Thursday, November 13, 2008

Australian Health Club Chain Fights 3000% Hike In Music Royalties

“We've seen plenty of occasions 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.”

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