The Hot Seat, Brett Cottle, CEO, APRA | AMCOS

Published in The Music Network


Brett, you’ve just returned from the World Copyright Summit in Brussels. What were some of the big themes?

The broader issues were the continuing issue of ISP liability, and the impact of file-sharing and other illegal content on the growth of legitimate services. There was talk about cloud-based services and what they mean in copyright terms. There was talk about pan-European licensing and internal industry issues, such as the idea of a central global database of musical works. If I had one criticism of the content, it was that perhaps that it was too Euro-centric and certainly not much attention paid to Asia. Surely one of the big issues for all of us is if and when Apple will launch its service across Asia, and what licensing arrangements will apply to that service.

What are the big challenges facing the Australian industry?

The fundamental problem is the seemingly inexorable decline of the physical product market. And the continuing fact that the digital business is not expanding at a rate which plugs the gap. Publishers are facing that same decline in their revenue. And they’re having to deal with a hell of a lot more data and micropayments. They’re paying out many more writers and dealing with much smaller sums of money. I’m not privy to how their sync licensing businesses are performing, but the general economy is probably placing a downward pressure on that area.

APRA recently announced a record royalty distribution. Is it all good news?

The business is still reasonably buoyant because it’s extremely diverse – our clients range from corner shops to concert promoters. But it’s going to get much tougher next year. The primary reason is the strength of the Australian dollar. We’ll see a marked fall off in revenue from overseas because of the strength of the Aussie dollar. NZ revenue accounts for about 10% of revenue within APRA and because the NZ dollar is relatively weak, we’ll see a decline in that part of our accounts. There are other problems caused by the strength of the currency, and they’re primarily to do with the downturn in the hospitality industry generally because of the great drop-off in tourist dollars being spent in Australia.

In the general licensing area, we’re seeing a high level of cancellation in the hotel area and a very difficult trading environment in the dance club area. Offsetting that, our market penetration generally in public performance licensing is still increasing. We’ve just agreed on a new tariff with the fitness industry; we’ll see a significant increase in license fees and we’ve got some areas of opportunity which we’ll be negotiating in the next year. We’ve also got to renegotiate our YouTube licensing agreement, beginning in July. That’s quite a big ticket item for us.

Which areas has APRA identified for royalty growth potential?

Digital is still growing strongly. We haven’t seen the levelling-off in digital sales as we’re seeing in the U.S. The opportunities that will arise for us will principally have to do with a re-evaluation of rights — getting new deals in other areas. And YouTube would be one example. And you’re shifting to a quarterly distribution cycle from a half-yearly? Yes. Our first quarterly distribution will be made in mid-August. We aren’t moving to a full quarterly distribution initially. We’re going to pay-out quarterly what we can readily do, which is about 60-70% of our total payments. The remaining areas of our distribution which for the time being will remain on a half- yearly cycle – for example television – will gradually move across to a quarterly cycle over the next 12-24 months.

EMI Music Publishing says its bundling performance rights previously represented by ASCAP with mechanical and synchronisation rights in a move to streamline licensing for digital music service providers. Will that help clarify the minefield that is publishing rights?

There is a lack of clarity on what the impact is. Once the rights are within the mandate of a collecting society, they’re available to license. All you have to do is comply with the terms of the relevant license scheme. But if the rights are locked-up back in a publishing house, of course that publisher can decide whether to license them or not. It’s difficult to see what the convenience for users might be, in the sense that the owner might decide simply not to license those rights unless a premium is paid.

What changes would you like introduced to the industry?

There’s only one – I’d like to see the issue of free illegal content online dealt with. The only way it can be dealt with is at the ISP level. And the ISPs have either got to adopt some sensible, responsible approach to the system of illegal content, or they’ve got to begin to talk to copyright owners about buy-in on the business models. And come up with some kind of licensing proposal, which will address the issue of the huge amount of content which gets traded for free.

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