To pump music out to their dance floors, Australian clubs used to have to pay record companies and artists a nominal 7 Australian cents in royalties per guest, per night. Under a recent copyright settlement, that rate has risen to 50 cents per customer, and it is set to jump to 1.05 dollars, or 84 U.S. cents, in a few years.
We looked at this and thought, 7 cents just doesnt seem right, when people are paying 10 to 15 dollars to get in and at least 5 dollars for a drink, said Stephen Peach, chief executive of Phonographic Performance Co. of Australia, which collects the fees. Without music, there wouldnt be a nightclub.
As the music industry searches for a way to make up for plunging sales of compact discs, it is pushing to generate new revenue, not just from Australian clubs but also from Italian restaurants, Chinese karaoke bars and U.S. radio stations, as well as fitness centers, retail stores and myriad other businesses that play music, around the world.
This has always been seen in the past as a secondary source of revenue, said John Kennedy, chief executive of the International Federation of the Phonographic Industry, a London-based trade group for the major record labels. But with the declines in revenue from physical sales in recent years, it has become more and more important.
Royalty payments to the record industry from so-called performance rights rose 16 percent last year, according to the federation, even as overall music sales fell by 8 percent. The federation is coordinating a global campaign to double the amount raised from performance rights over the next decade.
To reach that goal, it is urging other countries to follow the Australian example and increase the rates paid to music companies and artists. Elsewhere, it is pushing for stricter enforcement of existing agreements. And in the handful of countries where such royalties do not exist most notably the United States it is lobbying aggressively to try to establish them.
Last month in Washington, the House Judiciary Committee approved a bill, sponsored by Representative John Conyers Jr., a Democrat from Michigan, that would require U.S. radio stations to start paying royalties to record companies and artists when they play their music over the airwaves.
U.S. radio stations already make royalty payments, but only to songwriters, who are protected by a different kind of copyright. In much of the rest of the world, songwriters, record companies and musicians all get paid for air play, as well as for the use of their music in public places.
The thing that draws people to radio is the music, and performers dont get any of that revenue, said Michael Huppe, general counsel at SoundExchange, an organization that collects royalties for record companies and artists when music is performed on U.S. Internet and satellite radio services, which are required to pay such fees.
Music executives say they are hopeful that Congress will pass the performance rights bill into law by the end of the year, but the radio industry is also lobbying hard to try to prevent that from happening.
Its going to be a nasty, ongoing fight, said Dennis Wharton, a spokesman for the National Association of Broadcasters. The record labels are just trying to make up for their struggling business model. Its not radios fault that theyve had a couple of down years.
Mr. Wharton said it was unfair to compare the United States to other countries, because copyright conditions are different. In the United States, for instance, sound recordings are protected for 95 years, compared with 50 years in Europe, so music labels and artists earn royalties from record sales for a much longer time in United States.
Record companies and musicians ought to be grateful for free air play, because it generates sales, Mr. Wharton added. Indeed, because of the marketing power of radio, music companies in the past sometimes paid for radio time, under the outlawed practice of payola.
