Legislation, regulation, infrastructure

When two or more of us are gathered together to consider the big issues in music and look for the big solutions, there is a tendency to identity a problem and hand the job of solving it to the care of the government.

Music Council of Australia

AUSTRALIAN MUSICAL FUTURES: TOWARDS 2020

BRIEFING PAPER: LEGISLATION, REGULATION AND INFRASTRUCTURE

Richard Letts

A. GOVERNMENT INTERVENTIONS

1. The Whole of Government: Commonwealth Ministries with Potential Relevance to the Music Sector

2. Government Arts Subsidies p17

3. Other Forms of Government Support p21

4. Employment Conditions p22

Written by Terry Noone, Federal Secretary, Musicians' Union of Australia

5. Australian Content Requirements for Broadcasters p24

6. Live Music and the Regulation of Venues p26

B. INFRASTRUCTURE p27

1. Scale and Structure of the Sector

2. Industry and Volunteer Associations p35

3. Statistical and Other Structural Information p36

4. Financing p38

5. Musical Instruments and Equipment p38

Written with assistance from Ian Harvey, CEO, Australian Music Association

6. Physical and Virtual Spaces Available for Music Activity p42

C. INTELLECTUAL PROPERTY RIGHTS p47

D. FREEDOM OF EXPRESSION p49

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INTRODUCTION

This is logical in its way. It's usually the job of the government rather than arts organisations or business to deal with the big picture and invent policies that can take the whole country forward. There is for this moment a sort of match between our and their thought processes, the outcomes are for the whole country and that is what we are looking for.

I think we should be wary of this. We should recognise that this tendency can pre-empt our consideration of other solutions. I'm looking at the report on the government's 2020 summit and most of the proposals involve government. (Of course, this was a government summit, so perhaps that is what was wanted.)

That said, this paper is written firstly for the Legislation, Regulation and Infrastructure group in the MCA summit (although some information here will be useful to all) and so a lot of it deals with government regulations and other government inputs. This happened to be the task for this paper. It is not meant to lead us away from self-reliance. I believe that we should look for things that WE can do, individually, collectively, organisationally, as well as things that the government can do.

The report of the Rudd summit is full of good ideas, and some not so good ones. I have mentioned some but suggest that you read the report, which we will send you, and draw your own conclusions.

The paper is not all fact; there is also observation and a bit of personal perspective or opinion. You will of course accept or reject as you see fit. It covers a lot of ground and I may have some things wrong. If you see the need for corrections, please let me know.

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A. GOVERNMENT INTERVENTIONS

This is a national summit and this briefing paper deals almost exclusively with interventions by the Commonwealth Government. State governments and to an extent local governments also play a significant role in supporting and regulating music activity and the contexts in which it takes place but as will quickly be apparent, to deal with the Commonwealth already is very complex and to add the interventions of eight state and territory governments would simply not be feasible in a one day meeting. Nevertheless, there is some reference to the states where they are major players in an issue of current importance, such as regulation of live music venues.

There is much talk of a whole-of-government approach to the arts but I have never seen the full implications spelt out. The first part of this section lists the possibilities.

1. The Whole of Government: Commonwealth Ministries with Relevance to the Music Sector

2. Government Arts Subsidies

3. Other Forms of Government Support

4. Employment Conditions

5. Australian Content Requirements for Broadcasters

6. Live Music and the Regulation of Venues

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1. THE WHOLE OF GOVERNMENT: COMMONWEALTH MINISTRIES WITH RELEVANCE TO THE MUSIC SECTOR

The Commonwealth Ministries/Departments with actual or potential relevance to the music sector are listed and existing or potential relevance noted.

a) Ageing

Music therapy is an important resource for the ageing and has special application for instance in the treatment of dementia. There are unresolved issues around government recognition of music therapy and access to medicare or health insurance for music therapy services.

Music also has a valuable role to play in provision of recreational services for older people, with opportunities growing as the ageing population expands. There is potential for government funding of some of these services.

"Creative industries development

· Strategic Digital Industry Plan
The Government has committed to develop a Strategic Digital Industry Plan in response to the Digital Content Industry Action Agenda.

· Creative Industries Innovation Centre
The Government has committed to provide $17 million over four years for business guidance to emerging creative enterprises nationally.

· Creative Digital Industries National Mapping Project
A three-year study that determined the size and growth of the creative industries in Australia, both by the number of creative businesses and the size of the creative workforce.

Cultural sector engagement in the digital environment

· Cultural Ministers Council Creative Innovation Economy Roundtable
In February 2008 the Roundtable reported on opportunities for the creative sector's engagement in the online, broadband and mobile digital environment.

· Culture and Recreation Portal
The Culture and Recreation Portal encourages and provides online access to over 4000 websites about Australian cultural activities and events."

The government is considering moving arts funding programs now administered by the Department to the Australia Council.

g) Families, Housing, Community Services and Indigenous Affairs

There are programs that support indigenous arts, mostly visual arts but in principle, they probably can include music. As noted, the Australia Council has an Aboriginal and Torres Strait Islander Arts Board and the Department for the Arts a number of programs directed to indigenous arts practice. Music and the arts presumably can also find support within this department if projects are suitably designed.

h) Finance and Deregulation

"The Department of Finance and Deregulation (Finance) plays an important role in assisting government across a wide range of policy areas to ensure its outcomes are met, particularly with regard to expenditure and financial management, deregulation reform and the operations of government." It assists in preparation of the budget and oversees expenditures and the efficient operation of government. Residence of the razor gang.

i) Foreign Affairs

Foreign Affairs and Trade are separate ministries but share a single department, the Department of Foreign Affairs and Trade. There are two Parliamentary Secretaries in Foreign Affairs, each with distinct portfolios: Pacific Island Affairs, and International Development Assistance. (See below for the latter.)

The present government has terminated a program which funded touring by Australian musicians to perform at trade fairs and diplomatic posts. The purpose was more to show the flag, demonstrate Australian accomplishments, than to provide cultural subsidy or industry assistance. Perhaps it should be regarded as fee for service. And perhaps it will be restored in future. Other countries have much more active international promotion programs of this character - e.g. the British Council, Alliance Francaise, Goethe Institute.

The Department offers grant programs through a number of councils that foster bilateral relations between Australia and other countries or regions - e.g. the Australia-China Council.

j) Health and Ageing

We have not explored the difference between the Ministries of Health and Ageing, and Ageing, but suspect that the second is a section of the first. See 1 a) above.

Music is recognised as a contributor to public health by some government agencies. Vic Health (Victoria) has a long record of grant support to projects in which music is used therapeutically.

There are basically two types of health issues specifically involving music: 1) occupational disorders of musicians, in particular the physical issues that grow up around instrumental or vocal performance and 2) the use of music as an aspect of treatment for various conditions through the various forms of music therapy. There is a good summary on the MCA Knowledge Base at http://www.mca.org.au/web/component/option,com_kb/task,article/article,97/ An excellent summary of music therapy can be found in the same section.

There are issues around official recognition of, and health insurance support for music therapy, in which the Commonwealth is a player.

k) Human Services

Department of Human Services administers the Child Support Agency and CRS Australia (employment agency) -and the Human Services agencies, Centrelink, Medicare Australia, Australian Hearing and the HSA Group, the latter covering occupational health.

At this point, we have not special insights into the possibilities here except that it could assist with occupational health issues for musicians.

l) Immigration and Citizenship

"The purpose of the Department of Immigration and Citizenship (DIAC) is to 'enrich Australia through the well managed entry and settlement of people'." Obviously, it manages immigration, refugees, illegal immigrants and detention centres. It is not so famous for well managed settlement of people. But its description of activities includes the statement "We also contribute to a society that values Australian citizenship and social cohesion and enables migrants and refugees to participate equitably." http://www.immi.gov.au/about/department/diac-plan/diac-plan.pdf

Since music is such a strong instrument to support social cohesion, it would be a natural for use by this Department.

A section of the Department deals with multiculturalism through the following four programs, three of them offering grant funding. Since these are not widely known, here are brief descriptions.

Harmony Day is celebrated on 21 March each year and is about bringing people together to celebrate Australia's community harmony, participation and cultural diversity. No funding mentioned here, but it appears to have survived from the previous government in these three progams:

Community relations funding is available to help incorporated not for profit organisations address issues of cultural, racial and religious intolerance. Projects should target all people living in a community or local government area and promote respect, fairness, inclusion and a sense of belonging for everyone.

Through the Living in Harmony Partnerships program the Australian Government establishes partnerships with peak bodies and national organisations to work together to address issues on a regional or national scale, to promote Australian values, mutual respect and participation.

The Emerging Priorities Program enables the Australian Government to support community responses to emerging issues. Under the program project based responses are developed with the support of the relevant community and government organisations.

m) Infrastructure, Transport, Regional Development and Local Government

With Richard Florida's theories of the creative class and its contribution to urban vitality and growth so much in favour, there should be an opportunity to engage some regions and local governments in the concept that a strong arts life will have benefits for the local economy and attractiveness for new residents. However, it is not immediately apparent from the programs of this Department that direct approaches have anywhere to go. It funds local government to the tune of nearly half a billion a year, but it is the local councils that decide upon the allocation of funds. There is an associated grant-giving foundation, which is to be approached directly. There ought to be opportunities here, but it may take some ingenuity to discover or more probably, create them.

Note the comments under Communications above, about the importance for musical development of broadband access in the regions.

n) Innovation, Industry, Science and Research

An important Ministry for music development.

Through its industry face, it is a potential source of advice and support on industry development. There is an array of industry assistance programs including, for instance, one to encourage venture capital investments.

The Contemporary Music Working Group has been working for several years to get the support of this department in a top-to-toe analysis of the "industry". It appears that this is now likely to happen through a collaboration between a number of departments.

The Minister has for the last six months been conducting a Review of the National Innovation System. It is headed by Terry Cutler, a former Chair of the Australia Council. It sought submissions and these can be read on the Department's website.

The Department administers the Australian Research Council (ARC) which provides research grants to applicants from the tertiary education sector. These projects often involve industry partners (MCA is such a partner, for instance, and the possibility is there also for private businesses).

There are current issues around the inclusion of "creative practice" in the arts as activity eligible for ARC funding. These seem to be headed towards satisfactory resolution. The major sectoral advocate has been CHASS, the Council for Humanities, Arts and Social Sciences.

This Department administers support to the Australian Institute of Aboriginal and Torres Strait Islander Studies, a long-time actor in the collection and study of traditional ATSI music and culture, and to the Cooperative Research Centres, CSIRO and IP Australia. The latter is a website to assist in the use of IP rights such as patents (e.g. in new music instruments, hardware) and trademarks but not copyright.

o) Tourism

The Department operates the promotional agency, Tourism Australia. It has long been a complaint of the arts sector that Tourism Australia presents Australia as barbies, sport, nature, the outback, and does not include arts/culture. My data are out of date and I have not had time to do new research. A few years ago, the average stay of tourists was rather short and the percentage making a second or subsequent visit was low. The length of stay and level of expenditure was higher for Western visitors than Asian visitors, but the promotion was concentrated on Asia. The rate of cultural attendances for Asians was comparatively low; this was not necessarily because they saw Australian culture as inferior - the Japanese, for instance, also had low attendance rates at home.

So as things stood at that time, there were good arguments for attracting more Western tourists - stayed longer, spent more, and are more interested in the arts.

The Victorians tourist campaign has brought many more tourists and includes culture.

p) Trade

As noted, the Ministries of Trade and Foreign Affairs are closely linked through a shared department.

The Department of Trade might be renamed the Department of International Trade since international trade, in various aspects, is its main concern.

An important aspect of its work is the negotiation of international trade agreements. A few years ago it negotiated a "free trade agreement" with the USA with negative consequences for Australian music. It is engaged currently in negotiation of agreements with ASEAN, China, Japan and other countries. Basically, the issue of concern in these agreements is that they can reduce our government's "cultural sovereignty" - its prerogatives to support Australian culture by, especially, regulations that ensure that it has some presence in the market, possibly at the cost to foreign suppliers that their access to the Australian market is not totally uninhibited.

The music sector is very interested in building music exports, and this aspiration has easy in principle support from both sides of politics. The Department of Trade's agency Austrade supports international promotion of Australian musicians, mostly in the popular field. It maintains a music office in Los Angeles. Matching grants are available for export promotion and the office itself assists with promotions e.g. at music trade fairs such as MIDEM and SXSW. www.austrade.gov.au

The Minister is participating in negotiations around the creation of an Anti-Counterfeiting Trade Agreement (ACTA), initiated by the USA and intended "to establish a new standard of intellectual property (IP) enforcement to combat the high levels of commercial scale trade in counterfeit and pirated goods worldwide. These participants intend that the ACTA improves intellectual property enforcement by: 1) improving enforcement international cooperation; 2) establishing enforcement best practice; and 3) enhancing the enforcement legal framework.

"The participants in ACTA negotiations do not intend for the ACTA to target individuals, the privacy of individuals or the property of individuals where those individuals are not engaged in commercial scale trade in counterfeit and pirate goods."

There are problems experienced by Australian musicians in getting visas for touring in the USA in particular and to a lesser extent in Europe. Other countries' visa arrangements have been negotiated by the Minister for Trade in agreements such as that with the USA. Whether in all cases it is a Trade responsibility or whether it also can be influenced by Foreign Affairs or even Immigration, there apparently is a need for action.

q) Treasury

Treasury is concerned mainly with economic policy. This distinguishes it from the Department of Finance, which deals with financial management of government programs.

The department is divided into four groups, Fiscal, Macroeconomic, Revenue and Markets with support coming from the Corporate Services Group. These groups were established to meet four policy outcomes (quote):

· Sound macroeconomic environment

The Treasury monitors and assesses economic conditions and prospects, both in Australia and overseas, and provides advice on the formulation and implementation of effective macroeconomic policy, including monetary and fiscal policy, and labour market issues.

· Effective government spending and taxation arrangements

The Treasury provides advice on budget policy issues, trends in Commonwealth revenue and major fiscal and financial aggregates, major expenditure programmes, taxation policy, retirement income, Commonwealth-State financial policy and actuarial services.

· Effective taxation and retirement income arrangements

· Well functioning markets

The Treasury provides advice on policy processes and reforms that promote a secure financial system and sound corporate practices, remove impediments to competition in product and services markets and safeguard the public interest in matters such as consumer protection and foreign investment.

The Treasurer is responsible for the preparation of the budget, which is to say, responsible for the decisions about what funds are raised and where they are spent. By and large, one does not expect to present a case for music directly to the Treasurer although no harm would be done, especially for arguments focused around economic outcomes such as offered by the creative industries agenda.

The Australian Bureau of Statistics is responsible to the Assistant Treasurer. The ABS runs the national census and conducts various other surveys.

r) Veterans' Affairs

A possible location of interest in services of the genres provided to the ageing, for instance.

There is a grants program.

Parliamentary Secretaries

Assist Ministers in particular aspects of their portfolios. They are essentially junior ministers and manage the following portfolios of relevance to music.

s) Disabilities and Children's Services

Music plays an important role in support to and treatment of children with disabilities. There is scope in this program for development of those services.

t) Early Childhood Education and Child Care

The fact that there is a special Secretary for Early Childhood Education is an indication that it tends to slip off the radar in the education portfolio. Music education in the early childhood years is extremely important. Most early childhood practitioners have had no training in music or its use and in the MCA's view, such music preparation should be a mandatory requirement in courses leading to qualification to practice. If the teachers have the necessary skills, it seems a foregone conclusion that they would find them valuable and enjoyable in their work and no other special provision would be necessary.

u) International Development Assistance

The Australian sector could give assistance to the development of music sectors in developing countries. In fact, APRA already does so, for instance assisting the implementation of copyright law in Papua New Guinea. In order to get financial involvement by this section of the Department of Foreign Affairs, a request must be received from the country in question. It cannot come about simply because an Australian entity wishes to initiate a program.

v) Multicultural Affairs and Settlement Services

Under the auspices of the Minister for Immigration and Settlement Services.

w) Social Inclusion and the Voluntary Sector

The Secretary assists the Minister for Social Inclusion. This issue is given high status: the PM formed a Social Inclusion Committee of Cabinet, with as members the PM, Deputy PM and Parliamentary Secretary. A Social Inclusion Board has been formed, with a membership of distinguished citizens. The portfolio deals with such things as how to measure disadvantage and social exclusion, how to increase economic and social participation, and how communities can be engaged with social inclusion matters. It deals with homelessness, issues of health and disability.

There are existing projects in which music contributes to rehabilitation of prisoners, diversion of at-risk youth, and building community cohesion/social inclusion/social integration. ACMF, for instance, runs government-funded programs in prisons. Hip hop seems much favoured in such programs. There are wonderfully successful music programs for the disabled, such as the Tutti Ensemble in Adelaide, which assists disabled people to achieve professional status as performers.

Whole of government and the creative sector

Both governments and industry show high interest in concepts of the "creative economy", of which the "creative industries" are a part. Music is a creative industry. Generally when music is discussed as a creative industry the focus is upon its economic contribution. However, the Creative
Economy Report 2008 (published as a collaboration between the UN Conference on Trade and Development, UN Development Programme, UNESCO, WIPO and ITC) observes that the creative economy is not one-dimensionally about economic issues. From the Executive Summary:

Cross-cutting linkages

The "creative economy" is a multidimensional concept with linkages to a number of different sectors in the overall economy. Different approaches to analysing the creative economy lead to different emphases on its various aspects. For example, a sociological approach has examined the notion of a "creative class" in society, comprising professional, scientific and artistic workers whose presence generates economic, social and cultural dynamism. Other approaches have stressed the role of culture in terms of social empowerment. Even beyond urban planning circles, the concept of the "creative city" has become established, while geographers focus on the locational aspects of creative activity in the form of creative clusters, networks and districts. The multifaceted nature of the creative economy means that it cuts across a wide range of areas of economic and social policy in addition to any intrinsic value. Thus policy-making in relation to the creative economy is not confined to a single ministry or government department; rather, it is likely to implicate a number of different policy fields, including:

■ economic development and regional growth;

■ urban planning;

■ international trade;

■ labour and industrial relations;

■ migration;

■ domestic and foreign investment;

■ technology and communications;

■ art and culture;

■ tourism;

■ social welfare; and

■ education.

Moreover, there is a similar multiplicity of involvement across the public sector, the corporate sector, the non-profit sector and civil society.

POSSIBLE ISSUES

Remember that these issues are treated here only inasmuch as they can be addressed by government funding or regulation. Hopefully, many issues can be dealt with independently by the music sector. The following list makes no attempt at prioritisation.

Whole of government. Some thoughts on this currently much-used phrase. At least part of the attraction to this concept from within arts circles is the perception that the arts are always on the fringe of government and so also, therefore, is arts funding. A "whole of government" approach could unlock the doors to ministries of greater influence and wealth. (This inevitably leads to justifying arts and artistic activity as instrumental to other non-arts outcomes. In the view of this writer, who actually still believes in art for art's sake (remember that phrase?), that is a danger as well as an opportunity because we do have a habit of being overcome by our own arguments and forgetting where we came from.)

Clearly, in real life and as can be seen from the above, the implication is not that every part of government collaborates in addressing some issue of (musical) development, but that depending on the issue, relevant parts of government collaborate. So for instance, for "new music industry" issues, there could be a fruitful collaboration between the Ministers/Departments for Attorney-General, Broadband/Communications, Innovation/Industry and of course, Arts. Music as a tool for social cohesion might be taken up by some or all of the Ministries for Social Inclusion, Community Services, Health, Immigration/Multicultural Affairs, Regional Development and Arts. There could be configurations for health, for education and so on. There could also be collaborations between unlike departments: for instance, between Education and Industry to consider how well the outcomes of the education system meet the needs of employers.

The question is perhaps about the agony/benefit ratio of pulling Ministers and departments out of their silos in order to achieve these collaborations. And there might be some issues also around whether there needs to be a similar united effort from the music sector or some parts of it. If the government is to be asked to make these difficult arrangements, then the project would need to be on a relevant scale.

How would these collaborations be brought about? One suspects that unless the arrangements are brokered by some within the government, the game would never really begin. The Australia Council, as noted elsewhere, has seen a role for itself - but is it in the right position to be effective and also, does it envisage taking on a brokering role for sector initiatives or only for its own? Would a Minister be more inclined and better positioned to deal with sectoral initiatives? But we need not prejudge this.

I suggest that it is by far preferable that the sector invents these initiatives than that it depends upon government for them. Under its previous administration, the Australia Council saw itself as taking a ‘leadership role' in arts development. In my opinion, that is unwelcome and inappropriate. That is not to say that the Australia Council should not come up with good new ideas for testing, but the arts should be led by the artists and by their organisations and the first job of the Australia Council is to reflect and enable, not lead.

The Australia Council at least includes people with a good understanding of the arts. This is rarely the case for Arts Ministers who often get basic on-the-job training after they are appointed. The initiatives should come from the sector. The current work of the Contemporary Music Working Group is a fine exemplar.

The place of the arts in government's pecking order. As note, the whole of government notion arises probably from the ongoing concern about the peripheral place of the arts in most Australian governments.

In the report on the government's 2020 summit, the idea is put forward that the Prime Minister should [always?] be the Minister for the Arts. This could be a good idea, depending upon the PM's view of the arts. PM Howard showed no interest whatever, and the arts would have been officially ignored at the highest level.

More commonly, it is proposed that the arts should be coupled with another portfolio that is included in the inner Cabinet. In recent years, the arts have been under the Ministers for Education and for Communications. At present, they are coupled with Environment. In the first two cases, there were junior Arts Ministers assisting the Education or Communications Ministers. Currently, there is no junior minister, but report has it that the Minister is almost totally taken up with issues around the Environment. The position in Cabinet presumably does give the Minister more opportunity to achieve favourable outcomes for the arts; the question is whether he or she has sufficient interest to use the opportunity. Judging by outcomes in recent years, the strategy has not been effective. Would outcomes have been better if there were a separate Arts Minister in the outer Cabinet? Well, probably not.

Incidentally, the coupling of Arts with another portfolio was also envisaged as lifting arts' status in that area. For instance, making arts a part of the Education Ministry would result in the elevation of the arts in the curriculum. How well did that work?! It's a nice theory but again, there will be a result only if the Education Minister is committed to the arts.

The government's 2020 summit includes a proposition that there should be a "Ministry for Culture for high-level, cross-government advocacy that is central to and influential in government". It probably is easy to rename the present Ministry for Arts as the Ministry for Culture and even broaden its responsibilities in this way. This will not automatically confer a central and influential place in government - an aspiration that is at least decades old. Possibly it will work; possibly this centrality will be achieved only when it reflects a broad cultural change in the population.

Issues by Department:

Attorney-General. Lift the 1% cap on broadcast royalties to record companies and performers.

Keep pace with the needs for copyright change as the digital realm evolves. See the copyright paper, Section C below.

Broadband, Communications and the Digital Economy. Public broadcasting. Seek increased allocation of funds to and by the ABC to live music production by its radio networks, especially perhaps Classic FM and Triple J.

Seek increase in music productions shown on ABC and SBS TV.

Seek a clearly stated commitment by SBS radio to music made by Australians.

Seek more Australian music programming on both ABC TV and SBS TV.

Consider whether there should be regulation to involve ISPs in making royalty payments for music transmitted through their services.

Principles for allocation of digital broadcasting spectrum. MCA's view is that it should be allocated to achieve maximum programming choice and musical diversity. How would this be best achieved?

Note that these issues also apply to digital television spectrum.

The public broadcasters should be funded to introduce multi-channeling.

NOTE. The Rudd summit recommends: "Introduce a levy on commercial broadcasters, with funds raised going to public broadcasters in exchange for the lifting of the mandatory Australian content quota." This hare-brained idea could mean a decline in, or virtual disappearance of Australian content on the music stations listened to by 80-90% of the population. Remember that the profit-motivated commercial radio stations pay no broadcast royalty on US tracks. They may continue to play Australian content, or they may not.

Defence.

No more cuts to/of armed services bands.

Education

Employment and Workplace Relations

Social Inclusion

Education. The Commonwealth's National Review into School Music Education made 99 recommendations, only one of which has been acted upon by the Commonwealth. Among the states, only one, SA, has taken any action. A substantial continuing commitment of funds is required, led by the Commonwealth but even more importantly, multiplied by the states. Everything else follows from that. It is of the highest priority.

At the Commonwealth level, Peter Garrett made an election promise to produce a satisfactory level of school music education. Although the government has made a great deal of the necessity for it to meet its election promises, it is clear to MCA at this point that music education is not even on a future priority list for the Department of Education. Garrett's promise has the difficulty that he is not the Minister for Education and does not have the budget nor the authority, presumably, to fund education policy.

Social Inclusion. The summit might recommend that interested parties in the music sector work with the MCA to develop a proposal to the Minister for appropriate use of music activities to achieve social inclusion, perhaps for identified population groups. The objective would be to lead the Minister to a coherent policy position that envisages a partnership between the government and the sector in this area, rather than the present scattershot ad hockery.

Environment, Heritage and the Arts. Screen Australia. Take into account in film financing decisions whether or not the soundtrack is by an Australian.

Seek the establishment of a music counterpart to the film investment scheme. See the suggestion about financing in the next section.

Increase arts subsidies to support greater artistic risk-taking, viability for more small to medium music organisations. Should ‘industry assistance' subsidies come from this budget or from the Department of Industry?

Perhaps the Department could facilitate multi-department support to suitable music initiatives. The Australia Council has pictured itself as doing this but so far has not, to our knowledge, invited arts organisations to seek its assistance. (See the first issue in this section.)

Implement the proposed ArtStart program, add arts activities in Work for the Dole schemes and the other government initiatives described above.

Support the proposals of the Contemporary Music Working Group for economic development of the industry.

Proceed with other proposed ‘creative industries' approaches to development.

Families, Housing, Community Services and Indigenous Affairs. There are issues about adequate marketing of indigenous music productions which should be taken up by the New Music Industry group at the summit. They may be of interest to this Ministry but also would have a place with the Minister for Industry.

An objective of the Ministry is to bring communities together. Can music be proposed effectively to this Ministry as an effective tool for doing that?

Foreign affairs. Long-standing Foreign Affairs funding of international presentations by Australian artists was terminated by the Rudd government. It probably was not well conceived but reform would have been preferable. Investigate the models offered by the British, French, Germans and others and introduce a more effective cultural promotion for Australia.

It is suggested that should such a program be established, it should combine the objectives of satisfying the Commonwealth's needs for promotion through the arts with other agencies' objectives to build artists' international careers. For instance, Foreign Affairs could select its artists from among those supported by the Australia Council in building international careers.

Perhaps even more effective could be the creation of the Australian counterpart of the British Council and other foreign cultural promotion agencies, for international promotion of Australian culture, as a joint project of Arts, Foreign Affairs and Trade Ministries (and even possibly, Tourism). The objectives could be

a) international promotion of Australian culture for diplomatic objectives

b) increase in cultural exports through presence and sales overseas

c) increase in cultural exports through inwards tourism

d) assistance to Australian artists, suitably qualified, committed and prepared, to build international careers.

When the nationals of most other countries gain high office in important international NGOs, their governments assist them in meeting the costs of involvement. In Australia, such assistance is not available except possibly by grace of employers. Without this support, the consequence is that unless such persons are of sufficient private means, they either cannot afford to accept the role or are constrained in carrying it out well. They do not win these roles unless they are of high ability and in carrying them out, they can do a tremendous service to Australia, even if only simply by being Australian. A high UNESCO employee who had been dealing with Australians in setting up a conference said to me that she was "struck by the force of Australian culture." We have something to offer. A little assistance in offering it could go a long way.

Health and Ageing. There are issues around government recognition of music therapy services for purposes of Medicare. These could be taken up by the summit and recommendations made to the government.

Immigration and Citizenship. Recalling the Parliamentary Secretary's responsibility for Multiculturalism and Settlement Services, is there a way that the sector can work with the Minister to support and develop ethnic and multicultural music as a major instrument for meeting its goals of social cohesion, participation, cultural diversity and so on, and at the same time achieve benefits for musical life by bringing a lot of this music out into the larger community and from it building new hybrids, new genres?

Infrastructure, Transport, Regional Development and Local Government. Is there a way that the sector could work with this Minister to build musical life and opportunities as an element of the cultural and economic development of the regions?

Innovation, Industry, Science and Research. Finally, support to the proposals of the Contemporary Music Working Group, basically for a government funded analysis of the industry as a basis for future development by the industry and possible support by the government.

At present, only tertiary education institutions can apply for research funds from the Australian Research Council. How about removing that restriction and admitting applications from non-profit organisations/industry associations?

Does the summit have proposals for the Innovations Agenda?

Tourism

Include culture as an attraction in tourist promotions by Tourism Australia. Also see Foreign Affairs, above.

Trade. As mentioned a couple of times, there is a strong case for increased industry assistance to international promotion of Australian music, of which the government is well aware and to which it is sympathetic.

Every time a new international trade agreement is negotiated, the risk arises that the government will give away some of its ‘cultural sovereignty'. MCA attempts to remain alert to this issue and to offer advice where there is risk. Negative effects may appear only years later, opportunities foregone in a sense do not appear at all. We therefore have to respond in advance to these possible negatives and there is no pain that propels us into action. But once a treaty is signed, the game is pretty much over.

It was proposed to the Rudd summit that "The government should take immediate steps to remove culture from all free trade agreements, including the Australia-US Free Trade Agreement, to ensure Australian content restrictions." In principle I agree, but the proposer probably did not understand the difficulty. New Zealand undertook under GATS not to have local content quotas. When Labor came to power, its platform included a promise to repudiate this undertaking, but it discovered that the financial penalties were so onerous that it could not proceed, and instead developed a subsidy scheme to promote local music on the market.

The issue goes beyond local content quotas to large questions of cultural sovereignty and integrity.

Does the summit have a view on Australia's involvement in the US-led ACTA?

Also see Foreign Affairs, above.

Treasury. The Australian Bureau of Statistics provides most of the statistical data available about the music sector. Unfortunately, there are large gaps. For a discussion see section B3 below.

Responsibilities of the Parliamentary Secretaries

Disabilities and Children's Services

There probably will be some rather complex proposals concerning disabilities considered by the Community group at the summit.

Early Childhood Education and Child Care

Proposed that it must be a graduation requirement for early childhood carers and teachers that they achieve prescribed skill levels in music and music teaching in early childhood programs.

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2. Government Arts Subsidies

Government subsidies are conceived as addressing situations where an activity considered of public value is not supported financially by the market and for its existence, or its profitability, requires non-market support, in this case, from the government.

It is useful to think of subsidies as of two types:

cultural subsidy
industry assistance.

Cultural subsidy is given by governments to sustain activities which cannot survive from the market alone and are considered to be of special cultural value. A common reason for lack of financial viability in cultural activities is their high labour costs; while they may participate in the technological efficiencies of the age, these may not replace labour costs as they do in other industries. So, a symphony orchestra still requires a large number of players and its quality, upon which box office depends, probably requires their full time employment. No matter how many times it fills a concert hall, it is virtually impossible for it to meet costs from box office alone. A small experimental music group will appeal to only a small audience that again does not provide sufficient box office income. Furthermore, the gap between industries that can benefit from continuing productivity gains and many of the arts is widening all the time.

Provision of subsidy is unlikely to make such ventures profitable. While it is fair that they should be expected to be expertly and efficiently managed, a successful outcome of this subsidy is the production of the music to a high level of excellence. A consequence is that the groups may have thereby justified further subsidy.

It seems appropriate to support the existence of, say, a successful string quartet or orchestra if we believe it has a special cultural value. These values are at base, personal and subjective. ‘I don't like orchestral music, so why should my taxes subsidise it?' Nevertheless, we can take a broader view. We could say, yes, Australia should have symphony orchestras even though symphony music is not my personal preference, just as Australia should have Olympic swimmers although I don't swim, libraries although I buy my own books, public trains although there is no station near me. Ditto for military bands and so on.

Industry assistance is subsidy given temporarily to assist a musical venture to achieve profitability. Issues of cultural value may or may not be considered relevant. The desired outcome is that the venture is profitable. Such success means that further subsidy is not justified. Conversely, failure to achieve profitability according to plan also may mean that further subsidy is not justified!

Successful rock groups can become very wealthy. Successful string quartets probably cannot survive from performance-related income.

Grants to locally successful rock groups to promote themselves onto the international market would be a suitable way to give industry assistance. Success may require spending more money than they may be able to accumulate at home. Industry assistance involves some speculation and risk taking by the government but it should be noted that success in the international sphere brings benefits that go beyond the financial rewards to the group in question.

Emerging artists. Governments also have a practice of supporting ‘emerging artists', whether they are young string quartets or young hip hop artists. The objective generally has something to do with helping them enter the profession successfully and the expectations might be that they achieve greater artistic excellence or greater financial viability or both, but certainly higher profile.

Subsidy objectives at the different levels of government. Cultural subsidies are provided by federal, state and local governments but the nature of the activities supported varies across the three levels. Generally speaking, the policies match the national, state or local constituencies.

Local government provides physical facilities, often with financial support from state governments. Just as playing fields and libraries have traditionally been provided by local government, more recently so have performing arts centres. Local government also gives modest support to local musical initiatives, often including amateur activities. Many local governments have cultural officers with broad if under-funded responsibilities for cultural development initiatives. Sometimes these positions are organised on a regional level, taking in more than one local government area. They might be employed by the non-profit state or regional arts council with local government subsidy. Local governments may also (or alternatively) employ events managers, who could have responsibility for programming, for instance, the local government-owned arts complexes, or local festivals.

State government funding to the arts has grown where federal funding has been static, and generally the states fund a broad range of professional activity. They have major responsibility for performing organisations that are conceived as having state-wide significance, but also work into the local level much more than does federal funding. They may support amateur activities. State government provides major metro facilities such as performing arts centres and supports local governments in building regional facilities.

The Commonwealth gives total or majority support to music organisations regarded as national: Opera Australia, Australian National Academy of Music - and to the professional symphony orchestras nearly all of which had national origins in the ABC or the national opera and ballet companies. It gives substantial secondary support to the state opera companies. It supports national touring and festivals agencies and is a main source of continuing funding for composers and for a number of music ensembles. The Commonwealth does not take responsibility for funding physical facilities in the performing arts.

For more details about government funding to music, please refer to the MCA Music in Australia Knowledge Base. Go to www.mca.org.au and follow this path: Knowledge Base » Statistics» 6 Other infrastructure support» 6.2 Government funding

How subsidy decisions are organised at different levels of government. The Commonwealth passes much of its music funding through the Australia Council, a ‘statutory arm's-length authority'. ‘Arm's-length' means that the Arts Minister may not instruct the Council to fund or not to fund any particular entity or project. The intention is to remove funding decisions from political influence. The government may, however, instruct the Council in arts policy. There are some funding decisions made in the Department for the Arts and these can be directed by the Minister.

The state funding authorities are under the direct control of the Minister. At both national and state levels, the assessments of applications are carried out by advisory panels of artists and experts. In the Australia Council the outcomes are funding decisions, at state level and within the Federal Arts Department, the outcomes are advice to the Minister, who may reject it. There have been numerous instances of this happening, some for plainly political reasons.

At local government level, which accounts for an estimated one-sixth of total arts funding, funding is determined by council members with advice and support from council officers.

The structure of the Australia Council is largely art-form based. There are ‘Boards' for music, theatre, dance, literature etc. The state ministries have largely departed this type of structure so that whereas funding categories in the past might have been music composition or recording, now they might be, as in Victoria, ‘Community Partnerships' or ‘Artists in Schools' and objectives tend not to be art form based. In some cases at least, the level of musical expertise found in Arts Department employees has fallen away.

Funding cooperation between Commonwealth and state authorities. There are those who in the interests of tidiness and efficiency would like Commonwealth and state funding authorities to agree on whether or not to fund an activity, especially ongoing activities or organisations. Among their complaints are that arts organisations have to deal with multiple funding bodies. ((See the recommendations from the Commonwealth's 2020 Summit.) This is a burden!? If there were only one funding body, they would have the opposite complaint.) The opposing arguments are that these decisions depend at least in part on subjective value judgements and that it is therefore better to have alternative sources for funding; also that it is appropriate that state and Federal funding objectives should be different and so there should not be a requirement that an activity satisfies both in order to get support.

Arts programs managed directly by the Commonwealth Department for the Arts. Due to politicians' distaste for the Australia Council and/or statutory authorities in general and/or actual failures by the Australia Council and/or the historical jockeying for position between the Department and the Australia Council, a number of important arts subsidy programs are directly administered by the Department. These include Touring Australia, Festivals Australia, Australian National Academy of Music.

As an election promise, Peter Garrett pledged that the Rudd Government would bring these programs under the auspices of the Australia Council. There, presumably, they would participate in statutory independence and the arm's length principle, and there would be administrative efficiencies and policy consistency across Federal arts funding activity. However, before taking this step, there is a review of the Australia Council. (Was there ever such a reviewed and restructured organisation? It should have a permanent staff to review the latest review.) The terms of this review do not seem to be public and to our knowledge, on this occasion, there is no industry consultation. On recent past evidence, this may be imprudent.

Links to arts funding bodies and Ministers at federal and state levels can be found on the MCA website: www.mca.org.au >> CONNECTIONS>> LINKS TO ORGANISATIONS>> Commonwealth and State Arts Ministries

Possible Issues

Insufficient subsidies. Trends. See the Knowledge Base for factual information about trends in government funding. National funding has increased for orchestras and opera but small to medium activities have suffered. Some states have taken big steps forward but NSW seems to be disintegrating administratively with funds to approved grantees not provided until well into the year and application deadlines for 2009 not even set. Usually the applications are due around now.

Needs. How much is enough? How long is a piece of string? European subsidies makes Australian subsidies look paltry. US subsidies make Australia look well off (though in the US, the private sector makes up the difference and more). What activity, what quality do we want that we don't have?

Subsidies out of fashion. If any music is not popular enough to survive from the market alone, then clearly we don't need it, say the economic rationalists. (Hans Hoegh-Guldberg points out that economic rationalist approach deals only in the short-term. "In its pure form will not accept even economic arguments covering a longer-term future, one excuse being that it can't be measured statistically.") The counter-argument is that the consequence is that there are some forms of music that we simply will not have any longer in Australia. If there is no subsidy for orchestras, we will not have orchestras, and if we do not have orchestras, the economic infrastructure for classical music disappears and we will not have all the smaller forms of classical music either. This applies to a lesser extent for some other forms of music.

Some arts bureaucrats speak disparagingly of subsidies. This is deeply ironic.

Quality of funding decisions. The quality and direction of funding decisions depends upon the nature and quality of Ministerial appointments to funding advisory committees or decision-making boards. There are many instances where Ministers ignore good advice and appoint people who are not the peers of those they will assess.

Consolidating Federal arts funding under the Australia Council. What are the pros and cons? There are always criticisms of Australia Council processes but as noted elsewhere, perhaps we know that because the critics do not expect to be victimised by the Australia Council for airing their opinions (or perhaps are disgruntled because not funded and figure they have nothing to lose). There certainly are criticisms of the Department's processes but they seem not to be made public. We do know that decisions need not be made by peer review nor benefit from the arm's length principle.

Music bureaucrats without adequate musical knowledge. When state authorities were structured by art form, there were bureaucrats with art form expertise. Now, those in charge of music subsidies may have strong opinions but only the most superficial knowledge of music. At both the state level and in the Federal Department, the bureaucrats have a lot of influence. In principle, not a good combination.

Accountability. Along with the rest of the public service, arts agencies are afflicted with creeping accountability syndrome. Subsidised organisations are carried along with this and complain that they are increasingly distracted from their real vocations and objectives by burdensome application and reporting requirements. Some believe that funding is skewed towards the good application writers.

Viability. Phrases like "permanently on the public teat" litter funding discussions. Funding bodies fund what they hope are the best artists and arts organisations this year, and next year they are still the best, and the year after that. The best are funded and they are the same people. The funding bodies begin to feel trapped, and bored. They would like a bit of fun, too, supporting new things. Other artists can't get funding and perceive their way blocked by permanent funding to people who have had it for years. There are invocations or requirements on the continually funded, and everyone else, to achieve financial viability, but of course, most of these activities can only become less unviable and the invocations are more political than expert.

(So we would like to avoid continuing funding. On the other hand, we decry the insufficiency and instability of the music infrastructure.)

If the case for subsidy is accepted, there seems no way out of this dilemma. If more of the best artists are funded, then they too, new this year, will be older and possibly still funded in five or ten years.

The only apparent solution is to more or less arbitrarily divide the available funds into those used for ongoing support and those used for one-off projects. This is in effect what happens.

Classical music gets most of the music subsidies. Definitely guilty, as charged. Some resent it. Let me briefly make the case for the defence.

The viability of the classical music sector hinges on the existence of the orchestras. As already noted, their labour costs are too high to be paid for from box office and are proportionately way higher than for any other musical genres (except opera, of course). Part of the reason for this is that the musicians are industrially organised and get (modest) salaries. If we halved the musicians' salaries, we might solve the subsidy problem, but who wants that? And who wants to study for 20 years to be paid half the average wage? And why would you not then go overseas to where there is a good living? That takes us back to the 1940s.

In Australia, classical music is way less subsidised than in Europe, where 80-90% of costs might be covered by subsidy (and artistic risk is supported). Here it might be only say 35%. The imbalance in music funding is not because classical music gets too much, but everything else gets too little. It should be noted that there is a similar imbalance in dance funding for similar reasons (large companies vs. the rest) and in the visual arts (not noticed because the comparisons are usually made in Australia Council funding and all the big galleries are state-funded).

Of course, there are those who simply would not fund classical music. That is a personal value judgement and another discussion altogether. I would say, however, that at the least it is bad strategy to reinforce such divisions within the sector. We can advocate for our preferences without bringing others down.

Industry assistance for exports. There seems to be a strong case for increased industry assistance especially in building exports. This might be continuing assistance or if successful, industry in due course might be able to collaboratively fund an effective presence at MIDEM and other trade shows and in general manage an Australian promotion. It is noted that state governments are independently supporting international marketing initiatives by/for their own artists and that a combined approach might be more effective. This, incidentally, is a situation where cooperation is of more value than competition. (See B4, this paper.)

An Arts Future Fund. Currency House's Platform Papers series recently published a monograph titled A Sustainable Arts Sector. What Does It Take?. This proposed an arts Future Fund which would provide a base for sustaining government funding to the arts. The concept is repeated by the government's 2020 summit. The idea has obvious merits but there should be an examination of the possible ramifications, perhaps through a scenario planning approach. For instance, is there a risk that government assigns total responsibility for arts support to the income from the Future Fund and opts out of any further consideration of situation or need?

The Rudd summit proposes that the Future Fund, or "national endowment fund for the arts", should seek private funds as well as a government endowment. The possible consequences: private funds are allocated according to policies of this endowment or perhaps the Australia Council, which may be more thoughtful or knowledgeable or willing to back artistic risk than the are the private donors; on the other hand, arts organisations will have to compete with the government for private donations. It seems unlikely that the government can win such a competition - who wants to donate to the government? --unless it gives itself an advantage by offering greater tax advantages for donations to itself than to arts organisations. Would that be a popular move?

Other ideas from the government's 2020 summit.

Government assumes responsibility for liability insurance [for whom?].

A HECS-type scheme for young and emerging artists and entrepreneurs.

Governments establish a register of surplus government space and make it available to artists.

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3. Other Forms of Government Support

Tax deductible donations. Government supports the non-profit area of the music sector through providing for tax-deductibility on donations made by private individuals or businesses. Since this means tax income foregone for the government, it is a form of indirect subsidy. Donations can be in the form of money, the value of goods (with certain curious restrictions), and services. Donations by trusts are not tax-deductible since trusts are already tax exempt.

Sponsorships are donations by businesses that potentially are tax-deductible but actually are counted as business expenses chalked up to the marketing budget. Since the costs are business expenses they are deducted from (taxable) profit. The contra is some form of promotion of the business by the sponsored organisation. Sponsorships therefore do not count as indirect government support.

The Australian Business Arts Foundation is funded by the Commonwealth to assist in forming partnerships between arts organisations and businesses, usually in the form of sponsorships.

A note on financing. With the decline of the major record companies and the rise of DIY and the (smaller) independent record companies, financing music recordings and audiovisuals becomes perhaps more problematical than in the past. Film has to face the problem that a single production costs millions and in Australia, with its small domestic market, production levels would probably be very low indeed were there no government support. (It's like the orchestras.) In this case, it's not that it is impossible for an Australian film to be profitable, but so few achieve a profit that private investment is high risk.

Private investment in music recordings is also high risk, but it is for much smaller amounts. And in any case, record companies have been able to spread the risk over a large number of recordings and cover the financial losers with profits from the few that succeed in the market. So the case for government intervention has not been as strong.

Nevertheless, there are those in the industry who would make a case for government investment along similar lines to that in the film industry - and argue that it becomes more urgent with the decline of the majors, especially if Australia hopes to achieve more substantial success on the international market.

This writer is not proposing that financing the industry is a problem to be left to the government. Above all, it is an issue for the industry itself. The focus on government in this instance is a consequence only of the fact that this paper is about the interaction with government.

Possible Issues

Tax deductibility. Some find the present regime inadequate. It would be interesting to hear their proposals for improvement.

We can name one instance. The value of donated goods worth less than $5,000 is deductible only if they were purchased in the previous 12 months. So for instance, if you want to donate a $4,500 musical instrument that has been sitting in your closet for ten years to the local band or orchestra, you cannot claim a tax deduction. But if it is worth more than $5,000, you can. Why is this so?!

Some tax deductibility ideas from the government's 2020 summit.

Make it easier to establish prescribed private funds.

Introducing (sic) incentives for individual and corporate philanthropy. [Perhaps this really means "increasing" rather than "introducing". Introduce a 125% tax deduction for [investments in? donations to?] public art and performing arts in public spaces.

Accelerated tax deduction on investment in large-scale free public installations or performances.

Widely promote the benefits of giving to the arts.

Establish a formal patronage system. [Why is responsibility for this given to the government?]

Private entities making private space available for creative purposes should receive tax incentives.

Establish a micro-loan scheme for artists. (No details given.)

Financing. Is there an appropriate role for government in financing record production and/or marketing? This would recognise in particular, with the decline of the major record companies as sources of finance, the need for finance for small to medium companies especially to achieve effective marketing and distribution including at international level.

A scheme might encourage private investment through public/private partnerships with the Commonwealth investing in portfolios of recordings rather than single recordings and with some inducements from the Commonwealth for private investors e.g. by limiting risk through some level of underwriting losses, or through tax incentives.

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4. Employment Conditions

Written by Terry Noone, Federal Secretary, Musicians' Union of Australia

AWARDS

Australian musicians, like all other Australians, operate under state and federal award systems that protect their minimum wage entitlements and conditions. There are a number of awards governing the employment of musicians and these are routinely applied in the orchestras and commercial music theatre. Unfortunately in many other areas these are not applied for a number of reasons.

THE EMPLOYER-EMPLOYEE RELATIONSHIP

Awards only apply to people who are engaged as "employees" however they can apply in many more situations than is generally understood.

Contrary to popular belief, the employment relationship has absolutely nothing to do with the length of time for which a person is engaged. It is possible to be an "employee" for a single gig. The misapprehension appears to arise because of confusion between the employer/contractor distinction and that between a casual and ongoing employee.

The nature of the employment relationship is also not definitively affected by the intentions of the parties. Even if a musician makes an agreement with someone where both parties clearly agree that the relationship will not be that of employer/employee, this fact is insufficient, by itself, to ensure that it will be so.

A requirement that an ABN be provided is also insufficient, by itself, to definitively characterise the nature of the relationship.

The relationship is only clarified by the application of various industrial law principles by the relevant jurisdiction. The confusion, however, means that many musicians do not believe that they are entitled to award protection and therefore do not pursue it. Many employers are similarly confused and assume that they have no obligations regarding pay and conditions.

The net result is the almost total disappearance of the concept of a "minimum rate" for musicians and a consequent total market distortion caused by the introduction of the possibility of low, or even zero, payment for musical services.

None of this section should be understood as arguing that musicians are always employees, it merely raises the possibility that this may be the case in more cases than is popularly believed.

THE INDEPENDENT CONTRACTOR

Musicians who are not engaged as employees have virtually no regulatory protection of wages or conditions. Some state industrial relations legislation, such as that of New South Wales and Queensland, has "unfair contract" provisions but these offer limited use and their application to the situation of musicians has rarely been tested. The "Workchoices" legislation removed the, admittedly weak, "unfair contract" section from the federal act. The relatively recent federal "Independent Contractors" legislation also offers no guarantees of minimum wages or conditions.

"Workchoices" changed the constitutional basis of the federal "Workplace Relations Act" from a reliance on the so called "industrial power" of the constitution [section 51 (xxxv)] to a reliance on the "corporations power" [section 51 (xx)]. This could mean that the wages or conditions of independent contractors might be regulated although the previous government did not do this and there is no indication that the current government intends to.

Where a contract is unfair, remedies through the civil legal system are available using, for example, the "unconscionable conduct" section of the Trade Practices Act. This is an expensive path to follow and the typical resource imbalance between the musician and the other contracting party usually means that either the musician is unsuccessful or, daunted by the likely costs, decides not to pursue this path.

CODES OF PRACTICE

There are various "codes of practice" relating to the employment of musicians but these are voluntary "opt in" arrangements whose effectiveness largely depends on the strength of customary practice. They have no general enforceability and leave most of the music industry unaffected.

NON EMPLOYMENT INCOME

This is in a similar category to income as an independent contractor; the only protection is the availability of an essentially ineffective civil remedy. There are guarantees of a sort in the copyright act such as "prescribed royalties" but these come into play only if the parties can not "agree". Given the relative strengths of the bargaining positions of a musician and, for example, a record company, these provisions generally provide no effective protection.

TAXATION

Deductions relating to expenses incurred in the generation of income are available to Australian musicians on the same basis as to all other Australians. There are also income averaging provisions available to musicians in certain circumstances. There is no special tax scheme for artists similar to that in place elsewhere (Ireland for example).

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5. Australian Content Requirements for Broadcasters

There are requirements of Australian broadcasters, radio, television and cable television, that they support the product of Australian artists. In music, these apply most importantly to free to air radio. They are administered under regimes of self-regulation, reinforced by the possibility that if self-regulation is inadequate, government regulation will be re-introduced. The requirements are made of the commercial and community radio sectors and essentially take the form of assignment of a specified minimum percentage of music broadcast time to Australian musical content. The ABC is governed only by the generalities of its Charter requiring support to Australian culture but ABC radio has adopted voluntary quotas to at least match the commercial radio quotas.

The system for commercial radio is administered by the trade association, Commercial Radio Australia, and overseen by an industry committee including members from ARIA, APRA, the Musicians' Union and others, the Australian Music Performance Committee (AMPCOM); its responsibilities and prerogatives are described under Code of Practice 4 of the regulations. The percentage requirements are in a tiered system of genres with percentages in 5% decrements from a top of 25% to a bottom of 5%. There are also requirements on the top three tiers for broadcast of tracks released in the previous 12 months (‘new music'). For details, see www.mca.org.au >> RESEARCH AND ADVOCACY>> NATIONAL AND INTERNATIONAL POLICY DOCUMENTS>> National Documents>> Australian Content Documents for Commercial Radio.

The system for community radio is administered by the Community Broadcasting Association of Australia. It is more briefly stated than the commercial code and can be read at www.cbaa.org.au/content.php/20.html. The key paragraph is this:

3.1

Community broadcasters will ensure a proportion of the total number of musical items broadcast consist of: (a) not less than 25% Australian music items for all community broadcasting licensees except ethnic and classical stations as cited Clause 3.1(b) below; (b) not less that 10% Australian musical items for ethnic and classical stations. (c) (a) and (b) to be determined over one month.

Prior to the introduction of government requirements on broadcasters, there was almost no Australian music on Australian commercial radio. The commercial industry has resisted the imposition of content requirements on the grounds that it interferes with free action in pursuit of profits. While it now offers cooperation, there are reasons for lack of confidence that in the absence of regulation, local content would be maintained.

It is a curiosity of the situation that since there are no broadcast royalties from the copyright in the recording in the USA, and since royalty collection and payments on foreign copyrights are internationally on a reciprocal basis, there is no royalty payable in Australia when a US recording is broadcast whereas a royalty is paid for broadcast of an Australian recording. This could be one reason that Australian content requirements are resisted by commercial radio. The Australian recording is therefore in that sense at a commercial disadvantage. We have even seen a situation in the past where Australian radio broadcasters refused to broadcast Australian recordings and broadcasted US recordings as a strategic ploy in negotiations about content requirements.

(On the other hand, if the US introduces such a royalty, there will be a net outflow of funds from Australia to the US.)

There has been a clear correlation between airplay and record sales. MCA conducted a little study on the Australian situation. The report, by Paul Mason, is available on the MCA website at http://www.mca.org.au/web/content/view/104/6 . These circumstances may be changing with the shift to online distribution.

Domestic repertoire in Australia achieves normally sales of around 25% - 28% (say) of total market. This happens to approximate with the top level of local content requirement, which applies to those genres in which most records are made. The implication of the above research report is that this may not be a mere coincidence.

The local industry tends to express satisfaction about this market share but in global terms it is fairly ordinary. I do not have current figures but data from the late 90s show the world average for domestic repertoire around 70%. Only one Latin American country had domestic repertoire sales of less than 50% and most were around 70%. Figures for Africa and Asia were generally even higher. Many European countries were higher than Australia, some were similar. France was 47%, Greece 38%, Germany 40%, Spain 36%, Sweden 29%. (World Culture Report, UNESCO 1998)

Issues

Intervention of Free Trade Agreement. Under the Free Trade Agreement with the USA (AUSFTA), Australian content requirements are capped at the level pertaining at the time of the agreement: viz. 25%. The limit was imposed by the USA and accepted under duress by the Australian government. The requirements for any genre may be changed, as can the ‘new music' requirement, provided that the cap is not exceeded. This percentage cap applies for the period of the agreement, which essentially is open-ended, and thus applies essentially for all time, although that was never even a concept in the discussions leading to its calculation. It should be noted that a) in some other countries with local content requirements, the percentage is much higher and b) in many countries, even without the local content requirements, local content is much higher and may make up 80 or 90% of broadcast time. Australian local content levels are among the lowest in the world. Therefore, it would be appropriate to be able to remove the constraint imposed by AUSFTA to allow upwards negotiation of content requirements, even if change is not a foregone conclusion.

New music requirement. The ‘new music' requirement was instituted because radio stations broadcast mainly old releases and the record companies found it difficult to gain a market for new releases. The requirements are 25% of the 25% tier must be new music, 20% of the 20% tier, and 15% of 15%. So say that a station devotes 10 minutes in an hour to advertising, the amount of time it is required at the bottom of the three levels to give to Australian new music is 15% of 15% of 50 minutes = 1.125 minutes. This is hardly going to shake the ratings charts. Even 25% of 25% of 50 minutes is only 3.125 minutes. Nevertheless, the record industry claims that there has been a benefit. There is an argument for upward negotiation of the new music requirement.

Obsolescence of free to air radio and regulation of the digital realm. There are those who think that local content issues on free to air radio are yesterday's battle because it will give way to other media, especially online media. No-one so far seems to be dealing with whether there is a sufficient Australian music presence on music-on-demand online services such as iTUNES. It also is not clear whether there is any feasible way of regulating for Australian content on such services. Obviously, customers cannot be required to take some percentage of Australian music among their purchases. However, there was a proposal during the AUSFTA negotiations that would permit a requirement of ‘shelf-space' for Australian music: a percentage of the music offered should be Australian. The US refused this point blank. The language of AUSFTA as it applies to ‘interactive media' permits government regulation, but there are so many US-inspired stipulations obviously intended to make it difficult that it would be a brave Australian government that ventured into that field. Be that as it may, nothing need or will be done if there is no demonstration of disadvantage.

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6. Live Music and the Regulation of Venues

There has been a lot of attention in the last few years to the regulation of liquor-licensed premises as live music venues. Obviously, liquor profits can pay musicians' fees and these venues are probably the principal source of employment for musicians. The importance of the licensing regime has been demonstrated by the dramatic differences between NSW and Victoria and especially their capital cities. The onerous requirements in NSW, both in terms of the high licence fees and the obstacle-strewn compliance requirements, have seen a stultification of musical life as compared to Melbourne, where the low costs and ease of compliance have seen the growth of a diverse, multi-level scene that has attracted a lot of musicians from other states including NSW.

Regulation of performing venues comes under state and local governments. Liquor-licensed venues must comply not only with the requirements of the state liquor licensing regulations but also local government regulations concerning neighbourhood amenity, building codes and so on. Fire codes have been important: in NSW, different and more onerous requirements were imposed if a venue offered live music rather than, say, footy on a TV screen. Apparently listening to music made the punters more flammable. There are regulations, sometimes contentious, around noise audible outside the venue.

In July, there was a culmination of work to rewrite the NSW Liquor Act and local government requirements and a really major easing of the regulatory obstacles to live music presentation in licensed premises. This happened largely because of the persistent advocacy of John Wardle and a small number of colleagues.

MCA has commissioned Wardle to write a paper that assembles and summarises the relevant regulations for all states. This will be available before the Towards 2020 summit. The intention is that it will be used to identify best practice and serve as the basis for advocacy. Funds were provided by PPCA, for which we all are grateful.

Also funded by PPCA and to be carried out in collaboration with APRA, MCA is about to commission a manual for venue proprietors to guide them in setting up a live music program. And a special Live Music website is to be constructed with APRA funding to be used for promotion and support to venue proprietors.

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B. INFRASTRUCTURE

1. Scale and Structure of the Sector

2. Industry and Volunteer Associations

3. Statistical and Other Structural Information

4. Financing

5. Musical Instruments and Equipment

Written with assistance from Ian Harvey

6. Physical and Virtual Spaces Available for Music Activity

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1. Scale and Structure of the Sector

What is offered in this section is some basic information about the scale and structure of the sector. Such is the breadth of the sector, and its fragmentation, that not only one hand doesn't know what the other is doing, in some cases it doesn't even know there is another hand.

I hope the information here is helpful. For myself, I know some parts better than others and would welcome your corrections or brief additions. The description of the area you inhabit is not meant for you but the descriptions of areas that you don't know at all may give a little bit of an orientation.

This chart by Hans Hoegh-Guldberg comes from the MCA Knowledge Base, in the Context section. It is one possible graphic representation of the sector. You will find it easily enough at http://www.mca.org.au/web/component/option,com_kb/ , along with other useful information. The table of contents for the Knowledge Base is another representation and you also can find a long description in the MCA Research section of the site in the study on a statistical framework for the music sector: http://www.culturaldata.gov.au/__data/assets/pdf_file/59155/A_Statistical_Framework_for_the_Music_Sector.pdf .

Scale

There are no official statistics covering the entire sector. Economist Hans Hoegh-Guldberg has calculated a music GDP by extrapolation from the only known comprehensive study, which he himself did for the Music Board in 1985. Obviously, with a 23 year lapse in time this draws a long bow but you can read his reasoning on the Knowledge Base. He estimates the value at around $7 billion, which puts the music sector in favourable comparison with a number of other, one might have expected, more economically important sectors:

· Forestry and fishing $2.5 billion

Electricity $13.9 billion
Gas $1.4 billion
Water supply, sewerage and draining services $6.3 billion
Manufacturing: textiles, footware, clothing and leather $2.7 billion
Wood and paper products $7.1 billion
Printing, publishing and recorded media $11.3 billion
Non-metallic mineral products $5.5 billion

· Cultural and recreational services $14.3 billion

There are about 60,000 registered music businesses, three quarters of which are sole traders; there are 4,700,000 businesse in total in Australia. (Most statistics in this paper come from the ABS, www.abs.gov.au ) In statistical studies, the recording industry is usually and mistakenly taken to be the entire sector. In 2007, its wholesale sales value (www.aria.com.au ) was $462m, including both physical and digital sales. Royalty revenues recorded through the royalty collecting societies in 2006 were about $170m. Music export royalties were $52m; they and imports vary from year to year but usually are about 20% of music imports. Exports of music goods (instruments, recordings) were $182m, and are usually also around 20% of imports.

You can find some more detailed statistics on the Knowledge Base. See also the section on statistics in this paper.

Education

For more information, see the MCA Knowledge Base in the Support section and the briefing paper for this summit.

Early childhood. There is no requirement that early childhood teachers or carers have any relevant musical knowledge in order to graduate from pre-service courses, nor that employers require it. So delivery is random.

School music education. There are about 10,000 primary and secondary schools (Stevens Report, www.mca.org.au , MCA Research Reports)

Most students receive their education through the public school systems run by the states and territories. There are also Catholic school systems organised on a state/territory basis, and independent schools which make up a category rather than a system.

Some big generalisations:

We estimate that 23% of state school students have access to a competent music education, and 88% of independent school students. Catholic schools overall are probably similar to state schools.

Most secondary school music offer music classes taught by music specialists.

Most primary schools have delegated music teaching to generalist classroom teachers who are vastly unprepared for the task. Their music training will take between zero% and around 5% of the total hours in the teaching training course, coming out to around 22 hours average, as preparation to teach music for six or seven years. Queensland has specialist primary music teachers.

Some states offer some free or subsidised instrument lessons, most do not.

School curricula used to be classical music orientated. In the public schools, this probably survives only in a small percentage of schools serving students whose families may have a classical music background. It is strong in the independent schools, however the curriculum has diversified generally. It has shifted decisively towards student interests in popular music in most public schools.

Tertiary music education. Approximately 30 universities offer music instruction, some only as part of school teacher training. For the most part these are public institutions but there are a small number of degree-granting private institutions such as Australian Institute of Music, Melba Conservatorium, Bond University, Catholic University. Curricula traditionally were in classical music but there has been considerable diversification over the past couple of decades, with schools like Southern Cross University specialising in contemporary music while others like the major conservatoriums retain at least an emphasis in classical music. All independent public conservatoria were forced to amalgamate with universities by Education Minister Dawkins under the Hawke government.

Formal music education to diploma level is also available through TAFE and VET courses and some private colleges dealing with music technology. We don't have statistics on these. Basic instruction for musicians on such things as small business practices or marketing are mostly available at this level, or through workshops offered by industry associations (see below).

Community education. Instrumental instruction is mainly offered by private studio teachers. There are state music teachers' associations and associations for voice and for single instruments such as flute.

NSW has 17 "regional conservatoriums" that are community owned but receive modest funding from the Education Department. They are not degree-granting.

There is a scattering of organisations and programs teaching contemporary music performance to the general population or to disadvantaged groups. As examples, you can find some of these among the finalists for the MCA Music in Communities Awards: http://www.musicincommunities.org.au/media/MiCAwardssummaryandjudgescomment.pdf

Professional development workshops are mainly offered by the professional associations. The state music industry associations that are joined under the Australian Music Industry Network umbrella offer workshops in the business side of being a musician in contemporary music genres. There are concerns within the industry that these opportunities need to be taken further, for instance through internships with companies or mentorships with effective individuals. In the preparation a few years ago of the MCA Australian Guide to Careers in Music, the author encountered among many, including some company executives, a dismissive attitude to education as preparation for work in their area. Was this blind ockerism or a dissatisfaction with the relevance of existing courses? Could be either, one suspects.

Counterpart courses on the classical side are fairly rare although many conservatoriums give some small instruction. Music education associations like ASME, aMuse, the music teachers' associations give PD workshops for teachers. Such workshops may not be supported or provided by the school systems, nor recognition nor reward given to the teachers.

Community

Music carried on at community or amateur level is very diverse and there is no overall organisation or networking except to an extent in Victoria, through Community Music Victoria. We can make some generalisations by genre.

Traditionally, community music activity was based around brass bands, choirs, orchestras and music theatre groups. It is my guess that brass bands are declining in number; some have become concert bands with more complex instrumentation. Traditionally, choirs performed classical music and the church was a stronghold. Church choirs have been disappearing for some decades although popular singing styles have probably gained strength in churches generally and in evangelical churches in particular. Quantity of activity aside, probably at the peak level the quality of classical choirs is at its best in decades. There has been a considerable diversification of choral repertoire in the direction of popular music, and a growth of a cappella singing groups including barbershop and its female counterpart (often called Sweet Adelines after the American association) 20 years ago, there was a fear that choral music was dying in Australia. One suspects that it has regained its feet and is expanding.

Youth orchestras play an important role in the classical music supply chain, at the top level providing an important link in delivering trained musicians to professional orchestras. Although the number of orchestras in schools has declined, at the community level youth orchestras seem to be doing well. Community orchestras persist; I do not know the trend but it probably very much depends upon the quality of leadership. Similarly I do not know the trend in community musical theatre activity but suspect that it has diminished over recent decades.

Ethnic music is probably sustained in ethnic communities but there are no data known to me. There is a fair amount of activity using hip hop as rescue for disadvantaged kids or kids in trouble. Some of this is directed to indigenous youth. Probably it is happening with other contemporary genres too but hip hop comes a lot to our attention. As always, there are lots of kids putting together garage bands. Programs like Weekend Warriors bring lapsed musicians back to music when they are in the 30s, 40s and beyond.

Some community music activities are encouraged by local councils through cultural development officers and events managers. There is quite a large number and variety of community music festivals. And there are many community organisations that offer music instruction.

Creation

Composers and songwriters mainly earn income from commissions and royalties on performances, recordings, broadcast and other use of their works. A few have managers. In the contemporary (popular) music area and jazz, songwriters/composers are also performers and write for their own performances. In other areas such as classical music and to some extent film music, composers write music for performance by others. Some assign copyright in their works to publishers who attempt to increase copyright earnings and share earnings with the creators. Composers/publishers assign the task of collecting royalties to the Australasian Performing Right Association, APRA. Increasingly, creators use the internet to distribute their work and to some extent this removes the publisher and APRA from the supply chain.

Live performance

Live performance happens in a great variety of situations, ranging obviously from the formal concert hall to pubs to festivals to theatres. It is difficult to summarise this in a thumbnail sketch.

At one end of one spectrum are orchestras, opera companies, music theatre companies. The performers are employees and there are award conditions. Work is continuous or seasonal rather than casual, except for the guest principal artists. The scale of the presentation requires large audiences and for orchestras and opera companies, a house of 1500 capacity is rather small; they are based in the large cities to give sufficient audience base. Touring is cumbersome and expensive, must be subsidised and therefore limited to larger centres. Musical theatre is not subsidised unless presented by opera companies, usually as an exercise in internal cross-subsidy. Musical theatre has high initial production costs that can be recovered only through long seasons, and considerable ongoing costs because in most cases of a relatively large number of performers compared with regular theatre. It has cut pit costs through use of technology to reduce player numbers.

At the other end of the spectrum are groups performing in contemporary genres. The groups are small and the work is usually one gig at a time on a casual basis although of course gigs are lined up into the future, giving a semblance of employment. But hardly anyone has employee status. Touring for successful or ambitious groups is a way of life. Performances are in pubs, clubs, restaurants, festivals and for very successful groups, in arenas and stadiums. Venue capacity varies from a couple of dozen to tens of thousands, so the contemporary sector embraces a number of quite different presentation scenarios and economies. The concert industry, whether for orchestras in concert halls or rock groups in arenas, works quite differently from the pub and club scene.

Presentation of various genres tends to be organised on a vertical basis. A genre can have typical live performance venues, perhaps a particular group of educational institutions, particular artist managers and agents, dominate particular festivals (blues/roots, jazz, world music etc), be recorded by some labels and not others, have its own radio stations.

Among those with a stake in live performance are the musicians, their managers and agents. (Managers handle all of the performer's business affairs, agents, who may work for the performer or for the hirer, are mainly concerned with finding gigs or musicians for them (bookers); however, there terms are not used cleanly - some people calling themselves managers are really only agents, some people calling themselves agents do more than just find gigs.) There are venue proprietors, production people - crewing, sound and lighting, staging - tour organisers, marketers, people who handle merchandising (T-shirts, CDs etc), ticket agencies, unions, legal advisors.

There are statistics on some aspects of live performance on the Knowledge Base.

Recording

The industry globally is dominated by four transnational corporations, known as the majors, who are also dominant in the Australian market with about 70-75% of sales. In better times, the majors bought up the larger "independent" companies ("indies") so that the industry was comprised of the large majors, the small indies, and not much in between. Now, some larger independents are emerging. The industry also includes recording studios, which make the master recordings for subsequent replication, record distributors, which promote and deliver physical recordings to retailers, and of course the retailers. It links into AMCOS and PPCA, the relevant royalty collection societies, and provides succour for artist managers, entertainment lawyers and so on.

There were about 1100 media, manufacturing and publishing businesses, 1300 record retailers, 1250 recording studios in 2004. Total income of these businesses was a little over $2 billion.

There has been, incidentally, a concentration of retailers just as there has been a merging of majors. Also, there is increased activity from large general retailers such as K-Mart, selling the most popular discs at discounted prices and so exacerbating difficulties for small retailers, already hurt by the impact of the internet.

Sales of physical recordings are in decline with revenues only partially replaced by sales through online services. Total sales, wholesale value, were at a peak of $647m in 2001, decreasing 35% to $422m in 2007. Digital sales were $10m in 2005, $28m in 2006, and $40m in 2007. So the increase in the second year, in both percentage and absolute terms, was less than in the first year. Compared to the patterns of adoption of earlier new formats such as the CD, this is a very early levelling off in growth, possibly suggesting that the current strategies for gaining income from downloading may not solve the industry's problems.

In the current flux, the independent sector is growing, with both existing companies and new entrants perhaps able to adapt more flexibly to new circumstances - and having less to lose in the contraction of the old. This may lead to a more evenly distributed recording sector. But meanwhile, no-one really can foretell the shape of the sector even in the mid-term.

In 2007, 64% of the Australian tracks released were in rock/pop/dance genres and another 11% in country/folk, 5% in classical, with the remainder scattered around a number of genres (www.aria.com.au , AMPCOM report). Out of the total 104,082 tracks released on the Australian market, 17,434, 16.8%, were Australian. There has been an upward trend in the number of Australian tracks reaching the top 100. There is a growing market for music videos as a separate revenue stream that includes income from licensing to online providers. Mobile phone ringtones have been a surprisingly strong income source although some see it as having peaked; sales declined a little from 2006 to 2007.

The Australian Record Industry Association has an operation called Music Industry Piracy Investigations (MIPI) which prosecutes individuals and organisations that use copyright recordings without paying royalties. There are those who agree with this approach, believing that this is the way to punish bad offenders, to raise consciousness of the moral issue and discourage offending. Others see this as making enemies in many cases with music's strongest audience and customers. The anti-piracy activities of the RIAA, the US counterpart to ARIA, have included many prosecutions of ordinary individuals. ARIA has not taken that line.

Even five years ago, for an artist to have a CD released, even in the most modest circumstances, was a career milestone. Now DIY offers very low cost of entry into CD production and easy access to the internet allows DIY distribution. The great problem at all levels is, as they say, "monetising" the passionate interest in and free downloading of music on the internet. Meanwhile, whereas until very recently, CD sales were the main source of income for successful groups, and tours were undertaken mainly to support recordings, now the focus has shifted to touring and merchandise sales as the earners with the recording as support.

There is a great interest in the industry and in government in building music exports. The peak music royalty income from overseas was $74m in 2001. In the last four years, the average was $46m. When the total is so small, the presence or absence of one major international success makes an enormous difference proportionally and probably accounted for the 2001 figure. Peak imports were $266m in 2002 and in the last four years averaged $222m. (Figures from the ABS.) So imports (payments of royalties to foreigners) have also fallen, in line with the decline in the industry generally. Generally royalty exports are around a fifth of imports. We could expect some interesting changes for 2008, given the appreciation of the AU$ against the US$.

There seems to be a move imminent by government to assist in building royalty exports. The current decline in sale of physical recordings is an impediment to success, and while there is an increase in online sales, they so far represent only about 10% of total sales and it is not at all certain that the current increase will be sustained. There is not yet an assured successful model for online sales and an Australian export drive might need to include an effort to find a solution to this problem that is such a preoccupation of the industry globally.

While the attention is usually on export income from royalties, the exports of musical goods are worth four times as much. In 2007, exports of instruments and recordings was worth $182m and imports were worth $1,171m FOB. Is there potential for export growth here?

There are two industry associations and some basic information is available about them at www.mca.org.au >> Knowledge Base » Creation » Recorded/mediated performance » Recording industry . ARIA, the senior of the two associations has a board of seven of which four positions are assigned to representatives of the four majors; its total membership is about 100 labels all but four of which are by extrapolation independents. AIR, the association for independents, has over 650 members. AIR is very strongly focussed on Australian music.

Broadcasting

See section B5 for information on Australian content requirements.

There are three broadcasting sectors: commercial, public and community. Commercial radio (AM and FM and moving to digital) and television (also moving to digital) are funded by advertising, public by the government and some earnings, and community by audience subscriptions and limited advertising. Add cable television. There is now also broadcast streaming over the internet, which means the sources so far as the consumer is concerned are global.

At this time, the Knowledge Base contains some information on commercial and community broadcasting but not public broadcasting.

Commercial broadcasting is driven by the profit motive and profit results from advertising revenue which in turn results from audience reach and size. Commercial broadcasters therefore seek the maximum possible audience and therefore broadcast the genres with a large following. Since it is not fruitful for everyone to seek to share the same audience, there is some differentiation of stations by genre identifications, but nevertheless the commercial stations cover a rather narrow range of genres. It should be noted nevertheless that some stations or networks have been active in support of Australian music, for instance by showcasing new artists.

The neglected genres are to a greater or lesser extent picked up by the public and community stations. ABC has five radio networks of which two are specialist music networks, one based around classical music, totally absent from commercial radio, and the other around contemporary repertoire overlapping with the repertoire of the commercial sector. SBS radio is largely assigned to various cultural and language groups and musical content appears to be their prerogative and dominated by recordings from the old countries. Community radio is very diverse, serving many niche audiences whether geographic, cultural or stylistic. It also gives many young artists their first break.

Internet

It is predicted by some that music radio will give way to online music on demand or a streaming variant which delivers according to the individual listener's taste and prior listening choices.

Composers and musicians - and stakeholder companies in various roles - can distribute music via the internet from their own websites, via social networks like YouTube, or using the services of aggregators who pull together and market some particular group of artists or repertoire. These can be tiny operations or giant operations. They can distribute direct to consumers or to online ‘etailers' or to retailers who offer downloadable music through kiosks. There are a number of companies that sell their services to ‘independent' musicians who have not made exclusive contracts with a record company.

Digital distribution sales are growing rapidly but so far not enough to compensate for loss of sales of physical product. Whether physical product will be totally displaced is a matter for conjecture but it seems logical to suppose that it will. Global value of digital sales doubled in 2006 and represented about 10% of total sales. They are downloaded to computers, portable players, mobile phones. The traditional market has held up longer in Australia; digital sales accounted for just under 10% of the total a year later in 2007 but presumably we are simply lagging rather than striking an independent course. (See also the section on Recording in B1.)

The Internet significantly changes Australia's situation with regard to music exports. Some are very critical of a lack of initiative and innovation in exploiting the new possibilities. Such possibilities can be explored at this summit, probably especially by the New Music Industry group.

The Internet also brings new opportunities for musical development in Australian centres outside the large cities.

A Fragmented Sector

Much of what can be said here about the cohesion or otherwise of the music sector is impressionistic. It is commonly said about the "commercial" section of the sector that it is fragmented, but this is just as true for the non-profit section and between the two sections. Within the commercial section, it has been observed that, as compared with some other countries, this fragmentation manifests itself as a low level of day-to-day cooperation even within particular types of activity.

The CMWG notes that the fragmentation ‘can lead to a brake on collaboration and long term investment in that economies of scale cannot be captured. Fragmentation leads to information gaps due to difficulties in coordination, and makes it difficult for firms to capture the full benefits of investment in shared infrastructures and capabilities.'

There are of course a large number of associations for interest groups within the sector (see section B2) and these bring some connectedness, but they do not necessarily impact strongly upon daily transactions and nor do they necessarily interact with each other.

I recall the first meeting of the Music Council of Australia, which has a membership structure intended to bring together representatives from across the entire sector. Delegates were sitting across the table from others from areas with which they previously never had contact: the rock band manager and the early childhood music specialist, the community music development coordinator and the opera manager, the music examinations guy and the folk musician, and so on. What could we possibly have to say to each other? Over the years, the agenda has developed; one observes that people have found ways to talk and there is plenty to say - although the very structure of this summit shows something of the large divisions that are inevitable when dealing with such a complex area.

So there are two aspects to this fragmentation: the lack of useful contact between various interest areas and a low level of collaboration on a daily basis within areas.

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2. Industry and Volunteer Associations

A study into Swedish success as a music exporter found four main contributing factors (two of them depended on music education). Importantly, there was a high level of cooperation in the sector, said the report. As noted above, many perceive that there is poor cooperation in the Australian music business with consequences as noted, for instance, by the CMWG.

From another perspective: more than one Australian Arts Minister has commented that the arts are a "rabble" that can be counted on to disagree among themselves, leaving the Minister without clear advice from the sector and the perfect alibi to do nothing.

Competition is a good thing but where appropriate, cooperation is probably even better. The sector might give thought to where cooperation is possible, or where competition can be foregone or alternatively, is inescapable.

Cooperation is formalised within the interest group associations, whether the larger industry membership associations such ARIA, AIR or APRA or the multitude of non-profit sector associations for music teachers, choral singers and so on. It is even more intrinsic to associations that bring together different interest groups, such as the Music Council, ArtsPeak (the alliance of peak organisations for the various art forms), or initiatives such as the Contemporary Music Working Group which achieves cooperation among groups across the contemporary music sector.

There is a short article on such organisations at www.mca.org.au >>Knowledge Base » Support » Other infrastructure support » Music organisations

The enormous geographical dispersion of the Australian population makes the effective operation of a national association difficult unless there is money for a secretariat. There is almost never a national secretariat among the associations in the non-profit sector. This is one of the reasons that some areas are only organised up to a state level. Some national associations have been formed as federations of pre-existing state organisations, sometimes with the result that there are continuing unresolved control issues between state and national levels and a struggle for the national to survive. The states often have the advantage that their natural agendas are more local, concrete, more hands-on, whereas the national may need to deal with more conceptual, abstract issues.

Some areas are simply not organised and so have no-one to speak for them. One thinks, for instance, of multicultural music, comprising the musics of the many immigrant communities leading through to world music at a professional level. It is intuitively obvious why this should be so. A consequence is one of the great missed opportunities for music development in our country.

What are the beneficial outcomes from these associations? Members benefit from a sense of collegiality, often quite important in motivating their work. A good association finds ways to keep its members up to date on advances in their field through mounting conferences, publishing websites, newsletters, periodicals; this benefits the nation by supporting higher achievement. Some will undertake initiatives such as professional accreditation systems, research, or developmental projects. Some will undertake advocacy although in the writer's experience, this could not generally be seen as a strength. The wealthier industry associations employ lobbyists and clearly are more effective in their advocacy activities. Of course, such advocacy is for their own particular interests.

As mentioned, a lack of resources constrains the effectiveness of most music associations. It cannot be conceived that all are subsidised. At the same time, for many there is no way to stick to their statement of purpose and earn any income beyond stamp money. In a more perfect world, perhaps those that could demonstrate a real public benefit from their work and an intrinsically limited capacity to earn could receive some support.

Issues

How to induce greater cooperation within the sector and perhaps especially, in the daily business of the music business?

How to better resource some of the more promising membership associations that can demonstrate public benefit from their work?

How to make music sector associations better advocates for our musical life?

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3. Statistical and Other Structural Information

Statistics. MCA prepared a statistical framework for the music sector, instigated by the Contemporary Music Working Group and commissioned by the Cultural Ministers' Council, the conference of state and federal arts ministers. It can be viewed on the MCA website www.mca.org.au >> RESEARCH AND ADVOCACY>> MCA RESEARCH REPORTS>> then scroll to the title.

This sets out a comprehensive model against which gaps in the current provision can be identified. The current provision is mostly gap.

The main source of statistical information is the Commonwealth's Australian Bureau of Statistics (ABS) - www.abs.gov.au . The ABS maintains a section called the National Centre for Culture and Recreation Statistics (NCCRS -- use the search facility on the ABS site). It seems to devote most of its resources to sport; one report is titled A Sporting Nation, which may be an indicator. It does produce some special reports on cultural activities. Otherwise information about the music sector is drawn by the ABS from larger studies such as the national census, international trade figures and so on.

Presumably behind the commissioning of the statistical framework there was some thought of actually collecting statistics to fill it. The framework report recommended a phased inception over five years and then regular updating on a rolling schedule. However, the Cultural Ministers' Council has almost no money at its disposal and the only action to date was a considerable payment to the ABS to collect its available music statistics into a sort of compendium. We can only conjecture as to why a special payment was needed for the ABS to assemble its own statistics. (Accessible through the initial statistics paper on the MCA Knowledge Base - see below.)

Much of this compendium was drawn from a special music industry study by the ABS published in 1998 for which it received special funds. It says that it cannot repeat the exercise without more special funds. Consequently, there has been no subsequent study and many of the key available statistics are ten or more years old. It might be noted that that study was by no means comprehensive.

The most comprehensive study of the music sector was conducted by Hans Hoegh-Guldberg in 1985, commissioned by the Music Board of the Australia Council. It is titled The Australian Music Industry and is probably available from the Australia Council and state libraries. There have been some special studies in the following decade, e.g. by KPMG, but they dealt only with the recording industry and they too are of course seriously old.

A few of the music sector organisations collect their own statistics, notably ARIA (record sales), APRA (composer royalties) and AMPAL (publishers). The AMA accesses Department of Trade statistics on imports of musical instruments and equipment and publishes them. When statistics depend upon reporting by companies, there is a possibility of inaccuracies. Companies may decline to provide statistics or may not give accurate information. Some companies may not be affiliated to the collecting organisations and therefore are excluded from the process.

The MCA Knowledge Base has the ambition to collect all available statistics into one place. It has made some good progress with an exposition and also analysis by Hans Hoegh-Guldberg. www.mca.org.au >> KNOWLEDGE BASE>> go to the big section on statistics. (Please look also at the preceding item on the structure of the Knowledge Base because it is also a representation of the music sector.) You will find that many of the statistics headings lead to empty categories. Some are empty because MCA has such miniscule resources to apply to the work but more are empty because there is no information with which to fill them.

The gaps could be filled with funding by the industry, or by government. The work could be done by private tender, which probably would be cheaper, or by the ABS, which has statutory power to require responses.

Which statistics? The MCA's default position is that all the statistics in the framework should be collected. Others believe that only the statistics for which there is a clear and present purpose should be collected. On the face of it, the resources will not be available for a comprehensive collection and so priority categories should be identified by the sector according to perceived needs and utility.

What are those priorities? They certainly include education, breakdown of some statistics by genres (e.g. exports), touring - domestic and international, music activity in inbound tourism, e-commerce in music, investment.

One which might be mentioned became apparent when the MCA commissioned the Stevens Report, Trends in the Provision of Music Education in Schools (you can find it under MCA Research on www.mca.org.au .) Key statistics on music education in schools are simply not collected by some education systems and so there is no basis for accountability for provision or outcomes. (Why collect the statistics when you have nothing to be proud of?!) The Victorian Department, for instance, says decisions about music education provision are delegated to individual schools so it has no information nor, apparently, interest. This has not prevented some private studies such as that by Anne Lierse that show that the situation overall is appalling. Is there a mechanism by which the Commonwealth can require or encourage collection of these statistics?

Other structural information. The MCA Music in Australia Knowledge Base has the objective of setting out the structure of the music sector. In each of its categories, the key article is intended to provide a map of that particular area of activity, an orientation to how it works. This may then be followed by papers about issues for that area. At the time of writing, there are some 70 papers on the Knowledge Base.

As an elaboration of this exercise, MCA has launched a mapping project in which it has invited representatives of music sub-sectors to contribute SWOT analyses of their areas. (Strengths, Weaknesses, Opportunities, Threats.) Approximately 25 have been received to date. An analysis is being conducted by Robyn Holmes to discover common issues, differences, points of articulation, developmental possibilities. The tables may or may not in each case be the result of rigorous process and may or may not intend to fully reveal the situation of the sub-sector, but nevertheless they give very interesting insights into the views of the people on the ground that otherwise would not be available.

These SWOT tables will be added to the Knowledge Base as a bridge between the mapping articles and the issues papers. MCA will also publish on the Knowledge Base the overall analysis.

It is expected that this will be a valuable planning and advocacy resource for the entire sector. It could also form a potential basis for scenario planning, which would develop a planning framework based on two, three or four equally plausible and equally probable stories about the future.

Summit participants are invited to contribute to the Knowledge Base or propose other possible contributors.

Issues

Which categories of statistics should be given priority for collection?

How can the National Centre for Culture and Recreation Statistics be brought to a decision to divide its resources more equitably between culture and sport?

How can the quality of data collected by industry organisations be improved - i.e. how can more companies be encouraged to provide more accurate and comprehensive information?

How can more resources be found for the collection of statistics and to support the statistical work of the MCA Knowledge Base?

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4. Financing

Please refer to Section A3, and to that, add these brief comments.

This is not an area in which the writer is skilled. According to those who are, that is also the case with the sector generally.

One issue is the achievement of a critical mass of activity large enough to sustain efficient practice. With the contraction of the activities of the majors, this problem has become more exposed in Australia. There is a need to find sources of investment, but investment is high risk and there is a lack of sophisticated analysis, visibility and presentation. There is a need for vehicles for investment perhaps along the lines of some of the investments in the film industry (eg by Macquarie Bank) which set up portfolios of films, most of which might fail financially but be covered by the successes. It is an area requiring a specialist approach.

Who is to take the initiative in addressing this situation? It seems unlikely to induce spontaneous action by the financial sector.

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5. Musical Instruments and Equipment

Prepared with assistance from Ian Harvey, Australian Music Association

On the face of it, there is no problem of availability. Australia imports what it needs.

The total value of musical equipment sold in Australia is a little over $600 million. This includes instruments, printed music, professional audio products and computer music software. The total number of items imported exceeds two million pieces. Excluding PA equipment (speakers, mixers, amplifier, processors and microphones), the total value of musical instrument sales is around $400 million, including computer music software items as in many cases they serve as musical instruments.

The sales numbers for various instruments give a different perspective on the shape of musical life in Australia. Guitars have the most sales of any of the instruments (231,000 units) followed by recorders (220,000 - though declining over the past decade from around 300,000 units per annum) and then the electronic keyboard (85,000 units). By comparison with the latter there are around 15,000 piano imports (including digital pianos). Other instruments with considerable sales are flutes, 10,000, trumpets, 6,000 and orchestral stringed instruments, 20,000.

Print music is worth $33 million and accessories a further $60 million (reeds, mouthpieces, stands, strings, pads, rosin etc.). Both 2006 and 2007 have been record years for numbers of units imported.

Supply of high end string instruments. The one area in which supply is an issue is with high end orchestral string instruments. Readers will know of the press reports of the loan to Richard Tognetti of a $10 million Guaneri de Gesu violin. This is the most expensive instrument known to the writer but nevertheless, instruments that match the talents of very good professional players cost from hundreds of thousands into millions of dollars. The market for fine instruments has passed out of the hands of musicians into the hands of corporations and high-wealth individuals. In Europe, Asia and America, there is a good number of such owners who, in many cases, then loan the instruments to fine players from their own countries. Indeed, there is a consortium in Norway with $50 million to spend and one in Taipei with $300 million. The Canada Council, equivalent of the Australia Council, runs an instrument bank. There is little equivalent activity in Australia. The consequence is that our musicians compete not only against foreign musicians but their instruments.

MCA a couple of months ago established the MCA National Instrument Bank to try to address the problem. It has made a modest beginning with two instruments, a violin and a cello, suitable for highly talented young players.

Supply of student instruments. There is no lack of instruments available but as with any other commodity, instruments are not within the means of all families nor indeed, all schools. This of course constrains the spread of music-making in Australia. In real terms the combination of an improved Australian dollar exchange rates and lower production costs, especially from China, has reduced the real cost of instruments significantly since 2000. The average value of a musical instrument imported into Australia has fallen by around 30% since 2000. Adding inflation back in, the differential is something like 50% between the average import prices in 2000 and 2007. That said, high end quality products - pianos, guitars, woodwind, brass etc., continue to increase in price - possibly another example of high labour content and low productivity growth. There is no way around craftsmanship and exotic materials if you want a high quality product. The real price benefit is seen in the entry point instruments.

It should be noted that while initial cost is an issue, the real barrier is the cost of learning. A satisfactory Chinese violin, suitable for the initial few years of learning, can be bought for around $300. But over say two years of learning, the initial investment in the instrument would be no more than 12% of the total cost to the family assuming 40 weeks of private lessons at $25 per lesson for each of the two years. Add on costs such as strings, texts and so on. Figures for learning a guitar or keyboard would be similar. Purchase of a trumpet, flute, clarinet would make up 20-25% of the total cost of learning, saxophone up to 30%, piano in excess of 50% of the total cost, all, of course, because the instruments cost more, not that the lessons cost less.

So it is the commitment to funding lessons that is the main obstacle for most families. This is one reason that it is so important that instrumental instruction is offered through the schools.

Local manufacture of instruments. Decades ago, there was a substantial manufacture of pianos in Australia under the Beale brand. The Beale name is still owned in Australia by Australis, but for many years now has been made in China.

One of the surviving industrial producers of instruments is Maton guitars in Box Hill, Melbourne. Maton has been in business for 60 years and has success in Australia and to some extent, internationally. It appears to be a viable and well-respected business. Another is Epoch violins, which produces a range of electric violins, ‘cellos and basses. Unlike Maton, most of its product is sold overseas.

Rode Microphones is an internationally recognised producer from Silverwater in Sydney, operating at an industrial scale.

Attend the musical instrument convention in China and discover why in general terms, Australia could probably put its energies to better use than in trying to create industrial manufacture of musical instruments. The number and variety of instruments being manufactured there is jaw-dropping, all, of course, with similar cost advantages to those found in say clothing and footware manufacture.

Hand-crafted instruments. On the other hand, there appears to be room for hand-crafted instrument making in Australia, if only because for the makers it is a vocation from which they draw non-financial rewards.

There are two companies working on production of innovative piano designs. Stuart and Sons Pianos has a workshop in Newcastle where it produces extremely beautiful looking grand pianos with a number of innovations in stringing and other aspects. Albert's made an investment in the Stuart inventions, allowing the construction of the pianos to be set up on a businesslike basis. The instruments are essentially hand-built and costly but the operation appears to be doing well. Stuart's have some flair for promotion leading to prominent media coverage and presumably to sales.

Ron Overs, who runs a piano tuning and repair business from modest premises in Concord West, a Sydney suburb, has made even more thorough-going design changes. He has reconfigured the piano action, halving friction, and made important changes to stringing, soundboard and other components, winning praise from peers and musicians. Some instruments have been sold to institutions such as the Sydney Conservatorium where they seem to engender support from the pianists but promotional activities appear not to be well developed.

As to other instruments, there has long been a diverse cottage industry of handcrafting. There are some 500 makers in Australia, amateur and professional. The predominant instruments are the violin family, guitars and keyboards but there is quite a list of instrument types made here:

Accordions and concertinas
Bagpipes
Banjos and mandolins
Dulcimers, psalteries and zithers
Early keyboards including harpsichords, clavichords & fortepianos
Flutes, recorders and whistles
Guitars - acoustic and electric
Harps - Aeolian, Celtic, folk & concert
Hurdy-gurdies
Lutes and other early and ethnic plucked strings
Oboes and orchestral reeds
Organs - pipe & reed
Steel drums
Violin family including violins, violas, 'cellos and double basses, bows & accessories
Early strings including viols and period bows.

According to the editor of the newsletter of the makers' association, some makers achieve a very high quality and international sales. However, the total value of the sector is probably a tiny percentage of instrument sales, let alone the national GDP. For more information: www.mca.org.au >> KNOWLEDGE BASE>> SUPPORT» Manufacture, trade and technology » Musical instrument making

A problem for potential sales is that there is no concerted marketing effort by these makers and probably they find customers mainly by word of mouth. Professional makers have left the only national organisation, the Australian Association of Musical Instrument Makers, which at least has the newsletter and used to present annual showcases.

Locally designed or made digital music equipment and software. The Fairlight Computer Musical Instrument was a world-class innovation in the 70s and 80s but later was overtaken by competitors. In Perth, there was a more recent and more populist invention, the Thummer, a hand-held computer musical instrument enthusiastically promoted by its inventor but perhaps lacking some important ingredients for musical success - and in any case, recently removed to the USA.

There is innovative work in computer music. Two world class software producers are In the Chair and Music Maestro. Datasonics supplies its Music Maestro products to several US State Authorities and also the UK. Rising Software produce Auralia, aural training software.

Possible Issues

Availability of fine orchestral string instruments for our best players. The structure for addressing this has been put together by the MCA. Success depends upon support by those who can afford to buy and loan the instruments.

Supply of student instruments. MCA is discussing a pilot program in which it would partner with SA schools to encourage citizens to take unplayed instruments out of closets and donate them to school music programs. There are many complexities around such a program. While it may seem a no-brainer, arrangements have to be made and funding found for transport, drop-off points, assessments, repairs, administration. MCA is also considering another program to bring together lenders and borrowers of mid-level instruments. Resources are a problem with both of these initiatives.

There is another problem that has seen a number of schools out of pocket. While it is possible to purchase Chinese instruments that are good and work as they should, there are a number of products being made that only resemble musical instruments: trumpet-shaped objects that do not have functioning valves, violins whose bridge design is so flawed as to render them unplayable and so on. These are too often sold on the internet. The products are on the face of it cheap - a violin for say $50 to 70 - but it won't play. Too many schools and parents are getting ripped off by these 'instruments'. Some of the mass marketers have recently begun selling instruments, some of which are marginal in quality.

A fractured domestic music education market. We do not have a viable domestic market for some products because we have eight different state curricula for three million students over 12 years of learning. Work out the volumes on that basis.

Straying a little from the subject of instruments and equipment, a consequence of this situation is that there is a shortage of locally written and produced music curriculum materials; this could be satisfied commercially in a sufficiently aligned national market but not in markets in single states, some with very small populations. So production is then left to state governments/education authorities, most of which show little more than token interest in music education. Consequence: actual lack of curriculum materials, or importation from foreign countries.

A national music curriculum, or at least national key learning outcomes that allow some local flexibility, could far better support commercially viable initiatives in the production of both curricular materials and some equipment.

Hand-built pianos. A recorder can be made entirely from a piece of wood. A piano cannot avoid use of industrial processes, for instance, to cast the frame. You don't set out to build just one piano. Even hand-built pianos must be made on the basis that there is some sort of production line which then requires a capital base. Hand-built pianos cannot compete on cost with pianos mass produced in China and so they must compete on quality and to some extent individuality, although not too much individuality because touring pianists do not want to find themselves in a concert hall with 2,000 listeners and a piano that is so unfamiliar that they cannot control it. Indeed, many no doubt will prefer a good old familiar Steinway so they don't have to worry about that. So Australian piano makers are on a tight-rope. They have to appeal to the top end of a small market with high prices and few purchases, against long-established global competitors, with instruments that are different enough to be distinguishable and not so different that they frighten off the players. Above all, they have to compete with the name. In Australia, even Bösendorfer cannot compete with Steinway. Success in these circumstances is totally admirable.

Other hand-built instruments. The MCA National Instrument Bank received a very agitated email from an Australian violin maker demanding to know why we were not promoting Australian instruments instead of Stradivarius and such. It's a fair question and the answer is about market realities. As noted, there is no real attempt to create a market for these instruments beyond loyalties to individual makers. This appears to be an issue that cannot be managed by collaboration among the makers. Is there some other entity that would find it in its interests to solve the problem? And if there were, would the makers cooperate? Would the very best makers cooperate, or are they already successfully occupied?

Locally designed or made digital music equipment and software. In a comment not confined to but including digital musical equipment and software, Michael Smellie writes (see current Music Forum magazine): "Australia MUST establish some initiatives and stake out some intellectual property in the digital music arena. We must establish our equivalent of Silicon Valley and clearly music stands out as the place to start. There is a need to create a digital incubator and an accelerator to quickly get us up the knowledge curve. There are two aspects to this:

 The first involves the creation of a network of digital innovators in the music space to enable them to leverage their work. This will bring shared learning and knowledge together to accelerate the development and the marketing process of digital initiatives and products. This network needs to at least be a virtual concept but would be even better if it were to have some physical proximity also. Without this, we cannot hope to compete with the innovation seen in other countries.

 The second involves funding initiatives. I note that the Minister [for Arts, Peter Garrett] has already announced funding for a Creative Innovation Centre and that he is looking at providing microfinance opportunities to the music industry. These are both welcome and overdue. I would strongly suggest that these be implemented in some form of partnership with industry i.e. perhaps with private equity investors and existing industry investors. In this way, they are more likely to be self sustainable and to not fall under the influence of someone's personal musical taste."

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6. Physical and Virtual Spaces Available for Music Activity

Physical spaces. Despite all the difficulties recently aired, the category of venue that is the most plentiful source of live engagements for musicians are the liquor-licensed premises: hotels, restaurants, clubs, bars, nightclubs. A description of the regulatory situation on which so much depends can be found in the Live Music section of the first part of this report.

There are problems with some of these venues; for instance: poor physical provision in the performing space, poor employment practices, inadequate promotion of performances. Some proprietors seems to expect the musicians to do all the promotions, which is inappropriate. (On the other hand, many musicians do nothing for themselves and then complain about lack of audiences. See Hugh Nicholas: State of the Art: The long and painful coma of the Sydney music scene, at http://www.mca.org.au/web/content/view/12/6 )

Tracey Redhead of Music NSW has created VROOM, a list of such venues to assist musicians. It began as a NSW resource but is going national. www.vroom.musicnsw.com

Formal facilities are offered in performing arts centres across the country. In recent decades these have become no longer the exclusive prerogative of the capital cities and there are purpose-built facilities in many regional centres and in the main satellite centres of the big cities. The Australian Performing Arts Centres Association (APACA) has information: www.apaca.com.au

MCA is aware through its community work that a lot of grassroots music activity is inhibited by the lack of rehearsal spaces - especially for the louder genres! This is a need that local government could address.

Virtual spaces. Broadcasting. Commercial radio both creates and broadcasts to a mass audience and since it seeks a mass audience it must offer the genres with mass appeal and within those genres great originality is by and large not rewarded. The broadcast space for genres that lack mass appeal is offered by community radio and the public stations, in particular, ABC Classic FM and Triple J.

Internet. On the face of it, there is no lack of virtual spaces, whether personal or band websites or MySpace, YouTube etc. The issue is not in having a space but in attracting visitors and sales. That perhaps is a problem we can hand to the New Music Industry group at the summit.

Issues

The need for music rehearsal facilities both for professionals and for community use and young people.

Is there a need for more regional performing arts centres?

Is there a need for more resources to support regional presenters and regional touring?

The opportunity for an increase in music presentations in licensed venues. Associated with this is the need to achieve best practice in regulating these venues as live performance facilities, and to skill up venue proprietors in artistically and financially successful music presentation.

Possibly there should be an increase in the new music quotas on commercial radio.

Inadequacy in funds available to community radio broadcasters that can maximise their activities in building an audience for Australian music and musicians.

Similar inadequacy in funds available to public radio broadcasters.

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C. INTELLECTUAL PROPERTY

Nathan Shepherd

Introduction

The purpose of this paper is to provide a summary of the key issues affecting copyright regulation which are likely to be relevant to the music industry in the years leading up to 2020. Given the potential scope of this topic, only key issues which are likely to affect a broad cross-section of the music industry have been selected for discussion.

Digital Technology and Copyright Regulation

Probably the single most important factor behind many of the issues referred to in this paper is the introduction and development of digital technology. Digital technology has provided members of the general public with the tools to commit infringement of copyright on a significant scale. Such infringement can occur by an Internet user posting musical content on websites, downloading music, sending emails containing music files or by simply copying and pasting music files on their computer. Music files can be ripped, mixed, mashed, copied and distributed to other users (and therefore infringed) with ease.

The music industry's response to the development of digital technology to date has neither been strategic, coordinated nor effective. This ineffective response has seen IT companies take over some of the revenue streams traditionally controlled by the music industry. IT companies such as Apple have set up successful distribution/sales mechanisms for music content while CD sales in stores have decreased. Except for some independent recording labels, recording companies have largely attempted to cling to "pre-digital" distribution and revenue models. This, together with the general public's increasing use and reliance on illegal file sharing technology to listen, download and access music, has resulted in decreasing sales and profit margins for many (but not all) players in the music industry.

There is currently a wide divergence of opinion between various interest groups regarding solutions to the issues created by digital technology. Some copyright owners are seeking to counter the problems by exercising greater control over their musical content. This includes non-legal control mechanisms such as technological prevention measures (devices that restrict user access or copying) and monitoring/surveillance activities that identify illegal file sharing activities of Internet users. It also includes the use of legal mechanisms such as more stringent penalties (including criminal penalties) for infringement of copyright, greater obligations on third parties (such as ISPs and website operators) and enforcement activities through commencement (or threat of commencement) of proceedings and public education.

On the other side of the debate, copyright user groups (such as the non-profit group Creative Commons), propose that content should be available for free on a non-commercial basis to the world at large.[1] Such groups argue that by allowing content to be made available to the world at large, the free exchange of ideas allows creativity to flourish and results in the growth of new businesses and new revenue streams. Many of the IT companies who rely on a certain amount of fair use[2] under US law for their businesses (ie many internet search engines such as Google and online social networking sites like Facebook and Myspace) also support this view. As might be expected, this view is not supported by many copyright owners in the music industry.

In between the above two extremes, many groups represent the middle ground. There are number of recording labels and well known contemporary artists such as Prince and Radiohead that are allowing some rights to be waived in lieu of some greater benefit (e.g. marketing and distribution opportunities). An example of this is the use of free Internet downloads of one or more songs off an album as a marketing and promotional strategy. Another example of this is the use of live taping, which permits audience members to digitally tape live performances which the tapers can then trade on the Internet (provided such trade is non-commercial). The taping, and subsequent trade and discussion on Internet bulletin boards, acts as a free form of marketing, introducing new people to the band/artist and enabling existing fans to collect recordings of live performances. While some of the major recording companies may view the above examples as an infringement of their intellectual property rights, many of the minor labels (and non-signed musicians) are relaxing the way their intellectual property rights are managed in light of the marketing and distribution potential of the Internet.

The Copyright Balance

Copyright is the main form of intellectual property protection available to the music industry. In order to understand the current regulatory issues with greater perspective, it is useful to have an appreciation of the theory behind copyright regulation. Broadly speaking, the concept of copyright has been driven by at least two principles:

(a) the natural right arising from the expenditure of labour for the purpose of the creation of an object (referred to as the protection of proprietary rights principle). Just as there is a natural right in the object itself, there is a natural right in deriving revenue from the exploitation of the object. It is therefore contrary for someone other than the creator to obtain some reward from the use or exploitation of the object without the permission or licence of the creator; and

(b) an incentive for the creation and encouragement of artistic or scientific development (the public interest principle). The US Supreme Court has commented that "the primary objective in conferring [copyright] lies in the general benefits derived by the public from the labours of authors"[3] In this principle, the public interest aspect is more dominant than the proprietary right.

The second principle referred to above has more recently taken on an even more liberal form by Creative Commons and open source groups who advocate greater freedom for copyright users to share and use materials without traditional copyright restrictions. This is discussed in more detail below.

The central policy that forms the basis for copyright law is referred to by some commentators as the copyright balance; effectively a balance between the competing goals and interests of various industries and consumers who directly or indirectly deal with materials in which copyright subsists. The law of copyright attempts to balance the above two principles by providing value to artistic works in the form of proprietary rights (equating to and resulting in revenue streams) while acknowledging through fair dealing provisions that for the good of society not all unauthorised use amounts to infringement.

It should also be recognised that intellectual property protection is a form of monopoly which is balanced against certain prohibitions against restrictive trade practices (e.g. as set out in the Trade Practices Act 1975). The copyright balance also addresses the competing interests of copyright owners (who usually seek to enforce their proprietary rights) and copyright users (who usually seek free, unrestricted use of content).

Copyright user interest groups argue that a copyright balance completely in favour of copyright owners could stifle innovation and creativity through excessive controls on reproduction and access to material. Conversely, copyright owner interest groups argue that a copyright balance completely in favour of copyright users, could mean that authors/creators would cease earning revenue through the use of their works. So what should the correct balance be? This is a complex question which can be illustrated by the following example (which is loosely based on some real scenarios).

Example

A musician/composer living in Perth is privately researching a particular genre of jazz so that she can write a new composition for which she has funding from the Australia council. She hears about a rare live recording but is informed that the record is no longer being printed and is not available in Australia. The recording companies do not intend to re-release the record due to low sales potential. As the composer needs the recording quite urgently, she finds the simplest way to locate and obtain a copy of a rare recording is by getting on a bulletin board and asking someone in the US to post a copy on an international file sharing website which she (illegally) downloads. She then continues to do this for a range of other rare music.

In the above example, the composer benefits from the sound recordings and writes successful compositions (probably because of her access to the recordings). However, by her actions, the composer has also infringed the proprietary rights of the owners of both the sound recording and musical works embodied in the sound recording. Which should take precedence (if any)? The ideal situation would have the recording and publishing companies financially benefiting from the download[4] or otherwise making the recording legitimately available online so that interested members of the public could legitimately download and pay for the recording.

One can argue that the rise of digital technology has shifted the copyright balance in favour of copyright users (due to the fact that it is relatively simple to illegally download or copy musical content). However, to make matters more complex, a third interest group is now relevant to the equation - Internet Service Providers and website operators. Under copyright law, these parties (and other parties in other technology facilitatory roles) may be liable for their actions in authorising their customers to infringe copyright. Copyright owners in Australia and abroad have had some success in taking action against companies operating p2p file sharing systems such as Napster and Kazaa. However, the liability of ISPs and website operators is currently uncertain and likely to be the subject of further legislation and/or court action.[5]

What will the copyright balance look like in 2020? While it is clear that we are currently in a pivotal point in history, it is unclear whether the copyright balance will shift or whether the status quo will remain the same. The challenge to the music industry in the years leading to 2020 is to address the problems created by digital technology by adapting its revenue models and business to make use of the new distribution mechanisms and potential revenue streams offered by the Internet. If every instance of infringement by way of an illegal download could be transferred into revenue, then the music industry could be in a much healthier position financially due to the vast marketing and distribution potential that the Internet and digital technology can offer.

Issue 1: Digital technology and copyright law

As discussed above, the rise of digital technology is the most significant issue in affecting copyright regulation. Much of the copyright law that was originally intended to apply to physical copying (which was difficult and costly) has had to adapt to digital copying (which is simple and inexpensive). Copying and distribution of works to thousands if not millions (and potentially billions) of people can now be accomplished by pressing send on an email or posting content online. Many people are questioning whether the current regulatory environment which is based on "hard copy printing" is inherently unsuitable to be applied to digital technology. Does there need to be a complete re-think in the way copyright law is applied to digital technology?

Issue 2 - Interests of copyright users - fair use

One of the ways in which the copyright balance is achieved is by providing exceptions or defences relating to dealings by a copyright user that would otherwise be an infringement of copyright. One such exception relates to ‘fair dealing' which has been adopted by most common law countries (ie countries established under the English common law system). There are two limbs to this exception. Firstly, the dealing or use in question must be for one of the following purposes:

· research;

· study;

· criticism;

· review;

· parody;

· satire; and

· news reporting.

Secondly, the dealing must be ‘fair'. In deciding what is fair a Court will have regard to the relevant circumstances including the following:[6]

· the purpose and character of the dealing;

· the nature of the subject matter to which the copyright relates;

· the possibility of obtaining the subject matter to which the copyright relates within a reasonable time at an ordinary commercial price;

· the effect of the dealing upon the potential market for, or value of, the work or other subject matter to which the copyright relates

· in a case where part only of the subject matter to which the copyright relates is reproduced--the amount and substantiality of the part copied taken in relation to the whole of that subject matter.

The Copyright Act 1968 (the Act) provides that fair dealing will exist where the following takes place for the purpose of research or study:

· making a copy of a journal article in periodical publication; and

· copying not more than 10% or one chapter of a literary, dramatic or musical work or adaptation of such a work (except a computer program).

It can be seen from the nature of the fair dealing exception that its scope is limited to the purposes set out above. This can be contrasted with ‘fair use' in the US which unlike Australian fair dealing is open ended in terms of the purposes to which the exception can apply. In determining whether the use of a work constitutes "fair use" under the US system, the following factors will be considered by a court:

· the purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes;

· the nature of the copyrighted work;

· the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

· the effect of the use upon the potential market for or value of the copyrighted work.

With fair use, although the purpose of the dealing is a relevant consideration, it does not set the threshold of the defence. As such, it is often regarded by copyright user interest groups as a more flexible, purpose neutral defence than fair dealing.

In light of the increased powers given to copyright owners under the US-Australia Free Trade Agreement (FTA), and the objective of achieving harmonisation between relevant Australian and US laws, it may be reasonable to conclude that implementation of Australia's obligations under the FTA would also have involved adoption of the fair use test. However, following a review by the Attorney General,[7] the Australian government decided to introduce new exception-specific defences into the Copyright Act rather than adopt a fair use regime. The exception specific defences relate to home taping, time shifting, format shifting and a fair dealing exception for the purposes of parody and satire.

The problem with exception based drafting is that it often is unable to be applied to new technology or analogous situations - new legislation is required. It is noted that the Music Council of Australia (MCA) made a submission to the Attorney General in 2005 recommending that Australia not adopt the US fair use system on the basis that it would do more harm than good to the Australian music industry. Copyright owners generally do not support fair use as it complicates licensing models. For example, is a small sample of music reproduced on a CD fair use? The owner of copyright in the sample would say no and the sample should be licensed. The copyright user may invoke fair use, therefore negating the requirement of a licence and payment of royalties. This uncertainty could have a detrimental effect on the music industry, particularly in the case of copyright collecting societies who rely on the validity and enforceability of their licences.

It is worth noting that a study recently undertaken in the US commissioned by the Computer and Communications Industry Association (CCIA),[8] found that fair use exceptions to US copyright laws were responsible for more than $4.5 trillion dollars in annual revenue for the US economy representing one-sixth of the total US GDP. How much of this revenue is at the expense of the music industry?

The study also points out that fair use provides the basis for the operation of search engines and other Internet related activities such as the social networking websites. It is doubtful that such companies operating similar websites in Australia could similarly rely on Australian fair dealing provisions. From a broad economic perspective, this would seem to be to the detriment of the Australian economy. Looking into the future towards 2020, will a buoyant Australian IT industry provide more online revenue opportunities and provide a greater long term benefit to the Australian music industry than if the current regulatory environment prevails?

Issue 3: The interests of copyright owners

Under the FTA, Australia is required to harmonise its laws with the US in a number of areas including its intellectual property laws. Whilst Australia's laws relating to copyright have not been uniformly harmonised with the USA, the FTA has resulted in a number of amendments being made to the Act which have increased the powers of copyright holders. The Copyright Amendment Act 2006 introduced a number of provisions that were in favour of copyright holders, namely:

· tougher penalties for copyright infringers in the form of a tiered range of copyright offences including indictable, summary and strict liability criminal offences. The indictable offences have maximum penalties of 5 years imprisonment and/or between 550 ($60,500) to 850 ($93,500) penalty units for natural persons. The strict liability offences do not contain fault elements and attract maximum penalties of 60 penalty units ($6,600). Under this scheme, an offender issued with an infringement notice by a law enforcement officer will have the option of paying a fine or risking the possibility of prosecution in court. In addition to paying a fine, some offences will also require the offender to forfeit copyright material and/or related devices in order to avoid prosecution; and

· civil remedies and criminal penalties where a person circumvents an access control technological prevention measure.

It is noted that while the Act provides a range of remedies available to copyright owners, enforcement through the courts is still an expensive, uncertain and time consuming procedure with actions costing hundreds of thousands of dollars worth of legal fees. In today's uncertain economic environment, many copyright owners tend to want to avoid legal action unless absolutely necessary.

More recent concerns of copyright owners are connected with copyright infringement over the Internet and the role of Internet Service Providers (ISPs) and web service providers. Probably the single most important issue for copyright owners is to reduce the amount of copyright infringement occurring over the Internet. The scale of the infringement is often cited by various players in the music industry as a major contributing factor to the reduction of sales of CDs and corresponding reduction of profits to the music industry.

Issue 4: Authorisation liability - to what extent are ISPs responsible for their customers' infringement?

Under Australian law, intermediaries (such as ISP, venue operators etc) can be found to be liable for the infringing acts of copyright users if the intermediaries authorise such infringement. To authorise such infringement is to countenance, sanction or approve of such infringement (either directly or indirectly). While many of the earlier Australian cases involved venues that authorised performances of music without a valid APRA licence, the law of authorisation liability has more recently been used as a basis to commence to successful actions against ISPs, website operators and p2p software operators such as Sharman Networks (the company that operated the Kazaa p2p system).

Under Australian law, whether a person authorises copyright infringement will depend on:

· the extent (if any) of the person's power to prevent the doing of the act concerned;

· the nature of any relationship existing between the person and the person who did the act concerned; and

· whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

The third limb above is the most topical and important to the issue of whether ISPs and other internet related companies are liable for authorising infringement, namely, whether such companies took "reasonable steps" to prevent such infringement occurring. While the threshold of reasonableness is designed to be flexible, there is currently very little law on what constitutes "reasonable steps" and consequently, very little guidance for ISPs or copyright owners.

Under sections 39B and 112E of the Copyright Act 1968, a person who provides the facilities for making, or facilitating the making of, a communication is not taken to have authorised any infringement of copyright in a work or audio-visual item merely because another person uses such facilities and infringes copyright in the process. This presumably applies to most ISPs where they merely provide infrastructure. However, the Full Federal Court recently held[9] that if an ISP has a closer than normal relationship with an infringing website or customer, financially benefits from such relationship and does not take reasonable steps to prevent the infringement then it may be found liable for authorisation of copyright infringement. Unfortunately, the Full Federal Court did not clearly specify exactly when sections 39B or 122E would cease to apply and the issue is still the subject of argument between copyright owners and ISPs.

Due to the negative press received by the Recording Industry Association of America (RIAA) in the US when it directly targeted ISPs' customers and the expense of commencing legal proceedings, copyright owners have been attempting to force ISPs to take a more active role in preventing infringement occurring on its network. ISPs are generally prevented by privacy legislation from disclosing details of their customers to copyright owners so unless a copyright owner commences proceedings against a customer directly, it is unable to directly target the individual and must rely on the ISP to take appropriate action.

The real issue underpinning authorisation liability is the question of who takes responsibility for the infringement of copyright. Consider the following:

· can a manufacturer of technology that allows users to infringe copyright be held to be liable for the infringement of copyright? In the seminal US case Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), also known as the "Betamax case", the court ruled that the manufacturers of home video recording devices, such as Betamax or other VCRs (referred to as VTRs in the case), cannot be liable for infringement;

· can the operator or facilitator of technology that allows users to infringe copyright be held to be liable for the infringement of copyright? In the case Universal Music Australia Pty Ltd v Sharman License Holdings Ltd, Sharman Networks, the company responsible for the Kazaa p2p file sharing system was found to be liable for authorising the infringement of copyright; and

· can an ISP by held to be liable for authorising copyright infringement? In Cooper v Universal Music Australia Pty Ltd (Cooper) the ISP was held to be liable for authorising the infringement of copyright of its customers by hosting a site which provided links to infringing mp3 files. In Cooper, the ISP was provided free advertising on the infringing website. The Court held that in such circumstances, sections 39B and 112E did not apply to the ISP and the ISP was liable for authorising infringement.

Australian legislation and case law clearly indicates that ISPs can be held liable for authorising the infringement of their customers. However, the law provides no clarity regarding what reasonable steps ISPs are required to take to prevent copyright infringement occurring on their network.

Should ISPs be responsible for monitoring and policing the infringement of their customers? If so, what steps should they be required to take? Should copyright owners be required to take action directly against Internet users who infringe copyright (with appropriate cooperation from the relevant ISP)?

Issue 5: Authorisation liability - three strikes policy

Under the Act, Carriage Service Providers (this term covers most ISPs) that provide Internet access to customers are granted safe harbours in the form of protection from monetary awards of damages, provided that they comply with certain conditions relating to how they react to infringement notices (including other matters). In other words, if the ISPs comply with the safe harbour provisions, they will not be liable for damages even if found to have authorised the infringing acts of their customers.

The conditions for the safe harbours vary for each category of activity (the categories relate to transmission, caching, hosting or linking activities). One issue that is currently being pursued by copyright owners is that the conditions set out for category A activities (ie transmission based activities) do not specify that an ISP is required to take any action if they receive a notice of infringement from a copyright owner alleging an illegal transmission based infringement (ie internet download) of copyright material. Most ISPs, even those in compliance with the safe harbour regime, take no action when receiving such notices. While the Act contemplates that an industry code of conduct could regulate such action, for a code of conduct to be valid under the Act, both copyright owners and ISPs need to agree on its contents - to date, this has not occurred.

The issue recently received media attention as a result of Music Industry Piracy Investigations (MIPI) sending letters of demand to ISPs alleging that they had authorised the infringement of their customers by not taking "reasonable steps" when receiving notice of infringement including the adoption of a "3 strikes policy". The 3 strikes policy operates in the following way:

· MIPI would conduct surveillance of customer downloads over the Internet and record instances of copyright infringement in respect of copyright owned by its members by recording the IP addresses of infringing customers;

· MIPI would periodically send a list of IP addresses to each ISP;

· The ISP would match the IP addresses to each customer account and send a letter to the customer indicating that the IP address had been tracked because of an infringing activity;

· If the IP address was recorded by MIPI for a second time, the ISP would suspend the customer's account; and

· If the IP address was recorded by MIPI for a third time, the ISP would terminate the customer's account.

The 3 strikes policy is currently being considered by a number of international governments including the United Kingdom and France but has yet to be formally adopted in any jurisdiction. The issue is complex and as one would expect, there are a number of arguments on each side: Copyright owners argue that a 3 strikes policy would:

· result in repeat alleged infringers having their accounts disconnected;

· not affect people downloading through legitimate sources;

· act as a deterrent without the need of utilising courts and law enforcement proceedings;

· not be administered by the music industry other than by the harvesting of IP addresses;

· be a tangible step in combating transmission related infringement.

ISPs/copyright users argue that a 3 strikes policy would:

· effectively override or bypass traditional evidentiary tests applied by the courts (in other words, the ISP would act on evidence that is unverified, untested by an independent tribunal or court of law and produced by an interested party);

· effectively override or bypass the presumption of innocence and other fundamental legal principles;

· not consider whether the customer actually breached the Copyright Act 1968 (for instance, whether any of the fair dealing exceptions applied);

· result in the party providing the infrastructure (as opposed to the party alleging the infringement) being responsible for combating the infringement;

· be inequitable due to the inability of IP address tracking to accurately identify the person behind the infringement (e.g. an ISP address only relates to a computer that may be used by a number of persons (e.g. families, businesses, share houses etc)).

MIPI and the ISPs are attempting to resolve the issue through renewed negotiations on a code of conduct.

Issue 6: Authorisation liability - Australian application of safe harbours

Another issue involving safe harbour provisions is their limited application in Australia to ISPs. In the US, all manner of technology companies can use the safe harbour provisions (including Google and other web based businesses). In Australia, such protection only extends to ISPs. At first instance this may appear to be a bonus for Australian copyright owners. However, the downside is that some web-based businesses are setting up operations in the US in order to make use of the safe harbour provisions under the US legislation. It is possible that the Australian music industry may be missing opportunities to licence music and otherwise be involved in technology that simply cannot be set up in Australia under the current legal environment.

Issue 7: Creative Commons

Creative Commons is a non profit organisation based in the US. Its aim is to design methods and technologies that facilitate sharing of scientific, creative and other intellectual works with the general public.[10] The theory behind the licences is based on the same principles as fair use, namely, that unrestricted sharing of material/content on a non-commercial basis facilitates the progression or the relevant art or science and this in turn stimulates the economy. Opponents to Creative Commons argue that this is all well and good in theory but copyright owners (in particular composers of musical works) still need to ensure that they are paid for use of their works.

Creative Commons makes its licences available to copyright owners on the creative commons website. The copyright owners can select the type of licence they want, which attaches to their work. The licences are not between the copyright owner and Creative Commons; instead the licence is between the copyright owner and the ultimate user of the work. The licence conditions that may be selected by the copyright owner are:

· Attribution: the copyright owner lets others copy, distribute, display, and perform the copyrighted work (and derivative works based upon it) but only if the user attributes the work to the copyright owner;

· Non-commercial: the copyright owner lets others copy, distribute, display, and perform the copyright owner's work (and derivative works based upon it) but for non-commercial purposes only;

· No Derivative Works. the copyright owner lets others copy, distribute, display, and perform only verbatim copies of the copyright owner's work, but not derivative works based upon it.

· Share Alike: the copyright owner allow others to distribute derivative works only under a license identical to the license that governs the copyright owner's work.

The above conditions produce sixteen possible combinations, of which eleven are valid Creative Commons licenses.

Creative Commons licences are effectively exclusive, irrevocable licences. Consequently, copyright owners should always consider whether entering into creative commons licences is likely to conflict with any other future use of the work. The copyright owner cannot terminate the licence in the future. While Creative Commons Licences and APRA licences can coexist, the author understands that APRA is currently negotiating with Creative Commons regarding the interaction between the APRA licences and the Creative Commons licence. However, it is possible that recording companies or publishing companies would be less likely to enter into an exclusive recording or publishing deal with a musician who has licensed their works by way of the Creative Commons licence.

Other groups operate on a similar basis. In the case of Open Source Initiative (OSI), the group provides a range of creative commons style licences for software. The Artistic licence was recently the subject of US proceedings. Initially the District Court of Northern California found contravention of the terms of the open source licence did not constitute copyright infringement. This decision was overturned by Judge Jeffrey S White of the US Court of Appeals for the Federal Circuit (referred to as the as the "IP Court" by many commentators) who overturned the earlier decision, holding that open source license conditions are enforceable under the copyright laws.[11]

While the above decision is limited to the particular type of Open Source Licence (ie the Artistic Licence), the decision is being interpreted by many commentators as judicial endorsement of the validity of open source/creative commons licences.

Issue 8: Orphan works legislation

The US Congress is currently reviewing two bills regarding orphan works. An orphan work is a work that is protected by copyright but whose author cannot be identified and/or located. A good summary of the bills and impact on Australian users can be found at http://www.copyright.org.au/information/specialinterest/g101.htm

Issue 9: Plurilateral Anti-Counterfeiting Trade Agreement (ACTA)

A proposal has been made by a number of countries including Japan, members of the EC and the US for a new plurilateral Anti-Counterfeiting Trade Agreement (ACTA). The ACTA is proposed to establish a new standard of intellectual property rights enforcement to combat global counterfeiting and piracy.[12]

Various groups have stated that there has been little information provided in relation to the ACTA. ISP related groups (such as the Internet Industry Association) have expressed concern that certain surveillance and filtering obligations could be imposed on ISPs under the agreement.[13] According to a number of sources on the Internet (and also recognising the inherent inaccuracy of such sources):[14]

· the agreement is being secretly negotiated by the governments of the United States, Japan, Switzerland, Australia, New Zealand, South Korea, Canada, and Mexico, and the European Commission;

· the proposed agreement (of which a copy was apparently leaked) would allow border officials to search laptops, MP3 players, and cellular phones for copyright-infringing content. It would also impose new cooperation requirements upon ISPs, including perfunctory disclosure of customer information, and restrict the use of online privacy tools. The proposal specifies a plan to encourage developing nations to accept the legal regime, as well.

How this would complement or interact with existing legislation governing privacy and copyright is not clear.

Issue 10 - Licensing Issues - current problems

While the Internet has resulted in the creation of new online businesses and ventures, the music industry has not successfully converted these new opportunities into additional licensing revenue. This is illustrated by the following example (which is based very loosely on real examples).

Example

Business A is a night club that plays a range of recorded music to patrons and has music played over telephones when customers are on hold. The venue copies music from CDs to a central hard-drive. The business has the following licences:

· a licence from APRA to cover the copyright in the musical works and the corresponding performance and communication rights;

· a licence from AMCOS to cover the copyright in the musical works and the corresponding reproduction right;

· a licence from PPCA to cover the copyright in the sound recording and the corresponding performance and communication rights.

Under this scenario, owners of the copyright in the musical work (generally publishers and composers) and owners of copyright in the sound recording (generally recording companies) receive income through APRA, AMCOS and PPCA from Business A's use of the music.

The owners of Business A decide to launch a new Internet site which is an "online night club" (Business B) where Internet users can "hang out" and meet online. As Business A is known for its selection of quality music (predominantly Australian), the owners want to play the same songs and play lists that they use in Business A in the background so that the atmosphere of Business A can be recreated online. The owners approach APRA/AMCOS and obtain an experimental blanket licence in respect of the communication and reproduction of the copyright in the musical works. The owners then approach PPCA to get a similar licence for the sound recording. However, they are told that PPCA only administers the performance and broadcast rights, whereas the playing music over the Internet is covered by the communication right. The owners then go to ARIA who inform them that they do not administer blanket licenses for use over the Internet. The owners are told by ARIA to talk to each owner of copyright in the sound recordings regarding an individual licence for every song they intend to use (e.g. every recording company that owns copyright in the sound recording). The owners think this is ridiculous and impossible for their business to administer and give up. Six months later they discover a niche US company offering blanket copyright licences in both musical works and sound recordings for up and coming US dance groups. The owners set up Business B using the new US play lists which prove successful. The owners then incorporate many of these songs into Business A.

Under this scenario, owners of the copyright in the musical work (generally publishers and composers) and owners of copyright in the sound recording (generally recording companies) could have received income through APRA and AMCOS. However, due to the difficulty in obtaining an online blanket licence in respect of the sound recording, the whole venture is either cancelled or alternative music is sourced from elsewhere. The reduction of use of local music has a flow on effect to the other business conducted by the owners (ie Business A) and ultimately the patrons and consumers (who decide that the new dance music is much cooler). The loss to Australian publishers, composers and recording companies in this one example could potentially be in the many tens or hundreds of thousands of dollars per year. The potential flow on loss could potentially be much more.

From a commercial perspective, given that we are in 2008, isn't it ludicrous that recording companies cannot provide basic licensing infrastructure to prospective licensees who want to licence their music? Can the recording companies justify the complaints they have made in relation to illegal downloads affecting their profits when they can't provide basic licensing infrastructure?

Issue 11: Licensing Issues - possible solutions

One solution to the current problem of illegal file sharing that has been discussed by a number of commentators is a scheme analogous to regimes administered by APRA and PPCA for the collection of revenue from public performance and\or broadcast of copyright material. The scheme could be administered through the collection of a fee from ISPs' customers (probably collected by the ISP) in exchange for being able to download musical content for non-commercial purposes. The collecting society could then divide the amounts to be paid to the copyright holders according to its distribution model. While there are a number of difficulties with such a scheme, it would have the following advantages:

· it would create a new revenue stream for copyright owners of sound recordings and musical works;

· it would convert infringing use into revenue creating licensed use;

· the focus of the law could be shifted from user based infringement to commercial infringement;

· p2p and other distribution technologies would be encouraged and the music industry would benefit from such technology;

· the technology could be used freely by various arts industries to aide in increased awareness and interest in the arts;

· even a small fee of $5 per month per each subscriber would raise potentially billions of dollars of revenue for copyright holders (assuming its applied on a worldwide basis);

· copyright holders would be able to make money from works even if the works are no longer released/published. Equally, copyright users would able to access and pay for works which were previously not considered worth commercially exploiting by the record companies;

· artists would no longer depend on being signed by a recording company to achieve distribution and access to the market.

Consequently, such a scheme would seem to have positive aspects for all parties. However, such a scheme has been met by a certain amount of criticism, which can be summarised as follows:

· it would probably have to be administered jointly with other forms of content providers (e.g. film, media and software);

· it would have all the normal problems associated with the current collection schemes:

· precise determination of subsidies for particular copyright holders would be difficult;

· large amounts of revenue and time would be spent on the assessment and the collection of revenues;

· it would need to be implemented on a worldwide basis in order to be most effective;

· the Internet industry would probably be against such a scheme as they would view it as a tax or levy on ISPs.

As referred to above, precise determination of revenue would be difficult, particularly in the introductory period. However, if copyright owners were incentivised to work with technology companies to create content tracking and modelling mechanisms, technology could potentially deal with many of these issues. Even if large amounts of money were spent on administration, the important point is that revenue will be generated for copyright holders, as opposed to being lost in the current system. Additionally, ISPs will not be faced with authorisation liability and the associated compliance costs. Most importantly, the music industry would be working with and benefiting from digital technology rather than working against it.

[1] Discussed in more detail below at Issue 7

[2] Discussed in more detail below at Issue 3

[3] United States v Paramount Pictures, 334 US 131, 158 (1948)

[4] A possible solution is set out at Issue 11.

[5] Discussed in more detail at Issues 4 - 6

[6] This list is taken from sections 40(2) and 103C(20 of the Copyright Act 1968 which only apply where the dealing is for the purpose of research or study. However, case law suggests that these considerations or similar will be considered where a dealing for the other specified purposes is involved.

[7] See Australian Government Issues Paper - Fair use and other copyright exceptions (May 2005) at www.ag.gov.au

[8] A group representing companies including Google Inc., Microsoft Inc., Oracle Corporation, Sun Microsystems, Yahoo and other high tech companies.

[9] Cooper v Universal Music Australia Pty [2006] FCAFC 187

[10] Article II of the Creative Commons Articles of Organisation.

[11] http://www.cafc.uscourts.gov/opinions/08-1001.pdf

[12] A discussion paper is available at http://www.dfat.gov.au/trade/acta/discussion-paper.html.

[13] See http://www.iia.net.au/index.php?option=com_content&task=view&id=658&Itemid=32

[14] For example see http://en.wikipedia.org/wiki/Anti-Counterfeiting_Trade_Agreement and http://www.smh.com.au/news/perspectives/digital-copyright-its-all-wrong/2008/06/09/1212863545123.html

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D. FREEDOM OF EXPRESSION

Freedom of expression is purportedly guaranteed by various UN declarations and conventions to which Australia is a signatory.

However, unlike in the USA for instance, there is no domestic constitutional guarantee of freedom of expression in Australia and consequently Australians seem more constrained by laws of defamation than US citizens. However, there was a ruling by the High Court some years ago that gave a sort of guarantee of freedom of political expression as an implied intention of the Australian Constitution.

In music, issues of freedom of expression arise around lyrics/texts or related images rather than the music itself. (This is not the case in some other countries.) Limitations on such freedom are in theory the same as for the general population, although artistic expression tends to be a little less constrained. For instance, it is possible to mount a defence that the intention is satirical. Satire has a place in artistic work but less plausibly in ordinary discourse.

The recent controversy around the Bill Henson photographs, which saw art works removed from galleries by police or gallery managers, appeared to be based on a view of ‘community standards' as they apply to perceived sexual content and the protection of minors, rather than defamation. The writer has been approached by the press to comment on moves to strengthen constraints on the times at which music videos and recordings claimed to be unsuitable for children can be broadcast. Here again, presumably, the material of concern to the protagonists is textual or is about the visual presentation rather than the music per se. Such a constraint would require censorship classification of such content.

Music censorship in Australia. There is indeed a ‘self-regulatory' music industry panel, created on the instigation of the previous government, charged with classifying audio-recordings according to the content of the texts. The classification has to be shown on the packaging when offered for sale. The classification process, the Recorded Music Labelling Code of Practice, is administered by ARIA and AMRA (Australian Music Retailers' Association).

Recordings are either not classified (i.e. contain no contentious material according to the classification criteria), or are classified at one of three levels of increasing ‘coarse language and/or themes', with the third level not to be sold to people under 18 years of age.

Those are classifications intended to advise the public but not to prevent sales (and therefore freedom of expression). There is a further level of outright censorship, described thus:

Exceeding Level 3 - Not To Be Sold

These recordings are not permitted to be released and/or distributed by ARIA members or sold by AMRA members:

Product containing lyrics which promote, incite or instruct or exploitatively ("exploitative" means appearing to purposefully debase or abuse for the enjoyment of listeners, and lacking moral, artistic or other values) or gratuitously ("gratuitous" means material which is unwarranted or uncalled for, and included without the justification of artistic merit) depict drug abuse; cruelty; suicide; criminal or sexual violence; child abuse; incest; bestiality; or any other revolting or abhorrent activity in a way that causes outrage or extreme disgust to most adults.

For more information, go to www.aria.com.au>> CLASSIFICATION

The classification of music videos and other audio-visual productions is in the hands of the Office of Film & Literature Classification which administers the National Classification Scheme.

Freedom of expression can be limited not only by direct government intervention by also by sanctions or the threat of sanctions (‘chilling effect' > self-censorship). Whereas the structure of the Australia Council prevents the responsible government minister from requiring or denying funding to a particular artist or project, all the other arts funding bodies, federal and state, can be directly instructed by the minister. Often, the Minister takes a hands-off role; however, as the people's elected representative, he is entitled to make decisions that may or may not accord with the recommendations of the advisory body. We have reason to be uncomfortable if this power is use to block projects that take an opposing political view to his own, or that have the possibility to be controversial, or are simply not to his taste. An atmosphere grows around this: offend the Minister, lose your funding. It is interesting that artists seem happy to lay into the Australia Council but one almost never hears criticism of the state arts ministries.

The guarantee against censorship afforded by the Australia Council structure is taken as a major reason for its retention by some industry organisations such as the ArtsPeak coalition.

There are also occasional instances of what amounts to private inhibitions on freedom of expression, perhaps seen more in the USA than here. Corporate interest in sponsoring an arts activity can disappear if the work becomes publicly contentious, and sometimes such contention is fostered by interest groups. Of course, the notoriety may be good for sales and decisions can be made based on commercial assessment rather than principled judgements about freedom of expression or other moral issues.

The Australian arts organisation most strongly active against censorship at the moment is probably that National Association for Visual Arts. Check the NEWS DESK at its website, www.nava.net.au

Lawyer Julian Burnside gave a relevant paper to the MCA Annual Assembly in 2004. You can read it at www.mca.org.au >> MUSIC IN AUSTRALIA>> MCA ANNUAL ADDRESSES>> Annual Address 2004.

For a global view of the application of censorship to music, go to the website of the Copenhagen-based Freemuse at www.freemuse.org

The author has written at greater length on this issue in a study for the International Music Council and UNESCO. Go to www.unesco/imc>> Programmes>> Commissioned Research>> Study on Musical Diversity. Go to Part 1.

Issues

Sedition. The inclusion of sedition as an offence under the anti-terrorism laws caused considerable concern in the arts sector and a sustained advocacy effort led by the National Association for Visual Arts. Australian governments seem perfectly willing to manufacture alarm from which they can then rescue us with legislation that restricts the civil liberties supposedly of the "enemy" but actually of everyone. Does the music sector have a position on this matter?

Community standards and child protection. The Bill Henson affair raised some legitimate issues. The antagonists to his work believe that artistic merit was irrelevant to the fact that young teenagers had been photographed nude and the photographs put on public display, and that even if they and their parents agreed to this at the time, they were not yet of an age where they could safely be given the right to make such a decision. Henson's defenders stated that there was nothing "pornographic" in intent or outcome and that although in principle, there might be an issue worth considering, the remedies proposed by the antagonists were basically insupportable. NAVA, having organised Henson's defence but also some public debate, is now putting together a code of practice to be applied to artists' work with children.

At the aforesaid public debate, Clive Hamilton, a man normally associated with a small ‘l' liberal viewpoint, observed that the arts could not simply claim exemption from any form of "censorship" or constraint. There always had been censorship.

The question is how the limits are defined. Although the Henson affair seemed to be handled about as badly as possible by the police, there is a genuine issue which can be more or less resolved through dialogue and consequently, limits (blurrily) defined. The music sector might find itself obliged to engage with the issue if there were a challenge to the increasing use of children in a sexual context in popular music and music videos.

Without intending at all to be critical of the administration by ARIA and AMA of the Recorded Music Labelling Code of Practice, there is no discussion known to the writer about its principles or decisions. Perhaps there is a need for more transparency.

Statutory independence and government censorship. It was noted that some regard one of the Australia Council's great virtues as the independence of its funding decisions from government dictate. The downside is that, at least in the perceptions of some, governments do not like such independence and consequently, lacking the prerogative to make the funding decisions, decline to provide funding. It is pointed out that over quite a long period, arts funding through state arts ministries where decisions ultimately are in the Ministers' hands, increased while Commonwealth funding through the Australia Council lagged. On the other hand, there are plenty of instances where Ministers with the prerogative to do so (including Commonwealth Ministers) have made appalling interventions, refusing funding to arts projects that present an opposing political viewpoint, or offering funding to projects that fit their personal enthusiasms, or serve their political interests, or buy votes...

It is a long time since the music sector discussed this issue. Statutory independence is the most principled position but it is possibly argued at a financial cost. Do we support it?

Constitutional guarantees. At some point, there could well be a proposal for a bill of rights in Australia and such a bill would almost certainly include a guarantee of freedom of expression. It is an issue on which the music sector should have a position.

[1] The Cultural Ministers' Council is a regular meeting of arts ministers from Commonwealth, states, territories (and New Zealand?). Discussions can lead to joint actions or endorsements but the funds available to the CMC per se are minimal so generally implementation depends upon actions by individual governments. The CMC has its own Statistics Working Group separate from the ABS, but with a very tiny budget.