Australian Gyms Dumping Pop Music After Massive Increase In Royalty Rates

from the backfiring... dept

Last year, we wrote about an effort by the Australian performance collection society, the Phonographic Performance Company of Australia (PPCA) to massively boost royalty rates played by gyms, who often use music in exercise classes. This followed a similar effort with massively boosting rates at clubs and bars, which led those clubs and bars to stop playing covered music. It looks like the same thing is happening in gyms as well. Reader Shadzzy sends over news that the Australian Copyright Tribunal (who knows what they were thinking) has approved the massive boost in royalty rates. Where gyms used to have to pay $0.968 per class, they now have to pay $1 per participant per class. That’s a massive increase, and makes it impossible for many gyms to pay those royalty rates.

What it means, of course, is that the music is being played less. The gyms are looking for alternatives, because it simply doesn’t make sense to pay tens of thousands of dollars to promote music to its members. PPCA is, of course, in denial. It’s claiming that people are complaining about gyms not playing popular music, and that fitness centers who won’t play popular music at such extortionate rates are treating its members “with utter contempt.”

“We’ve seen a groundswell of discontent from gym members and fitness instructors who’ve been ordered to use cover music.”

I would imagine that those members would find having to get a massive increase in their membership bill creates a much bigger “groundswell of discontent,” and would find that it’s actually PPCA that’s treating everyone with “utter contempt,” by making the situation worse for everyone. The musicians PPCA “represents,” now get their music played significantly less. Gyms have to offer a “worse” overall service, and members get a somewhat worse experience. The problem is that PPCA (and the Copyright Tribunal’s) view of what is a reasonable royalty rate is simply out of line with reality. But since the entertainment industry has been able to set up this system where the government sets the price, and the industry influences those setting the price, then it gets to set rates that have no connection to reality.

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Comments on “Australian Gyms Dumping Pop Music After Massive Increase In Royalty Rates”

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Jim says:

Re: Re:

“I teach water aerobics and my students don’t give a flying ef what sort of music I play, as long as it’s a good class.”

While your class may be quite good, respectfully the atmospherics (i.e. good music) will enhance your class that much more. Old saying probably applies here, better to use honey than vinegar…

Anonymous Coward says:

isnt this a question of a business models? the business model of charging $50 or $60 a month for a gym membership that most people use two or three times, rebilling them for a year if they dont show up, etc, right? these are the people complaining about a rights fee increase? how much do you think the instructor gets paid per student? would the class be the same with no music or just a drum machine? its a bad business model to charge less than it costs to operate, no?

Sneeje (profile) says:

Re: Re:

Huh? Fail to see how that makes sense. The issue here is that a *new* cost has been raised (by roughly 10,000% depending on the number of participants) and the gyms have to decide whether to pass that cost on to the customers. Clearly many of them are deciding not to.

If you’re arguing that gyms are too expensive to begin with, that’s a different issue. Or if you are arguing that they should have been paying that cost all along, my initial statement still applies, at the point the gym was opened, they would have had to decide if the music was worth it and worth including in their membership costs.

Michael (profile) says:

Re: Re:

Not everyone that runs this type of class is getting a piece of an $800 per year gym membership. I’m in the US, so this does not apply to me (yet), but since I run a fitness class, I’ll throw out some numbers.

The class I run costs $65 per month and offers essentially 8 classes. So, for the math impaired, that is $8.13 per class. The increase that just passed would take a full 12% of the gross from the class – yikes – that seems fair…

I would have to seek music from other sources if the same thing happened here.

boost says:

Re: Re: Re:

My gym charges around $40 dollars/month for memberships and all classes are included in the monthly membership. So, my gym makes, technically, even less per class than most gyms. Increasing royalties here would definitely change the music that got played at my gym. Though, I would personally appreciate it greatly if it did. Let the dinasours die, I say.

Karl (profile) says:

Re: Re:

isnt this a question of a [sic] business models?

Yes. It’s a question of one business being forced to pay for the bad model of another business.

The gyms couldn’t afford the increase, so they don’t play licensed music. Everyone involved should have seen this coming. Since gyms weren’t the cause of the increase, blaming them is really a dick move.

crade (profile) says:

Re: Free Market

They do it this way because it is overly inconvient for the individual running the class to find the rights holder for each song they want to play and negotiate terms with them. It is also overly inconvient for the rights holder to determine if individuals running the classes might be using their music without such an agreement.

Ryan says:

Re: Re: Free Market

They do it this way because it is overly inconvient for the individual running the class to find the rights holder for each song they want to play and negotiate terms with them.

Which is why the whole royalty-per-play thing is phenomenally stupid. But if this system of dictating to gyms how much they will pay for goods is allegedly for their own benefit, I’m sure they wish the government would stop being so good to them.

It is also overly inconvient for the rights holder to determine if individuals running the classes might be using their music without such an agreement.

How exactly does the government setting rates instead of a contract between two parties have anything whatsoever to do with determining whether music is being played somewhere or not? And why should that make any difference to anybody anyway?

Let’s apply this scenario to something else…say, chairs. The government sets a rate everybody has to pay to sit in a chair…say, $10. Now anybody can go to a store and buy a chair, but the Chair Company of Australia (CCA) is going around ensuring that anytime somebody sits in that chair, the rights holder is paid the $10 he/she is owed. Oops, can’t reach your water bottle from the chair? If your butt lifts off the seat, that’s another $10 when you go back down!

Unlike you, I find that rather retarded.

crade (profile) says:

Re: Re: Re: Free Market

I didn’t say it wasn’t retarded, just trying to answer the question. 🙂 This is about public performance rights. If you don’t agree that public performance rights should be needed for anything at all ever, that it a different story.
Chairs don’t require public performance rights, so there is no need for chair analogies.

MadderMak (profile) says:

Re: Re: Re:2 Free Market

“Chairs don’t require public performance rights, so there is no need for chair analogies.”

Artists don’t require public performance rights, so there is no need for public performance rights.

Fixed that for you.

Once a song is payed for once if they play it at an airport why should they pay again? Now if they gave a copy away that would be workable 🙂

Alan Gerow (profile) says:

Re: Re: Free Market

That doesn’t actually answer the question. The PPCA could still exist that negotiates the prices with businesses in a method that is fair to both parties, like most business interactions in a free society. It’s not the usefulness of a collections agency that was being questioned.

The question is: why is the government the entity setting the price? Why can’t the business and the collection agency work on a price that they can agree on to be mutually beneficial? Why is the government enforcing a price independent of real-world economics of supply & demand?

Anonymous Coward says:

Re: Roll on license-exempt music

umm, it gets back to the same thing. the collection agency would still collect, pay the artists, and the artists could refund it. it is pretty hard to opt out, because they could still play licensed music (and not tell anyone), or the rights owners to the songs could change their rules. everyone ends up under the same rules, specifically to avoid artists having to negotiate a unique contract with each venue in each country for each piece of music they write.

Alan Gerow (profile) says:

Re: Re: Roll on license-exempt music

No, the point the poster was making was to use artists that are not members of the collection agency. Bypass the PPCA’s stable of artists entirely and work directly with musicians who wish not to license their music, but to use to promote themselves.

The PPCA should not be collecting & paying to artists it does not represent.

Karl (profile) says:

Re: Re: Re: Roll on license-exempt music

If it’s a government-required rate, then it might be the case that neither artists nor gyms have that option. You would still have to pay those rates even if you don’t play music licensed through the PPCA.

Take SoundExchange as an example. Internet stations must pay royalties to them, whether the artists approve or not.

I’m not sure whether that’s the case here, but it might be.

Anonymous Coward says:

Re: Re: Re: Roll on license-exempt music

what you miss is that member of the ppca or not, the ppca collects the government mandated rates. it isnt optional. it avoids an incredibly huge mess of legal issues, overlapping contracts, and horse crap that would leave nobody happy. you have to think of the alternatives, and they suck.

Henry Gray (profile) says:

Re: Re: Not exactly

The artist might refund her cut, but how about the fees extracted by the many layers of middlemen?

One solution I could see is for the various gyms to put together a “discover the new artist” contests that included the right to play the entrants’ music in the gyms, royalty free. Of course, no covers and no previously-signed bands. The winner gets whatever (maybe a “Best of the Iron Sweat Gym music” album on itunes, promoted at every gym) prize and the gyms get their music. The only losers are the PPCA, and rightfully so.

John Doe says:

Copyright needs to go!

The more I read here about how copyright and patents are being used to extract money from consumers through the use of government regulation, the more depressed about the situation I get. I don’t pirate anything, but I don’t buy it either. Books, music, movies, etc cost way more than they are worth to me. If the government would step out of the way and let the market set the price, then I have a feeling I would become a consumer.

V says:

I've said it before, I'll say it again...

If I were these gyms, I would approach local indy bands and tell them that they will play their music for free, and in exchange offer their CDs for sell at the gym desk and have a bulletin board where the participating bands can post their latest gigs.

The bands get free promotion and the gyms get free music. Win-win for them… Lose-lose for PPCA!

McBeese says:

This is the Stupidest Thing I've Seen Yet...

This is really stupid. Gyms should be royalty-free zones. There is ZERO loss of sale – nobody is going to start using the gym as their source of music. There is a good chance of potential sales that otherwise wouldn’t have happened. People decide to build their own workout playlist and buy the same songs from the gym, people are exposed to new music at the gym, etc., etc.

Imagine how bad this idea would be in a bar. You go up to the Juke box, select your song, and it prompts you to enter how many people are in the bar.

Stupid, stupid, stupid…

Henry Gray (profile) says:

Re: Welcome to the club

When I worked for a movie theater (sorry, theatre) long ago, we were only allowed to play ASCAP-licensed music before the film. Granted, this was last century before the never-ending commercials that were interrupted only to play the film.

The chain I worked for had negotiated a deal with ASCAP, so we were allowed to play their music. All the stuff we wanted to play by BMI was verboten. Too bad.

The reason why this was so was because people had to pay to get in, so ASCAP argued that the theater patron’s experience was enhanced by the music.

Presumably, if we didn’t charge admission, we wouldn’t need a license, but that is wrong too: public performance is a copyright violation. Better keep the windows to your car rolled up with your rockin’ the ipod on the boulevard, bub.

Igor Zevaka (profile) says:

Well, PPCA is in much bigger denial than you might think. Australia’s biggest gym network – Fitness First has fully committed to using non-PPCA music. As far as I am concerned it’s game over for “original music”.

Not being a music buff I didn’t notice a change at all. In the first week I had two instructors have a few tracks in common, but within two weeks that’s gone away. It struck me as though they started looking for the music in the same place and ended up with a few of the same track.

It looks like the demand for music from just this one gym network will boost growth in services providing royalty-free music.

Overall, I think it’s a good thing for music industry and another nail in a coffin for recording industry. I can’t believe that they would jeopardise the promotional value of making music available this much.

Darryl says:

Im from Australia, and I dont mind.

we have more than enough great things to do and see here, for free, or paid for so I dont care.

So lets look at it from another point of veiw, shall we.

What if you were showing hit movies, and not charging anyone to see them. You could come in and see the movie for free, as long as you did sit-up’s while watching the movie.

People go to gym’s for fitness and entertainment, they want to have a little fun while keeping fit. Part of that experience is the person out the front taking the session, the gym itself, the equipment, management, staff, and the music.

Just because they are doing some other activities while they are there, just like the movie show you watch for free if you do sit up, its a crazy notion and that is why it does not fly.

Just because you are doing ‘something else’ while you are providing entertainment, a part of that entertainment is the music you provide, and just like the gym instructor should be paid for his time and effort, and the manager of the gym should be paid for his time and effort, (and risk in establishing the business). the creators of the music, just like the creators and owners of the building they are in deserve to be compensated for their works.

Ofcourse if you dont want the complete experience of being in a nice clean gym, a good instructor, good music, and good equipment, you can stand in the middle of a field and do all the star jumps you like for free.

But if you want the luxury and facilities provided by a COMMERCIAL gym, then like eveyone else you fully expect to pay for ALL aspects of that experience, no matter who provides the tools for that experience.

ie, building, staff, equipment, instructors, music, air conditioning/heating and so on.

So just like you cant see a movie for free as long as you do something else during the movie (like pushups), you cant go listen to music, (that you are willing to pay for anyway, for the complete gym experience).

it’s also something customers want, they want to be able to listen to good music during their session, and I know many people who change gyms because they dont like the music, so it’s a business choice.

And a customer choice, they can choose not to use the gym at all, they can go and stand in a paddock and do what they like.

But if they want the full facilities of a gym, they fully expect and are willing to pay for those facilities, including the staff, building, instrustor and music.

(and security, airconditioning, metting people, drinks, good atmosphere and so on)

If funny in Australia, this is really a ‘non-news’ news.
That was put in the ‘we dont give a stuff” basket years ago.

Then again us Aussies are a pretty advanced mob…. 🙂

Always ahead of you in time. we live in you’re tomorrow…

Niall (profile) says:

Re: Im from Australia, and I dont mind.

So what about the ‘free’ TV in gyms? Should that be charged by $1 per head per hour or something? Doesn’t that rather ruin the point of offering a free-at-point-of-use service?

Of course, that would get confusing rapidly in the Uk because of mandatory TV licensing. So what happens when you play music through the TV? Cue some interesting lawsuits…

Anonymous Coward says:

Quoting Stephen Peach, the boss of PPCA:

“We are confident that many fitness centres will choose to continue to use real music and that they will have a strong business advantage over those that take what we think would be a very short-sighted decision to switch to low quality cover versions.”

So to him cover versions don’t count as real music. Isn’t that a considerable portion of music available these days? Idol, anyone?

Jerry says:

Fitness First

I go to Fitness First here in Australia, and as has already been stated, they are side-stepping the issue by not using original recordings as of June 1st. (Note that the PPCA cannot collect regardless, otherwise this move would not make any sense on FF’s part).

And to respond to Darryl, I think your analogy is at least flawed… sure, the music contributes *something* to the gym experience, but if there was no music that wouldn’t stop me from going to my classes… nor do I pay any particular attention to the music when I am doing a Yoga class… trust me, the exercise takes enough attention when done properly to not leave room to get into the music as well. It’s more background noise and as such does not warrant anywhere near $1 per class per person in my opinion.

Also, ‘just doing some situps during a movie’ is a bit too simplistic… if your exercise is light enough that you can still pay attention to the movie, then yes, you are right, but that does not compare to the amount of attention-span you have to spare in a properly instructor-led class… trust me that you wouldn’t be able to follow the movie *at all* if you were doing a yoga/pilates/cardio class at the same time without coasting through on purpose.

Darryl says:

RE: Fitness first (alive first, fitness second)

“sure, the music contributes *something* to the gym experience, but if there was no music that wouldn’t stop me from going to my classes”

yes, thats right the music does provide *something* to the gym experience, so does the carpet, the mats, the instructor, the mirrors, the equipment, the other people, the shop and so on.

How many components or *something* can you take away from a gym to the point where it’s just an empty field ?

So going to the gym for a workout, is a combination of listening to good music, using equipment, and facalities, all the various components that come with going to the gym.

How many parts can you remove before it ceases to be a gym?

Im sure the companies that lease the gym equipment, or rent the building are paid fairly for the services they provice, those services are required for the gym to exist. Without them it’s not a gym, and for many people without good music, good instructors, good facilities, good security, management and so on, is why they choose one gym over another.

Just as if a gym had better weight equipment than the one next door, they pay more to lease that equipment, but their reward is hopefully more paying customers.

Thats how the commercial world works, you have to pay for what you get.

No one would think twice about paying a dollar for the instructor, and a dollar for using the equipment, or the dollor to make the place clean, and also the dollar for the music they listen too, which is as much a part of the gym experience for many as the instructor and facilities are.

So the musos and producers have just as much a right to be rewarded for their efforts and for helping the gym exist and make a profit as the makers of the gym equipment.

So why should the person who built the building be paid and the guy who built the weight equipment, and the guy who makes the music that get’s customers in the door be paid for his efforts in helping the gym make money, and be a gym.

Also, most big names in music and bands tour to places based on record sales, they will go the countries where they are popular and put on concerts there.

So imagine if everyone was file sharing, and there was little or no feedback on the popularity, and certainly no indications of if those people would pay to go see them, or buy their albums.

So they dont tour, if you fileshare, because they have no feedback about if the tour will be successful or a failure.

Again, this is another way file sharing in breach of copyright damages the music and film industries. It’s not just about lost sales. It’s more than that..

If you think about it…

Eldakka (profile) says:

Re: RE: Fitness first (alive first, fitness second)

yes, thats right the music does provide *something* to the gym experience, so does the carpet, the mats, the instructor, the mirrors, the equipment, the other people, the shop and so on.

So does the manufacturer of the mat charge for every use of that mat? What about the mirrors or other equipment?

Why is it different when a CD is purchased? Make sure they have a valid CD with the track on it for every simultaneous use of that track (e.g. playing the same track simultaneously in 2 different classes requires 2 valid CDs). Why do they have to pay every time an already purchased item, the CD, is played?

Hephaestus (profile) says:

to funny

“This new amount didn’t make Fitness Australia happy. “The international record companies, who are represented by the PPCA, have shot themselves in the foot by demanding outrageously high copyright licensing fees from the fitness industry, the majority of which go straight into record company coffers. To mitigate the impact of such a decision, Fitness Australia members are already beginning to use music in their gyms that is free of PPCA copyright,” said Lauretta Stace, Fitness Australia Chief Executive Officer.”

john says:

Its a free market, Darryl

I expect that as the costs of using APRA music become more and more uncompetitive, more and more public venues will make alternative arrangements.

It is a free market; monopoly restrictions of terms of trade are taken very seriously in australia. One good possible side effect might be a revival in the number of venues using live music, though the absurd amount of overregulation of things like live music venues would have to be addressed.

Cuthulan (user link) says:

These royalties are killing the music industry! As someone that works in this industry ,all this royalties and copyright BS is just to pay the NON-MUSICAL,NON-PRODUCTIVE record executives! REAL musicians make money from live shows and selling CDs,DVDs and merchandice cheaply and directly to thier public. A lot of whom only discovered the band via free downloading sites and file sharing.Record labels stop this!!I have had to destroy good material for up and coming bands because of these ROYALTY NAZIS that even the band wishes they had never met them!!! This is just the last dying throws of the record label and thier casting couches…and GOOD RIDDANCE!!!! Most musicians do NOT mind having thier music downloaded and certainly would NOT want to make people PAY TO PLAY!!!!
I think a simple solution would be a small increase in ISP charges that go to ALL original material downloads.Be it a film, a song or a flash animation,or whatever, the percentage of downloads would equal the percentage of the money you get! In the real world, Cinema will continue as an experience, as will live shows and gyms shopuld be able to play what they want without charge , its FREE PROMOTION FOR THE MUSICIAN!!!

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