Executive Summary

Australian radio broadcasters operate under self-regulatory codes of practice that include minimum quotas for Australian music.

These quotas are vigorously defended by the music community as being critical to the preservation of a local musical culture and industry, and it is regularly argued that the minimum amount of Australian music to be played by broadcasters should be increased.

The benefits of airplay may appear to be obvious. The payola scandals in the USA, past and present, demonstrate a strong belief on the part of the record companies that airplay brings sales. However, it would contribute usefully to the debate over this policy if evidence were established to support the fundamental presumptions about the role of local content regulation in developing and maintaining an Australian musical practice.

In particular, this research has particularly sought to establish evidence of the effect of the local content requirements as mapped against the changes in those requirements. It is presumed that collection of such evidence will assist in assessing their ongoing utility and suggest potential future amendments. The report follows...

Assessing the impact of Australian music requirements for radio

Paul Mason
Paper prepared for the Music Council of Australia
This research was supported with funding from the Music Board of the Australia Council.
October 2003

Australian radio broadcasters operate under self-regulatory codes of practice that include minimum quotas for Australian music.

These quotas are vigorously defended by the music community as being critical to the preservation of a local musical culture and industry, and it is regularly argued that the minimum amount of Australian music to be played by broadcasters should be increased.

The benefits of airplay may appear to be obvious. The payola scandals in the USA, past and present, demonstrate a strong belief on the part of the record companies that airplay brings sales. However, it would contribute usefully to the debate over this policy if evidence were established to support the fundamental presumptions about the role of local content regulation in developing and maintaining an Australian musical practice.

In particular, this research has particularly sought to establish evidence of the effect of the local content requirements as mapped against the changes in those requirements. It is presumed that collection of such evidence will assist in assessing their ongoing utility and suggest potential future amendments.

Background

As a starting point in attempting to identify the impact of local content requirements, changes in these requirements for commercial broadcasters have been compared to available information about the level of production of local music and figures for the sale of locally produced music.

This is based on existing evidence which has primarily focused on the commercial recording and commercial broadcasting sectors.

The Australian environment

The first Australian local content standard was introduced as part of the 1942 Broadcasting Act. This stipulated that not less than of 2.5% of music time be devoted to the work of Australian composers. In 1956 it was raised to 5%. In 1973 the Australian Broadcasting Control Board introduced an auxiliary quota for Australian-performed music; this was initially set at 10% and was increased to 20% in 1976. In 1987 the Tribunal conducted a review of the standard, as a result of which amendments were introduced changing the compliance period from 24 hours a day to between 6am and midnight. The 20% level, along with the 1987 amendments, remained the standard until 1992 when the new Broadcasting Services Act made local content quotas part of a self regulatory code for commercial and community broadcasters.

Commercial broadcasters are now covered by a reasonably complex code which nominates a sliding scale of minimum Australian content percentages based on the predominant format of stations. At the top of this scale is contemporary popular music which is set at 25%, scaling down to jazz at 5%. Compliance with the code is monitored by the Australian Music Performance Committee (AMPCOM), comprised of representatives of the music and commercial broadcasting industries. In 1999 the code was amended to include quotas in certain categories for recordings of Australian performers released in the previous twelve months. Importantly, maintenance of the code is specifically tied to continuing production levels of suitable material for the formats by the record industry.

The fundamental premise for the current Code is articulated in the Broadcasting Services Act of 1992 as being to

[promote] the role of broadcasting services in developing and reflecting a sense of Australian identity, character and cultural diversity, by prescribing minimum content levels of Australian music

Fig 1 : Current Commercial Radio Code of Practice for Australian Music

The effect of the first quota

In his analysis of the consequences of the initial 1942 quota of 2.5% Australian composition, Mick Counihan identifies evidence that suggests it had the effect of stimulating the production of local music, specifically citing

• Columbia, the largest record company at the time significantly increased its production of local titles post 1942 from an average of 20 per year between 1927 and 1941, to 80 in 1942; 85 in 1943; dropping to 55 and 66 in 1944 and 1945 (arguably due to restrictions on raw materials due to the war); and recovering to 97 in 1946.

• Publishers’ claims that the quota measurably increased the percentage of Australian titles they handled [1]

The notion that the broadcast of local content stimulates local production is culturally significant as it suggests the possibility that the opportunity to hear local music on the radio inspires increased activity amongst the musical community. Although other factors such as changes in music education, an increase in performance opportunities, and greater access to recording facilities may also have an effect, it is reasonable to conclude that local content requirements for radio airplay play a key role in developing local music production. By the late 1940s, commercial radio representatives were arguing that the majority of stations were exceeding the minimum requirement, claiming levels of up to 5%. It is interesting to observe that on this basis, it was suggested that the Code was no longer necessary.

The broadcasters' successful compliance with the code, paralleling the increase in production, also suggests an interdependent relationship between airplay and practice. From the production point of view an increase in airplay would appear to stimulate musical activity and presumably also an increased confidence in investment in local artists, based on the presumption of an increased opportunity for sales. Conversely an increase in the amount of music available clearly improves the broadcasters' capacity to meet and indeed exceed the minimum requirement. It should be acknowledged however that the latter outcome is dependent on the production of music that is deemed suitable for airplay by the broadcasters, a critical caveat which is now specifically identified in the contemporary commercial radio code of practice.

Counihan also points out that the very establishment of a quota was also significant in that it introduced the notion that broadcasters were accountable to interests beyond those of sponsors and censors.

Importantly, rather than abolishing the code once the initial target had been met, through an ongoing process of assessment and debate, the regulations regarding the broadcast of local music continued to evolve and the minimum amounts increase.

This would suggest that simply meeting a nominate target may not always be enough.

Even when airplay can be seen to contribute to a specific effect such as the stimulation of production or sales of local artists CDs, it would appear necessary to constantly monitor those effects and assess their success.

Quantity vs Quality

Prior to the shift to a self-regulatory environment in 1992, Ed Jonker conducted research for the Australian Broadcasting Tribunal to determine how effectively the practice of Australian music being played on radio met the social and cultural objectives of the then standard.

In doing so Jonker compared the percentage of Australian releases that had received airplay, to their share of the market, as determined by the number of releases which had sold sufficient quantities to appear on the Top 100 charts.

The research showed that in 1989 and 1990

37% of Australian releases had received commercial radio airplay

26% of Australian releases had "charted"

all of the releases which had charted had received either radio or tv airplay, [2]

This would suggest that although a higher proportion of Australian releases had received airplay than had charted, airplay and sales were still fundamentally linked, given that no releases had charted without airplay support.

Jonker also analysed the relative success of the independent recording sector, which he asserted was largely responsible for the production of new and specialist local content. Here he found that while it was over-represented in the production of local music it was correspondingly under-represented in terms of commercial airplay and market share.

The under-representation on radio broadcast of the types of music recorded by the independents was cited as potentially being "a severe impediment to the development of an Australian music culture". Echoing the proposition that radio airplay has an effect on production, the implication of this argument is that the lack of commercial radio support for new and diverse local products has the potential to effect a change in local musical practice, encouraging the production of music that is determined to be more "radio friendly".

In the light of this it was further argued that despite the fact that the majority of stations were at the time fulfilling the local content requirements, it did not necessarily follow that the social and cultural objectives of the standard were being realised.

Recent changes and effects

Jonkers' research supported a proposition raised at the 1987 Australian Broadcasting Tribunal investigation, that the local content quotas should be amended to incorporate incentives for playing new Australian material. While unsuccessful at that time, the commercial code was eventually amended in 2000 to incorporate such a requirement

Analysis of the figures for the production and consumption of Australian music throughout the 1990s suggest that this amendment to the code had the effect of stimulating both the production and consumption of local products.

Broadcasters' compliance throughout the period, as monitored by the AMPCOM, was reported as high, with only a small number of stations failing to meet the minimum levels and the average amount of Australian music played by stations in all categories regularly exceeded the requirement.

Despite this, based on figures detailed in the AMPCOM reports, between 1994 and 1999 the production of Australian music, averaged 10.73% of the total of recorded music released in Australia including international product.

Of particular interest is the change in these figures between 1999 to 2000, leaping from 9.85% to 15.5%, the greatest 12-month change over the whole period. The low of 9.85% would appear to follow the introduction of Parallel Importing legislation, which was presumed to compromise the viability and integrity of investment in local music product. Conversely the subsequent increase coincides with the introduction of amendments to the code of practice for commercial radio to include quotas for new music. This would suggest that the increased radio airplay opportunities for new music created by amendments to local content regulations were a valuable tool in stimulating the production of local music.

Supporting the assumption that airplay is a driver of sales, figures for the sale of locally produced recorded music in Australia show a parallel increase in this period. The International Federation of the Phonographic Industry (IFPI) reports show that the sale of "national products" - local artists' recordings compared to those of non-Australian artists, and expressed as a percentage of the total CD sales in Australia over the period - rose from 12% in 1995 to 28% in 2000. This increase in market share had it's highest jump in the 1999 – 2000 period, mirroring the similar trend in local production, that may be seen to follow the amendment to the codes to encourage the airplay of "new music".

Fig 3: Sales and production of national products 97 - 00

International comparisons

A similar trend to that identified in Australia can be observed in France following the amendment of their local content codes for radio, encouraging the broadcast of new music. In 1996, the local content requirement for French commercial radio was set at 40%, half of which must be released in the preceding six months, and be by artists who had sold no more than 100,000 CDs.

These codes were amended in 2001 in a way which would appear to successfully accommodate both radio practice and the desired stimulatory effect for new artists.

Depending on format, stations can now choose one of the following options

• 40% local content of which 50% is new material
• 50% local content of which 15% is new material
• 30% local content of which 75% is new material

Certainly there is strong evidence to indicate the effect the introduction of local content regulation has had. Figures published by the International Federation of the Phonographic Industry show that sales of national products in France grew from 40% in 1992 to 53% in 1999.

Worth noting is the significant effect the codes have had on sales of releases by new artists.

In his paper "The National Product in Music and Film in times of Globalisation"[3] Hanness Gmelin quotes research published by the French record industry association, the Syndicat National de l'Edition Phonographique (SNEP) which indicates that the percentage share of new artists in total sales grew from 3.9% in 1996 to 21.2% by 1999.

As Gmelin notes "it is clear that new artists in France can enter the market much easier now as a result of this regulation".

Fig 4 : Sales of national products – France and New Zealand 1996 - 2001

By comparison with the evidence suggesting the impact of the introduction of local content regulation in France, analysis of the New Zealand experience provides an interesting illustration of the effect of de-regulation. New Zealand has operated in a de-regulated broadcasting environment with no local content requirements for commercial broadcasters since 1988.

Recent figures collected by the NZ Government indicate that the percentage of local music broadcast by commercial radio sat between 6.01% in 1997 and 10.75 % in 2001[4].

Correspondingly, as illustrated in Figure 1 above sales of national products in New Zealand sit well below 10% between 1996 and 2001. This is significantly lower than the international average which IFPI statistics show rose from 60% at the start of the 1990s to almost 70% by the end of that decade.

In analyzing these international averages it is important to note Gmelin's observation that these figures are distorted by the unusually high sales of national products achieved in Japan and the U.S.A. which sit at 80% and 90% of their market respectively. Gmelin calculates these countries out of the total and derives an average for the rest of the world that sits perhaps more realistically at around 40%.

Even with Gmelin's recalculation it is clear that the de-regulated New Zealand environment delivers unusually low success for national products.

Australian trends

As detailed previously the current Code of Practice for Australian commercial radio sets various minimum local content requirements that are dependent on the format of the radio station, ranging from 25% for commercial pop stations down to 5% for jazz stations.

In the annual reports published by the AMPCOM, the committee which monitors compliance with the codes, figures are provided for the production of local music divided by genre, with the sum of each genre represented as a percentage of the total number of releases in Australia for that year.

This presumably provides evidence for determining the appropriate level of the codes, given their specification that:

The quotas adopted by the industry depend on the availability of Australian music to suit station formats. The commercial radio industry will continue to encourage the increased production by the record industry of Australian music relevant to stations formats and the preferences of the Australian listening public.

Fig 5 : Production of Australian Music by genre, 1999 / 2000

Certainly these figures are consistent with the cascading airplay requirements outlined in the commercial radio codes of practice where the highest local content requirement is for contemporary popular music.

Perhaps more importantly, it should also be noted that Rock/pop/dance is the only category that directly relates to the programming categories employed in the commercial code of practice – Category A (Mainstream rock, album oriented rock, contemporary hits, Top 40 and Alternative.

Reference is made to both Country and Jazz in the Codes, but these are bundled with other unrelated format classifications in Category B (Hot/Mainstream Adult Contemporary, Country, Classic Rock) and Category E (nostalgia, jazz, NAC).

Certainly the most recently available AMPCOM report (2000) records no stations as having a format that is exclusively jazz or country. It could be fairly assumed then that there is largely no commercial radio airplay for contemporary Australian music that is not rock or popular music.

It is also worth noting that Classical and Country music, which are the two categories with the highest level of production other than Rock / Pop / Dance, both receive high levels of airplay support from national and community radio.

Similar genre based figures are published by the Australian Record Industry Association (ARIA) identifying the market share of individual genres – with the sum of each genre represented as a percentage of the total sales in Australia for that year.

>Fig 6 : Consumption of Australian Music by genre 1999 / 2000

Interestingly, shifts in the levels of production are not reflected in the figures for consumption. For example, while the production of Country, Religious, Ethnic and RnB all increased over the period, their sales figures remained static. This would suggest that simply increasing the production of a particular type of music may have little effect in developing markets and audiences.

Indeed while local popular music would appear to be assisted by airplay to sustain a market share that is greater than their level of production, the opposite would appear to be the case for other types of music, which are not as well supported by radio exposure beyond community and national broadcasters.

On this basis it may be that the current local content requirements are functioning to maintain the predominance of commercial pop and rock music in the production, consumption and radio exposure for local music. This may then have the effect of establishing an environment that is unresponsive to potential shifts in the musical practice and interests in the community, which in turn may compromise their efficacy in "developing and reflecting a sense of Australian identity, character and cultural diversity" that is at the foundation of Australian local content requirements.

Role of non commercial radio sectors

As noted above, this research has focused on the available evidence for production, airplay and consumption of local music, which mainly derives from the activities of the commercial recording and broadcasting industries.

While commercial broadcasters can be seen to primarily focus on commercial pop and rock music, a wider range of music is generally broadcast by community and national broadcasters.

A more detailed paper on the music broadcast on community radio and the cultural significance of that sector was presented by this writer at the 2001 Australian Broadcasting Authority conference. It may be that further research outlining the role of community and national radio in developing musical and cultural diversity and national identity may be warranted.

Any policy strategies that attempt to address the issue of how best to facilitate greater musical diversity must assess the impact of all radio sectors.

Conclusion

Certainly it can be established that radio airplay has a clear effect on the production and consumption of music and as such, requirements for the broadcast of local music can be used as an efficient means of stimulating and maintaining local musical practice.

However, it would appear that simply meeting an agreed target may not always be enough.

As such, use of local content requirements as a means of supporting local musical practice, would only appear to be effective if they are regularly monitored for compliance and effect, and if the ability to amend the requirements relative to changes in broadcasting and musical practice is maintained.

It may be that future discussions around the role of local content requirements should not focus on the simply on the quantity of local music broadcast, but rather seek to identify areas of local music practice that may require more support and determine how this can be meaningfully achieved through greater airplay.

[1] "Giving A Chance to A Youthful Muse: Radio, Records and the first Australian Music Quota", Mick Counihan. Media Information Australia, May 1992.
[2] "Contemporary Music and Commercial Radio" Ed Jonker. Media Information Australia, May 1992
[3] "The National Product in Music and Film in Times of Globalisation : A Comparative Study", Hannes Gmelin, University of Hamburg. Paper prepared for The Global Alliance for Cultural Diversity, Division of Arts and Cultural Enterprise, UNESCO, Paris. January 2003.
[4] http://www.executive.govt.nz/minister/hobbs/music/background_2.htm