or decide to license music from someone else.
    The real problem here is the various "boards", "companies" and "collectives" that are external to the market and decide what the price of music should be for different uses. This makes it very likely for music creators to be either under-compensated, like they claim it is with health clubs in Australia, or over-compensated, like some claim is with net broadcasting in the U.S.
    The only way to find the true "market value" of music is for the free market to decide it.

     

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  9.  
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    Heya, Nov 12th, 2008 @ 12:33pm

    Free advertising?

    Sounds like an opportunity - these health clubs could solicit budding songmakers, offer to play their stuff during classes, have CDs for sale on the premises...

    Cut the music mafia out of the picture altogether. :D

     

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  10.  
    identicon
    Hulser, Nov 12th, 2008 @ 12:40pm

    Re:

    Name some royalty free Australian music.

    You seem to be implying that Australian health clubs can only play Australian music. Why is this exactly? I love Australian music -- Powderfinger FTW -- but there are other options.

     

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  11.  
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    Tamara, Nov 12th, 2008 @ 12:44pm

    Re:

    For a start the vast majority of health clubs in Australia don't play music only from Australian artists. Just like everywhere else in the world they play music from artist from all over the world.

    And there's 10,000s of royalty free music available in Australia, just like there is everywhere else in the world.

     

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  12.  
    identicon
    Hulser, Nov 12th, 2008 @ 12:49pm

    Re:

    We are all witnesses to the murder of music by these organizations.

    You appear to be falling into the same logical trap as the chain president from this quote...

    "The chain's president said of the action, 'We have no choice. If we don't fight this, we won't have an [Australian health club] industry left to fight for.'"

    PPCA != "Music"

    In other words, the PPCA's actions aren't going to kill music or the health club chain, but as Douglas pointed out in the post, they're just going to push people to alternatives. Music will survive the PPCA's and the RIAA's shenanigans.

     

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  13.  
    identicon
    Casper, Nov 12th, 2008 @ 12:53pm

    Re:

    The only way to find the true "market value" of music is for the free market to decide it.

    That would be true, if there were real market competition. The problem is that generally other than unrepresented artists, there is not a good source of music that doesn't involve a member of a cartel.

     

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  14.  
    identicon
    Anonymous Coward, Nov 12th, 2008 @ 1:15pm

    If the industry is doing itself such harm, why are places like the health club still paying to play their music? Music should not be free, the MUSIC is the PRODUCT produced by Musicians, just like a CAR is a PRODUCT produced by Toyota. While you might consider MUSIC an INFINITE GOOD, there is a VERY SCARCE number of TALENTED MUSICIANS. While it might be POSSIBLE to make money even while giving away music, why force musicians to become CREATIVE MARKETERS to generate revenue? If the health club doesnt want to pay the royalties, don't and don't play any music. If the health club's decision to stop playing music hurts the music industry, they will certainly change their mind. My guess is that it WONT.

     

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  15.  
    identicon
    Hulser, Nov 12th, 2008 @ 1:28pm

    If the industry is doing itself such harm, why are places like the health club still paying to play their music?

    The post is about the potential impact of a drastic price increase. Your question is about what they are paying now, which isn't relevent to the post.


    Music should not be free, the MUSIC is the PRODUCT produced by Musicians, just like a CAR is a PRODUCT produced by Toyota.

    "Should" is very dangerous word. Who are you to say how a musician should earn their money? You're making an absolute statement that it's wrong for music to be free, but what if the artist chooses to use free music in a business model where they can still earn money based on their free music? Your statement is not even allowing for that option.

    While you might consider MUSIC an INFINITE GOOD, there is a VERY SCARCE number of TALENTED MUSICIANS. While it might be POSSIBLE to make money even while giving away music, why force musicians to become CREATIVE MARKETERS to generate revenue?

    Who is forcing musicians to become "creative marketers"? Many of the posts on TD are about how there are business opportunities for people to step in an act as marketers for musicians that take advantage of newer business models that use free music.

    If the health club doesnt want to pay the royalties, don't and don't play any music. If the health club's decision to stop playing music hurts the music industry, they will certainly change their mind.

    The tone of your comment appears to be contradicting the post, but here you're just paraphrasing the same points made in the post. Did you mean to agree with the author?

    My guess is that it WONT.

    My guess is that it will.

     

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  16.  
    identicon
    Vincent Clement, Nov 12th, 2008 @ 2:35pm

    Re:

    "Licensing music for commercial use, like in health clubs and dance clubs, makes a lot of sense."

    How so? If I paid for the music, why should I have to pay again every time I play it in a commercial setting? Do people pay GM, Ford, Chrysler or Toyota whenever they use a vehicle in a commercial setting?

    Can the health club ask for a credit if one of its customers goes buys music it heard at the health club? Maybe they should charge the record companies a marketing fee?

     

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  17.  
    identicon
    Vincent Clement, Nov 12th, 2008 @ 3:31pm

    Re:

    Can we stop with the capitalized emphasis?

    Except that Toyota doesn't demand that the government have a compulsory licensing scheme that requires someone to pay Toyota each their vehicle is used for a commercial purpose.

    I disagree that there is a very scarce number of talented musicians. The music industry is thriving. It is growing. Talented is an objective term.

     

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  18.  
    identicon
    Pseudonym, Nov 12th, 2008 @ 8:02pm

    Re: Silly Anon...

    Or even better: Commission some composers to write you music as work-for-hire, or licensed on reasonable terms (e.g. $2,500 per year flat fee for the whole club, maybe sell CDs or MP3s through the club).

    This would have benefits beyond price. You could develop music tailored for specific types of exercise sessions, for example. If instructors want to do "warm up" and "cool down", let the music reflect that. If you want to vary the tempo, do that. Sounds like win-win to me.

     

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  19.  
    identicon
    sambo, Nov 12th, 2008 @ 9:41pm

    I am from Australia and they have just done the same thing to the nightclub & bar industry.

    The whole outfit stinks as they are a 'not for proft' organisation whose main stakeholders are unsurprisingly, the 4 big record labels.

    Any decision to increase fees by the PPCA automatically increases the bottom line for the big four and has notning to do with getting more for the artists.

    The issue that they took up for the club and bar scene realtes specifically for dj's. The old rate was 70C per person per night. The new increase: $1 AUD per night based on the capacity of the venuew, REGARDLESS of how many patrons actually attend.

    A bar with a 100 person license therefore has to pay $100 per night, even if ther are only 3 people there.

    MMM, that sounds fair doesn't it.

    What really stinks about all of this is that the music played by dj's that they are collecting supposedly on behalf of the musicians for, at least 90% comes from overseas independent record labels who have nothing to do with the big 4. The sweetner being that the PPCA gets to keep 90% of the royalty fee for overseas released music, this then gets distributed to the major stakeholders who are of course, the big 4!

    In the electronic music scene due to the non-commercial nature of much of the music have always had rely on industry specific independent labels to distribute there music. The big 4 labels would not touch most of the music played in many clubs and themselves have done little to nothing to advance the electronic music scene.

    So in simple terms, they are stealing money off the clubs and giving it to themselves.

     

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  20.  
    identicon
    Fentex, Nov 13th, 2008 @ 12:14am

    Seems like a big business opportunity for an independent label to gather artists willing to have their music performed for free in the expectation they'll sell recordings of the popularised music later.

    Encourage bands to make high energy exercise friendly music, put it on a CD and mail it free of royalties to health clubs around the world along with order forms/web site addresses for individual purchases, offering a cut to the clubs.

     

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  21.  
    identicon
    Dan, Nov 13th, 2008 @ 2:04am

    Doesn't anyone see this as an opportunity for a new business model? These clubs, bar and the like could subscribe to a jointly owned company that writes, produces and owns the rights to music that it would play on their premises and also sell CDs to recover costs. Wake up folks, you can choose to compete, you have a built in captive market.

     

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  22.  
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    mike allen, Nov 13th, 2008 @ 2:37am

    now that Aus has done this

    Watch the same happen around the world USA. UK. Europe However one word JAMENDO creative commons no royalty music problem solved.

     

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  23.  
    identicon
    nasch, Nov 13th, 2008 @ 9:26am

    Re:

    While it might be POSSIBLE to make money even while giving away music, why force musicians to become CREATIVE MARKETERS to generate revenue?

    What is so special about this industry that means they should not have to do marketing, and instead have government and pseudo-governmental groups enforcing their business model instead? We expect those who make soap, cars, rivets, and jeans to think of how to market their products. Even movies, another infinite good, are commonly expected to involve marketing, sometimes in traditional ways and sometimes more creatively. Why should music be exempt from this?

     

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  24.  
    identicon
    goldenrail, Nov 14th, 2008 @ 11:19am

    Other Options

    It makes sense for the health clubs to fight such a large increase, but there are also plenty of options they can explore in the meantime. It's not the death of the health club.
    There's plenty of music available on creative commons licenses.
    The health clubs could do exercise class like ballet schools do their dance classes, with live piano players who can take classical pieces and play them in whatever time signature and tempo is needed for the desired movements.
    There's opportunities here for emerging artists to target the exercise audience(as Heya, Fentex and Dan pointed out).
    And as Tamara mentioned, there's always the royalty free option.
    I'm sure there are plenty of other options, too. The clubs need to get creative instead of just angry.

     

    reply to this | link to this | view in thread ]


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