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Administration MBE 148/45 Glenferrie Road Malvern, Vic 3144 Phone: 03 9507 2315 Fax: 03 9507 2316 Email

: admin@mca.org.au Website: www.mca.org.au ABN 85 070 619 608 Executive Director Tel: +61 (0)2 9251 3816 Fax: +61 (0)2 9251 3817 Email: mca@mca.org.au Music. Play for Life campaign Tel: 02) 4454 3887 or 0439 022 257 Email: tina.mpfl@mca.org.au Website: www.musicplayforlife.org Australia’s representative to the International Music Council

Music Council of Australia

Ms Joan Warner CEO Commercial Radio Australia By email: codes@commercialradio.com.au March 19, 2010

Dear Ms Warner RE: ALTERATION TO CODE 4 – AUSTRALIAN MUSIC 1. The Music Council of Australia here responds to your notice of a proposal to insert a new clause, 4.6, into Code 4 of the Commercial Radio Codes of Practice as notified in The Australian newspaper. 2. The Music Council of Australia (MCA) is the national music council, with 50 members representing the breadth of the Australian music sector, including the recording industry, and also live performance, education, youth, community, therapy, legal, international and so on. The MCA represents Australia on the International Music Council, with offices in UNESCO, Paris. 3. The CRA proposal as notified in The Australian: 4.6 This Code of Practice 4 does not apply to new digital only services.

Digital radio technology gives radio stations the ability to increase diversity of content, including new music formats and genres. The imposition of Australian music quotas on new digital-only channels would prevent licensees from providing a wide range of new and diverse programming and hence would defeat one of the Government’s key broadcasting policy objectives. The exemption will also encourage diversity and thus assist in

underpinning the viability of new and innovative services and in driving take-up of digital radio, This provision parallels the current exemption from Australian content obligations provided for new digital-only television channels. It is proposed that a review of this exemption will take place as part of the review of the Commercial Radio Codes of Practice which are reviewed every 3 years as part of the tri-annual review process. 4. The opening statement to Code 4 remains as follows: The purpose of this Code is to implement the object, set forth in the Broadcasting Services Act 1992, of promoting the role of broadcasting services in developing and reflecting a sense of Australian identity, character and cultural diversity, by prescribing minimum content levels of Australian music. The commercial radio industry is committed to supporting the music of Australian artists and composers. The quotas adopted by the industry depend upon the availability of Australian music to suit station formats. The commercial radio industry will continue to encourage the increased production by the record industry of Australian music relevant to stations formats and the preferences of the Australian listening public. The CRA proposals 5. The CRA proposal states: “Digital radio technology gives radio stations the ability to increase diversity of content, including new music formats and genres.” Lacking explanation of this assertion, it can be conjectured that CRA means that the digital regime will allow an increase in the number of broadcast channels and therefore, diversity among them. In that case, we

might ask whether there will not be an imperative for greater diversity among stations in order for each to find its special audience, regardless of the contents of the Code. 6. The CRA proposal continues: “The imposition of Australian music quotas on new digital-only channels would prevent licensees from providing a wide range of new and diverse programming and hence would defeat one of the Government’s key broadcasting policy objectives.” 7. MCA notes the phrase here, “new digital-only channels” and the title of the proposed section 4.6: “new digital only services”. Is CRA therefore proposing that there should be no local content quotas imposed on only those channels established under broadcasting companies that do not now exist? Or channels that add to the number of channels provided in analogue broadcasting? Or since all digital channels are “new” and soon all free to air radio will be “digital only”, does it mean that there should be no local content requirements on all free-to-air broadcasting? Lacking explanation, we do not know. 8. MCA makes four observations. Firstly, the government’s interest in diversity is in the context of its greater interest in provision of Australian content. Code 4 is about Australian content: “…the role of broadcasting services in developing and reflecting a sense of Australian identity, character and cultural diversity” – that is, Australian cultural diversity. We must assume that if CRA wishes to remove the local content code, it is so that its members can broadcast no Australian music or less Australian music. So although CRA claims that its proposal furthers the government’s objective, it in fact defeats it. 9. Secondly, although CRA here expresses an enthusiasm for musically diverse programming, it is only modestly in evidence in the programming by CRA members on analogue radio. There are various strands of the commercially popular genres, but not a single commercial station has a format of world music, or jazz, or classical music, for instance. It might be expected that diversity on digital radio will be no more than that dictated by commercial considerations.

10.Thirdly, there is no argument given in support of the extraordinary assertion that Australian music quotas would prevent licensees from providing diverse programming. This would make sense if Australian musicians were exclusively committed to, for instance, the genres broadcast by CRA members on analogue. But of course, there are highly accomplished musicians, indeed world-class Australian musicians active in every genre of interest to Australian listeners. In some genres, there may be only a modest supply of good, broadcastable, recordings, but that is taken care of by the CRA’s tiered quota system. And in any case, a shortage of recordings presumably would over time be remedied by support given indirectly to record production from the new, diverse commercial radio broadcasting practice. 11. Fourthly: perhaps CRA contemplates the licensing of broadcasting formats whose identity lies in an exclusively foreign repertoire or even the relay of programming from foreign stations. Should this be the case, MCA observes that broadcast spectrum is limited and it should not be allocated to stations that do not provide a public service that includes broadcast of Australian repertoire to the level prescribed by the local content standards. Exclusive foreign repertoire is available over the internet where spectrum is not an issue. 12. The CRA proposal continues: “The exemption will also encourage diversity and thus assist in underpinning the viability of new and innovative services and in driving take-up of digital radio.” This simply follows from the previous CRA assertion, is presented without argument and seems to be totally without substance. 13. We move to the CRA’s next assertion: “This provision parallels the current exemption from Australian content obligations provided for new digital-only television channels.” In what does this parallel lie? The manner in which digital free-to-air services are being phased in is complex and unique in Australia's broadcasting history. It has involved long lead times and the necessity to simulcast in standard definition while providing services in high definition. Its roll-out across the country is complicated by the fact that analogue switch-off will occur firstly in rural rather than urban areas where

broadcasters are reliant on feeds from major centres. This assertion also completely ignores the fact that the Government, through the Department of Broadband, Communications and the Digital Economy, is currently conducting a review of content regulation for multichannels – “Content and access: The future of program standards and captioning requirements on digital television multi-channels” - to establish precisely how and when content regulation will apply, something that should have been known to the CRA at the time the advertisement was published as the review was announced by the Department in December last year. 14. More generally, there is of course a parallel between radio and television inasmuch as the government seeks by regulation to ensure in both cases that Australian audiences have reasonable access to Australian content. However, the financial consequences for each of these mediums are in strong contrast. Television stations must actually produce local content, or pay others to produce it. Kim Dalton, formerly CEO of Screen Australia and now Director of Television for the ABC, stated in the press in the last week that the average production cost for one hour of television drama is around $500,000. 15. Radio broadcasters, on the other hand, simply use music productions provided to them on recordings, and pay a small royalty for use. So were regulatory concessions to be offered to television broadcasters, they would address financial circumstances that do not pertain to radio. 16. Finally, the existing analogue radio broadcasters have been allocated digital spectrum without charge because they will transfer their operations to digital when analogue is switched off. Why would not their obligations, evolved over many years, still apply? 17. For its 2009 review, CRA provided a discussion paper to assist stakeholders and the public, however inadequately, to understand its proposed alterations to Code 4. For the current proposal, it seems that the text of the advertisement constitutes the entire explanation and justification. We must assume that there is nothing more to which to respond. The review process

18. CRA states: “It is proposed that a review of this exemption will take place as part of the review of the Commercial Radio Codes of Practice which are reviewed every 3 years as part of the tri-annual review process.” The MCA submission to the last review was dated more than one year ago. Is this new proposal a part of the last review or the next review, not yet announced, to take place in two years? 19. The Code states: “It is intended that the Codes will be formally reviewed after they have been in effect for three (3) years. If, within that time, it is shown that the Codes require substantive change, the public will be given adequate opportunity to comment on the changes that may be proposed.” We note that the requirement is to provide the public, which includes but is greater than the industry, with adequate opportunity to comment. 20. The Code states that “the Codes will be formally reviewed after they have been in effect for three years.” The introduction of digital radio was not announced by surprise in the period since the 2009 review. CRA’s current proposals could have been introduced in that review. There is some question as to whether CRA has the right to instigate its current review. 21. Given that this review is therefore at the least unexpected, we might expect that CRA would make extensive and unusual efforts to ensure that it is known and opportunity is provided for comment. But MCA notes that, as with the review procedure in 2009, CRA has done the absolute minimum required to inform the general public and industry stakeholders of its review by placing a small advertisement in the national newspaper. MCA does not consider this as giving “adequate opportunity”. It is a token action sufficient only to allow CRA to claim that comment was invited. 22. As was the case in 2009, the advertisement was noticed by chance by someone in the music industry. Had that not happened, CRA might have been able to go to the government claiming that no-one in the industry nor the public had offered objections to its proposal. We would not like to think that that was its strategy, but we do find it extraordinary that CRA sees no need to give direct notification to those, for instance, who have made submissions to previous reviews nor even to its supposed colleagues on AMPCOM.

23. Will it be necessary for the music industry to employ someone to scour the classifieds of the newspapers (or even other media) to attempt to discover whether CRA has announced a review? At least if it is known that reviews will indeed be triennial, the task can be confined to a few months every few years. But if CRA proposes to initiate reviews at whim, the search will have to be daily, year-round. And perhaps should take in the Illawarra Mercury and the Back of Bourke Warrior and every regional weekly in the country. 24. But then we recall also that in its 2009 proposal, CRA simply deleted sections of the existing code without acknowledgement – sections that, for instance, would have made the new music quotas inoperable. CRA’s behaviour is less than forthright and transparent and borders on covert. The country, through the regulating authority, is entitled to know that it and the public are being presented with the entirety of CRA’s proposals and their justifications, and that CRA has made every reasonable effort to invite comment from the the general public and the affected industry. Is there any longer a need for local content standards? 25. The local content standard was introduced in 1942 and was then set at 2.5% for Australian compositions. In other words, commercial radio was not then achieving even 2.5% voluntarily. The history since then has been a ratcheting up of the quotas beyond the voluntary levels achieved by commercial radio until we reach the current 25% level. Let us be clear that while this level seems to be a source of some local satisfaction, it is very modest by comparison with local content levels, with or without quotas, in many other countries. 26. We are told by ARIA that in the most popular genres, sales of recordings of Australian artists now consistently account for a higher percentage of the market than the highest local content quota or compliance levels by commercial broadcasters. The public pays for more of this music than it can get free from radio. 27. With this sort of success, could we not take a more relaxed view and disband the quotas? Ironically, some might see value in that proposition were it not for the apparently fervid wish of the CRA as shown in its recent conduct and arguments to terminate the local content standards. Why end

the quotas if not to end or substantially diminish the broadcasts of Australian music? 28. Why end the broadcasts of Australian music? The reason that always presents itself is that CRA members could disband music on which they pay a broadcast royalty in favour of music from the USA on which they pay no royalty. 29. It has long been a premise of Governments, as manifested in the Broadcasting Services Act and its predecessor, that access to spectrum has attendant social, cultural and industry obligations. This has been carried through in regulatory requirements including local content requirements. The maintenance of Australia’s right to sustain local content requirements also has been an important element in negotiation of every international free trade agreement signed by Australia in the past decade. 30. We believe that the beginning of Code 4 still includes the statement: “The commercial radio industry is committed to supporting the music of Australian artists and composers.” That suggests that CRA supports this continuing policy direction by governments of both persuasions. However, we recall that CRA proposed last year to delete this statement from the code. This, at least, was honest. Whatever its past belief, whatever its past cooperation with the music sector, it clearly now has no such commitment and has abandoned pretence. The necessity for the local content regulations is consequently more urgent than ever. Conclusion 31. MCA was very dissatisfied with CRA’s conduct of the 2009 review and so informed ACMA. Its dissatisfaction increases with this proposal: firstly because the proposal is frivolous and unsupported, and secondly because despite the dissatisfaction expressed by MCA and other industry stakeholders last year with the lack of effective notification of its intentions, CRA has followed the same path in 2010. 32. MCA discovers no substance in the CRA proposals and opposes them as damaging to Australia’s cultural life, the health of the music sector and governments’ policy intentions. MCA is dissatisfied with the CRA’s management of the review process, sees no integrity in placing the

oversight of these regulations in the charge of an organisation that so clearly opposes them, and will seek a new, independent and equitable method of review of the local content codes. It will provide copies of this submission to the Minister and to ACMA. Yours sincerely Dr Richard Letts AM Executive Director