altNearly 200 Australian radio stations stopped their on-line simulcasts of on-air content at midnight on Jan 31st.

According to Commercial Radio Australia, the switch-off is at the insistence of record companies, as represented by the Phonographic Performance Company of Australia (PPCA), that radio stations pay additional music royalties — once for the free-to-air version, and again for the free-to-internet radio version.

The stations departing our digital airwaves tonight are all local commercial regional radio stations, but CRA has suggested that metropolitan radio stations may switch off in the future, telling Sound+Image also that  “If they get what they want, it will affect community, ABC and SBS as well.” 

All radio stations, including the ABC, SBS, community radio and commercial radio, pay record companies each time they play an Australian song on radio. The Phonographic Performance Company of Australia (PPCA) which represents the multinational record companies is demanding the radio industry pay two fees every time a track is played: one for the on-air transmission and a second, higher, payment for the on-line version.

Yet the PPCA can have no idea how many listeners outside a station’s traditional broadcast area are tuning in to the digital transmissions. And as CRA’s CEO Joan Warner says, charging for online listeners within the area is effectively charging stations for how their listeners choose to listen.

“In a converged world, listeners want the convenience of listening to their local radio station at home, at work and in the car,” says Warner. “Record companies now want radio stations to pay for how our listeners tune in. We don’t pay an extra fee when people listen on a car radio, via an FM chip in a mobile phone or via a radio chip in a clock radio or hi-fi system, but we are now faced with the prospect of paying an extra and higher fee (if the PPCA gets the high cost scheme it is pushing as a final scheme), if listeners choose to listen to their local radio station online.” 

The radio industry maintains the internet is simply another distribution mechanism for live and local free-to-air content, and claims that because the fees the PPCA charges are based on a percentage of gross revenue earned by commercial radio stations, this insistence on a second higher fee long term is more than double-dipping and threatens the continuation of listeners being able to access their local stations online when it suits them. Internet radio also overcomes problems of poor reception, and potentially improves quality for AM broadcasts in particular.

The switch-off became inevitable in August last year after the High Court of Australia rejected a leave application by Commercial Radio Australia and cemented an earlier ruling of the Federal Court which found that internet simulcasts of radio programs fall outside the definition of a “broadcast” under the Copyright Act. At the time PPCA CEO Dan Rosen said, “For too long radio has had a free kick - driving listening audience numbers and profits via the internet while not paying artists fairly for use of their recordings. This puts an end to the legal wrangling over payment for recorded music streamed on the internet. It confirms radio stations must pay a licence fee for streamed music and we hope to move quickly to work out a fair and proper licensing deal.”

But they haven’t, and the result is the loss of hundreds of local stations offering unique and diverse content. Major stations with high revenues may be able to suck up the extra fees, but it will lock lesser stations into existing broadcast models which will become increasingly outdated as technology advances.

The arguments here are complex, but might this not prove to be another attempt by copyright representatives to stifle new technologies that ends not only in failure, but in reduced royalties for those they claim to represent? If local stations disappear, those listening to internet radio are likely to retune to non-Australian stations, so this initiative will reduce the exposure of and potential revenue for Australian artists - and those organisations that profess to represent them.