Australian Copyright Agency Paid Itself More Than It Distributed To Content Creators

from the ah,-bureaucracy dept

One of the key problems we have with any sort of collection agency/performance rights organization/collective licensing scheme is that they introduce an unnecessary bureaucracy into the equation and, as a result, money gets redirected from the actual creators to the bureaucracy itself. It's a giant economic inefficiency that harms content creators. Case in point: Michael Geist points us to the news that the Australian copyright collection group, The Copyright Agency Limited, spent more on its own staff than it gave out directly to content creators. In 2009, it paid its staff $9.4 million, and it disbursed... $9.1 million directly to content creators.

Now, to be fair, the article buries the fact that CAL also gave $76 million to publishers "on the assumption that a proportion of this money will be returned to authors," but it also notes that it has no checks to see if that money is ever distributed. In other words, CAL doesn't actually do anything concerning that $76 million other than pass it on to other bureaucracies (not content creators) -- who might just be keeping it, rather than disbursing it. As the report notes, CAL collected $114 million last year, and can only say, for certain, that $9.1 million got distributed to actual content creators. Now that's efficient! Certainly, some of that $76 million may have reached content creators, but no one knows for sure.

So, again, we're left wondering why such a setup makes sense at all? All that's happening is that money that could go directly from fans/consumers to content creators gets filtered through inefficient bureaucracies that take huge cuts. That harms content creators.

Filed Under: australia, collections, copyright
Companies: copyright agency limited

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  1. icon
    ethorad (profile), 18 Feb 2010 @ 11:12am

    charitable comparison?

    Perhaps one way of thinking of the collections agencies is as a charity. After all they claim to be a way of channelling money from the public to the needy (artists).

    Using the figures above, they incurred expenses of 9.4m and distributed 9.1m to creators. Their distribution rate is therefore 49%. If a charity approached you for a donation, and told you that they would actually keep just over half of your donation, I don't think you'd be too impressed!

    I've had a quick scout around the internet to see what charity comparison sites have to say about efficiency ratings:

    Charity Navigator
    - 90% of charities spend more than 65% on their purpose, compared to CAL's 49%
    - Fundraising organisations, which seem to be close to CAL, spend an average of 6.6% on admin, much less than CAL's 51%
    - Even museums, who have property to maintain, get away with only 15.5% on admin

    Charities Aid Foundation
    - Average admin spend over the last 25 years has been pretty stable at around 13-14% (although it does acknowledge that there is noticeable individual variation)

    Intelligent Giving
    - Shows average admin spends are higher than the 13-14% on CAF above, however the highest is around 25.7% which is still around half that of CAL

    Note: I've ignored the 76m that was passed on to another collection agency (albeit an internal department of publishers) as in order to distribute that there will be more expenses, so by ignoring both I shouldn't be distorting things. If you argue that the publisher's expenses will be lower than CAL's (and can they really be higher?) then you'll have to explain why CAL doesn't step out of the picture and let the publishers deal with the whole thing. And try to keep a straight face!

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