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.

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Comments on “Australian Health Club Chain Fights 3000% Hike In Music Royalties”

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24 Comments
Pseudonym (profile) says:

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.

Anonymous Coward says:

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

Hulser says:

Re: 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.

Mike B says:

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.

Dalton says:

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.

Vincent Clement says:

Re: 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?

Anonymous Coward says:

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.

Vincent Clement says:

Re: 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.

nasch says:

Re: 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?

Hulser says:

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.

sambo (profile) says:

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.

Fentex says:

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.

goldenrail (user link) says:

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.

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