Exceptions for broadcasters

19.40 Sections 45, 47, 70, 107, 47A, 65, 67 and 109 of the Copyright Act operate to provide exceptions for persons engaged in making broadcasts. In effect, the definitions of ‘broadcast’ and ‘broadcasting’ in these sections serve to limit the availability of these exceptions to broadcasting services as defined by the Broadcasting Services Act. They provide broadcasting services with advantages as compared with other content providers who provide content over the internet or by other means (such as over telecommunications networks). The provisions may also operate as a barrier to broadcasters using the alternative platforms for communicating their own content.

Broadcast of extracts of works

19.41 Section 45 of the Copyright Act provides an unremunerated exception for the reading or recitation of a literary or dramatic work in public or for a broadcast, of a reasonable length, with sufficient acknowledgement. The original justification for the s 45 exception was that:

Recitations of reasonable extracts of works in public halls have for many years been regarded as a legitimate exception to copyright protection and it seems to us that the broadcasting of such recitations is the modern successor to that form of entertainment.^[42]

19.42 It is equally possible to see other forms of communication to the public, including on the internet, as the ‘modern successor’ to recitations in public halls.

19.43 Many uses covered by s 45 would also be covered by the new fair use exception or by the consolidated fair dealing exception under one of the prescribed purposes of quotation, criticism or review, and reporting news—although this would depend on the application of the fairness factors in the particular circumstances. For this reason, the Australian Government should consider repealing s 45, if fair use is introduced.^[43]

Reproduction for broadcasting

19.44 Sections 47, 70 and 107 of the Copyright Act provide what is referred to in the literature, and in this Report, as the ‘ephemeral’ copying provisions.^[44]

19.45 Section 47(1) provides an unremunerated exception that applies where, in order for a work to be broadcast, a copy of the work needs to be made in the form of a record or film to facilitate the broadcasting. Sections 70(1) and 107(1) provide similar exceptions, in relation to films of artistic works and sound recordings, respectively.

19.46 The exceptions cover copying ‘to make the actual broadcast technically easier, or to enable the making of repeat or subsequent broadcasts’^[45] and can be seen as promoting efficiency in broadcast programming.^[46]

19.47 These exceptions are expressly permitted by the Rome Convention, which states that domestic laws and regulations may provide for exceptions as regards ‘ephemeral fixation by a broadcasting organisation by means of its own facilities and for its own broadcasts’.^[47]

19.48 Sections 47(3), 70(3) and 107(3) of the Copyright Act provide similar exceptions, subject to a statutory licensing scheme, for the temporary copying of works, films of artistic works and sound recordings by a broadcaster, other than the maker of the work, film or recording, for the purpose of broadcasting.

19.49 The licences do not apply unless all the records embodying the recording or all copies are, within 12 months of the day on which the work, film or sound recording is first used for broadcasting, destroyed or transferred to the National Archives of Australia.^[48]

19.50 There may be no policy reason why the ephemeral copying provisions should not apply, for example, to temporary copying to facilitate the streaming of content over the internet, especially by a broadcasting service that also provides content over the internet.

19.51 In the Discussion Paper, the ALRC proposed that ss 47, 70 and 107 be amended to apply to the transmission of television or radio programs using the internet.^[49]

19.52 A number of stakeholders representing copyright owners specifically opposed the extension of the ephemeral copying provisions.^[50] APRA/AMCOS stated that the ephemeral copying provisions were originally introduced to deal with ‘specific issues faced by a nascent broadcasting industry’.

As it is, AMCOS has licensing arrangements with all free-to-air broadcasters that extend the provisions of the ephemeral licence, due to its narrow application that renders it largely inutile in the current broadcast environment.^[51]

19.53 APRA/AMCOS submitted that more appropriate response in the digital environment would be to repeal these provisions altogether. Similarly, the PPCA submitted that uses covered by s 107, in relation to sound recordings, are already granted in voluntary licence agreements, for example, between the PPCA or record companies and copyright users providing television or radio-like services over the internet. In particular, the PPCA

non-exclusively offers broadcasters and other service providers the rights for incidental copying and other uses of sound recordings which are necessary to provide their services in an online environment, including podcasting, catch-up viewing or listening. Accordingly, voluntary licensing is adequate to deal with new technology and services because PPCA’s offering augments and in some cases expands upon the statutory exceptions under s 107 of the Act, including the extension of incidental or ephemeral copying rights for sound recordings in respect of services which are delivered or made available using the internet.^[52]

19.54 The ABC observed that, due to technological change, the ephemeral copying provisions provide only part of the rights necessary for the ABC to deliver content. The ABC stated that when content is broadcast relying on statutory licences under ss 47, 70 and 107, it is ‘administratively burdensome, complex and costly’ then to have to seek further licences when the content moves online—for example, for catch-up television. This, the ABC said, ‘renders the statutory licence ineffective in the digital economy’.^[53]

19.55 The ABC suggested that these provisions ‘need to be rephrased in a technology-neutral way in order to support broadcasters as technologies converge’. Other problems with the statutory licences were said to include the use of the word ‘solely’ in the phrase ‘solely for the purpose of broadcasting’ in s 107(1). This limitation does not recognise that ‘broadcast material has a longer shelf-life than the broadcast alone—including, online archiving, and then to other distribution’. Further, s 107 may restrict broadcasters to making one copy of a sound recording, rather than allow for copying ‘as necessary’ for the purpose.^[54]

19.56 Pandora, an internet music provider, observed that in order to be able to stream recordings to users over the internet, server copies of all recordings need to be made, but Pandora does not currently qualify for protection under the ss 47 and 70 exceptions because it is not a broadcaster. Pandora submitted that such copying ‘does not constitute any form of additional commercial use, but is instead the only way in which the recordings can be accessed and streamed in accordance with the commercially negotiated communication licence’.^[55]

19.57 In the ALRC’s view, many uses of copyright material covered by the ephemeral copying provisions would be covered by the recommended new fair use exception—in particular, uses within the illustrative purpose of ‘incidental or technical use’.^[56] For example, where a broadcaster needs to transcode between digital formats to broadcast a television program, this should be expected to be considered a fair use.

19.58 In any case, voluntary licensing solutions seem to be available to cover many uses of copyright material that facilitate broadcasting or the activities of broadcasting organisations.^[57] While there may be arguments that some ephemeral uses need to be covered by a specific exception in order to provide certainty to broadcasters,^[58] there is little to suggest that the absence of ephemeral copying provisions has been a barrier to the development of internet transmission of content, which operates under voluntary licensing.

19.59 For these reasons, the Australian Government should consider repealing the ephemeral copying provisions in ss 47, 70 and 107 of the Copyright Act.

Sound broadcasting by holders of a print disability radio licence

19.60 Section 47A of the Copyright Act provides exceptions, subject to a statutory licensing scheme, for sound broadcasting by holders of a print disability radio licence.

19.61 These exceptions cover the making of sound broadcasts of a published literary or dramatic work, or of an adaptation of such a work, where this is done by the holder of a print disability radio licence, in force under the Broadcasting Services Act or the Radiocommunications Act 1992 (Cth).^[59]

19.62 Print disability radio licences are granted for the purpose of authorising the making of sound broadcasts to persons who, by reason of old age, disability or literacy problems, are unable to handle books or newspapers or to read or comprehend written material.^[60] In practice, this requirement is met by the granting of community radio licences with these conditions, and Radio for the Print Handicapped (RPH) broadcasts from stations in most capital cities.^[61]

19.63 Vision Australia submitted that the scope of the s 47H remuneration exception means that RPH services are ‘currently not able to operate as a reading service in this medium without engaging in time-consuming negotiations with individual publishers to obtain copyright permission’.

The result is that people who are blind, have low vision, or another print disability are unable to benefit from advances in content distribution such as internet streaming, at a time when internet radio is becoming commonplace for the rest of the community.^[62]

19.64 In the ALRC’s view, the extension of the s 47A statutory licence to cover the provision of sound recordings of written material using the internet or other means should be considered. The licence may need to be restricted to linear, programmed (that is, ‘streamed’ but not ‘on demand’) content to avoid applying to any internet sound recordings.

19.65 Such a reform would necessitate parallel review of the current system for granting print disability radio licences under the Broadcasting Services Act and Radiocommunications Act 1992 (Cth).

Incidental broadcast of artistic works

19.66 Section 65 of the Copyright Act provides an unremunerated exception that covers, among other things, the inclusion of a work in a television broadcast, where the work is ‘situated, otherwise than temporarily, in a public place, or in premises open to the public’.

19.67 Section 67 provides an unremunerated exception for the inclusion of an artistic work in a film or television broadcast where its inclusion is only incidental to the principal matters represented in the film or broadcast.

19.68 The policy behind these exceptions appears to be that it is reasonable to allow the inclusion of these works in a broadcast, as it would be impractical to control these forms of copying.

19.69 This rationale seems to apply equally to the inclusion of public works, or the incidental broadcast of works, in internet transmissions or other forms of communication to the public.

19.70 The ALRC would expect that many uses covered by ss 65 and 67 would be covered by the new fair use exception^[63]—although this would depend on the application of the fairness factors in the particular circumstances. An industry practice of licensing incidentally captured music for documentary films, for example, may weigh against fair use. The Australian Government should consider repealing ss 65 and 67, if a fair use exception is introduced.^[64]

Broadcasting of sound recordings

19.71 Section 109 of the Copyright Act provides an exception, subject to a statutory licensing scheme, for the broadcasting of published sound recordings, to facilitate access by free-to-air broadcasters to published sound recording repertoire.

19.72 Section 109 provides that copyright in a published sound recording is not infringed by the making of a broadcast (other than a broadcast transmitted for a fee), if remuneration is paid by the maker of the broadcast to the copyright owners in accordance with the scheme.^[65] The PPCA is the organisation that administers the statutory licensing of the broadcast rights in sound recordings. The owner of the copyright in a published sound recording or a broadcaster may apply to the Copyright Tribunal for an order determining the amount payable by the broadcaster to the copyright owner in respect of the broadcasting of the recording.^[66]

19.73 While broadcasters have access to sound recordings under the s 109 licence, other licences may still be needed with respect to the public performance and communication of the music and lyrics. APRA is the organisation that administers the voluntary licensing of music and lyrics for broadcast.

19.74 Broadcast radio stations are able to use the s 109 statutory licensing scheme to obtain rights to broadcast music and other sound recordings, but internet radio services cannot—at least where they are not also broadcasting services for the purposes of the Broadcasting Services Act. Rather, internet radio services must negotiate rights to transmit sound recordings outside the scheme.

19.75 A further complexity arises in relation to internet simulcasts, where radio stations, which are broadcasting services, commonly stream content simultaneously on the internet that is identical to their terrestrial broadcasts. In Phonographic Performance Company of Australia Limited v Commercial Radio Australia Limited (PPCA v CRA), the Full Court of the Federal Court held that, in simulcasting, a radio station was acting outside the terms of its licence, as internet streaming is not a ‘broadcast’.^[67]

19.76 While the case concerned the interpretation of a licensing agreement to broadcast sound recordings, it was agreed between the parties that the term ‘broadcast’ in the agreement was to be understood as having the meaning specified in the Copyright Act. The Court held that ‘the delivery of the radio program by transmission from a terrestrial transmitter is a different broadcasting service from the delivery of the same radio program using the internet’.^[68]

19.77 Broadcast radio stations, like internet radio services, now have to negotiate separate agreements with the relevant collecting society (the PPCA) to stream the same content for which they have already obtained a statutory licence to broadcast.

19.78 The implications of this have to be considered in the context of the s 152 remuneration caps, which make access to statutory licensing under s 109 more desirable for radio stations. The remuneration caps are discussed further below.

19.79 After the decision in PPCA v CRA, the Senate Environment and Communications References Committee was asked to examine the effectiveness of current regulatory arrangements in dealing with simulcasts, including the impact of current regulation on broadcasters and copyright holders (the Simulcast Inquiry). In June 2013, the Simulcast Inquiry recommended further Government consideration of this and related issues, following the release of the ALRC’s Report.

Extending the s 109 licence

19.80 In the Discussion Paper, the ALRC proposed that the compulsory licensing scheme in s 109 of the Copyright Act be amended to apply to the transmission of television or radio programs using the internet.^[69] The ALRC also asked whether, in the alternative, s 109 should be repealed, leaving licences to be negotiated voluntarily.^[70]

19.81 There was little support for the idea of extending the operation of the s 109 licence to internet transmission, except in relation to internet simulcast.

19.82 Pandora, however, submitted that the absence of a statutory licensing scheme covering all forms of ‘online radio’ may create an ‘unnecessary and unjustified barrier to market entry for those creating and launching new innovative online services’. Pandora suggested that either the existing statutory licensing scheme for broadcasters should be extended to include online licences, or a new scheme created for such services.^[71]

19.83 The Australian position was compared with that in the United States, where internet radio services operate pursuant to statutory licences under the Copyright Act 1976 (US). The US statutory licensing scheme covers the performance of sound recordings publicly by means of a ‘digital audio transmission’, including by subscription services.^[72] Pandora submitted that the differences in these legal frameworks with respect to internet radio, works to

impede the introduction into Australia of new and innovative business models, imposes unnecessary costs and inefficiencies upon those wanting to access or make use of copyright material and places Australia at a competitive disadvantage internationally.^[73]

19.84 Pandora supported the proposal to extend s 109, subject to qualifications, including that: a similar statutory licence in relation to musical works be made available; ‘radio program’ be defined broadly;^[74] and the existing exclusion in relation to subscription broadcasts should not apply.^[75]

19.85 Pandora suggested that a ‘workable method’ to extend s 109 would be to define its scope by reference to a definition of a ‘relevant communication’, which would include the existing concept of a broadcast and ‘communication of a radio program or TV program otherwise than by way of broadcast’.^[76]

19.86 Other stakeholders considered that s 109 should simply be extended^[77] to ensure that it covers internet simulcasts.^[78] CRA stated that this reform is required to ‘correct the inconsistency that copyright owners would be able to charge twice for the simultaneous use of exactly the same copyright material merely because the device on which it is received is different’.^[79]

19.87 This position was opposed by others,^[80] including the PPCA, which submitted that internet simulcasting must be treated as a communication to the public other than a broadcast ‘in keeping with existing copyright principles and commercial practice’.^[81] The ACC stated that, in accordance with international practice, broadcasting and internet simulcasts should be treated separately, because

to do otherwise would mean overturning settled law, shifting the structure of the Copyright Act for the narrow purpose of meeting the commercial objectives of the radio industry and distorting the market for the licensing of sound recordings on the Internet.^[82]

19.88 These, and other, stakeholders also opposed any other extension of the s 109 licence, or favoured repeal of the statutory licence entirely.^[83] In this context, stakeholders highlighted relevant differences between broadcasting and internet transmission, and the role of voluntary licensing.

19.89 The ACC contested the idea that the same exceptions should apply to internet transmissions as to broadcast, and referred to its submission to the Simulcast Inquiry, in which it stated:

Broadcasting is distinct from communication via the Internet in three important ways:

1. Broadcasting is tied to the broadcast signal and is therefore limited to a reasonably confined geographic area.

2. Broadcasting relates to a particular kind of technology, which also limits the potential audience (ie, those with a radio).

3. Not all sound recordings are covered by the broadcast right (under Australiaʼs international treaty obligations, not all sound recordings are protected).

These limitations do not apply to communications via the Internet. It follows, in our submission, that communications via the Internet are qualitatively and quantitatively different from broadcasting and require separate remuneration.^[84]

19.90 The PPCA also emphasised that treating communications over the internet (including internet simulcasts) as broadcasts would have negative effects on the protection of certain classes of sound recordings—notably US sound recordings—and bring Australia in possible breach of provisions of the AUSFTA.^[85]

19.91 Further, stakeholders submitted that voluntary licensing arrangements make it unnecessary to extend s 109 to internet radio.^[86] The Australian Independent Record Labels Association, for example, observed that

the wide range of legitimate music services currently available in the Australian market makes it abundantly clear that voluntary licensing practices between rights holders and music services are facilitating the creation and growth of new business models without the need for statutory licences and further copyright exceptions.^[87]

19.92 There was support for repeal of the s 109 licence and its replacement with forms of voluntary licensing.^[88] Nightlife stated, for example, that repeal would be the ‘best pathway for creators to manage their own rights and to allow technology to enable discount blanket licensing and address many needs currently unserviceable under statutory blanket licensing’.^[89]

19.93 Support for the repeal of s 109 was influenced by the existence of the remuneration caps, which limit remuneration for the broadcasting of published sound recordings (discussed below). For example, the ACC stated that,

For as long as the statutory licence under section 109 is subject to the inequitable one percent and ABC caps imposed on the equitable remuneration of performers and copyright holders in sound recordings, this statutory licence does not support nor properly incentivise the creation of sound recordings and accordingly should be repealed.^[90]

19.94 However, some stakeholders expressly supported repeal of s 109, even if the remuneration caps were abolished.^[91] The PPCA observed that

there is no compulsory licensing scheme for the broadcasting of musical works in Australia and the voluntary licensing arrangements entered into between broadcasters and APRA appear to operate effectively outside of section 109. Nor does a compulsory licence exist in New Zealand in respect of the broadcast of sound recordings. Similarly, PPCA is able to effectively license internet services in Australia such as those referred to above without a compulsory licence regime in place. It would be inconsistent as a matter of public policy to treat the sound recordings and musical works differently because services are required to license both rights when operating a music service.^[92]

19.95 In contrast, the ABC submitted that s 109 should not be repealed, because it is ‘in the public interest for broadcasters to be able to have access to the full available repertoire of sound recordings so that they can be made available to the public’. Further, it suggested that the introduction of a voluntary licence scheme could result in ‘censorship’ and in ‘increased administration costs for broadcasters and delays in obtaining permission’.^[93]

19.96 In Pandora’s view, direct licensing is not a practical alternative, because of the breadth of licensing required, the costs involved in negotiating separate licensing agreements, limitations on the rights granted to the PPCA by record companies and unsatisfactory dispute resolution procedures.^[94]

19.97 Pandora opposed voluntary licensing, including in relation to musical works, on the basis that rights owners may refuse to licence content, creating significant problems for Pandora’s business model.^[95] Pandora submitted that the ALRC should ‘guard against that possibility by recommending a provision in relation to musical works that mirrors s 109’.

The remuneration caps

19.98 Related issues are raised by the remuneration caps under s 152 of the Copyright Act, which provides caps on the remuneration that may be ordered by the Copyright Tribunal for the radio broadcasting of published sound recordings.

19.99 Section 152(8) provides that, in making orders for equitable remuneration, the Copyright Tribunal may not award more than one per cent of the gross earnings of a commercial or community radio broadcaster (the ‘one per cent cap’).^[96] The one per cent cap has been controversial and subject to court challenge.^[97]

19.100 The ABC is subject to a different cap under s 152(11), which provides that remuneration is limited to the sum of 0.5 cents per head of the Australian population (the ‘ABC cap’).

19.101 In 2000, the Ergas Committee recommended that the one per cent cap be abolished ‘to achieve competitive neutrality and remove unnecessary impediments to the functioning of markets on a commercial basis’.^[98] This recommendation was supported by arguments that the one per cent cap lacks policy justification and distorts the sound recordings market.^[99] A previous review reached similar conclusions.^[100]

19.102 The Ergas Committee accepted that the one per cent cap was originally implemented in 1969 to ease the burden imposed on the radio broadcasting industry by payments for the broadcasting of sound recordings. The Ergas Committee noted that, since then, the economic circumstances of the commercial radio industry had evolved. It concluded that no public policy purpose is served by the cap, which may ‘distort competition (for example, between commercial radio and diffusion over “Internet radios” of sound recordings), resource use, and income distribution’.^[101] However, the retention of the ABC cap was recommended, on the basis that the ABC is not a commercial competitor in the relevant markets, and there is a clear public interest in its operation as a national broadcaster.^[102]

19.103 In 2001, the Government rejected the Ergas Committee’s recommendation to repeal the one per cent cap.^[103] Then, in 2006, the then Attorney-General, the Hon Philip Ruddock MP, indicated that repeal of the one per cent cap had been approved, as part of 2006 amending legislation, but this did not eventuate.^[104]

19.104 The PPCA submitted to the ALRC Inquiry that both caps should be repealed, because the caps:

• distort the market in various ways—including by subsidising the radio industry;

• are out of date—given that the financial and other circumstances of the radio industry are very different from the late 1960s;

• reduce economic efficiency and lack equity—including by creating non market-based incentives for broadcasters in relation to increasing music use at the expense of non-music formats;

• are not necessary—given that the Copyright Tribunal independently assesses fees for statutory licence schemes;

• are inflexible and arbitrary—as the levels at which the caps are set are not linked to an economic assessment of the value of the licence;

• are anomalous—because the Copyright Act contains no other statutory caps, other jurisdictions do not cap licence fees, and the cap is inconsistent with Australian competition policy;

• may not comply with Australia’s international treaty obligations—in particular, the requirement under the Rome Convention for equitable remuneration to be paid.^[105]

19.105 The PPCA argued that removing the caps would bring benefits to the sound recording industry and Australian recording artists, through increased income and, in turn, provide a greater economic incentive for creativity and investment and enhance cultural opportunities.^[106]

19.106 The PPCA was supported in its position by a number of other stakeholders.^[107] The ACC, for example, submitted that both caps should be repealed as they are ‘inequitable, completely arbitrary and do not involve any analysis of economic efficiency’ and ‘constitute an unfair subsidisation of the radio industry by performers and sound recording copyright owners’.^[108]

19.107 Pandora also submitted that the caps provide the ‘commercial radio sector with a significant competitive advantage over online radio services’ and should be repealed. However, if the caps are not repealed, Pandora suggested that ‘market parity demands that online businesses providing the same or similar services should also receive the benefit of those caps’.^[109]

19.108 The ABC submitted that the ABC cap should remain, on the basis that the cap ‘represents a financial indicia set by Government’, the constitutional basis of which has recently been upheld unanimously by the High Court of Australia.^[110]

The future of s 109

19.109 Reform to broaden the communication technologies covered by the broadcast exceptions may be justified in order to encourage innovation and competition, and respond to technological change. The availability of the s 109 licensing scheme for radio broadcasters provides them with a competitive advantage over internet radio services.

19.110 In the context of media convergence, the continuing distinction between broadcasts and other electronic communications to the public in relation to copyright exceptions seems difficult to justify. There may be no reason, in copyright policy terms, why radio broadcasters should have access to a licensing scheme under s 109, while internet radio services do not. Australia appears to have a comprehensive and flexible system for the voluntary licensing of music, which can easily be adapted to the needs of broadcasters.

19.111 As discussed above, broadcasters usually require licences from two sources to broadcast a sound recording: one relating to copyright in the sound recording (available under s 109), and another relating to copyright in the musical work recorded. Voluntary licensing appears to operate effectively in respect of the latter.^[111]

19.112 For these reasons, the Australian Government should consider repealing the s 109 licensing scheme for the broadcasting of sound recordings, leaving licences to be negotiated voluntarily. If this approach were taken, issues concerning the application of the licensing scheme to internet transmission of television or radio programs, and concerns about remuneration caps, would no longer be relevant.

19.113 However, if the s 109 licence is retained, there appears to be a strong case for repeal of the one per cent cap. Further, the ABC cap may not be the most appropriate way to support the funding of the national broadcaster. The problematic nature of the caps was recognised by the Simulcast Inquiry, which stated that it ‘can understand why previous reviews have recommended the abolition of such a cap’.^[112]