In brief

  • The maximum licence fees to be paid for using music in fitness classes is still unresolved.
  • The issue has been referred back to the Copyright Tribunal of Australia for redetermination.
  • Fitness Australia successfully argued in the Federal Court that the earlier tribunal hearing was procedurally unfair because it took into account survey material that was not considered to be relied on in evidence.

For several years the Phonographic Performance Company of Australia (PPCA) has been fighting to increase licensing fees for the use of music in fitness classes.

The PPCA represents the interests of owners of copyright in sound recordings. It is a central licensing body that manages the process by which owners of copyright can receive royalties in relation to sound recordings. Members of the PPCA include major record company groups such as Sony Music, EMI, Universal and Warner.

In December 2006, the PPCA referred to the Copyright Tribunal of Australia a licence scheme which deals with music played in exercise classes. Licence schemes set out the classes of cases in which a licensor is willing to grant licences and the amount to be charged for those licences. Fitness Australia Ltd, the body which represents the interests of the fitness industry, was joined as a party.

The question for the tribunal was how much the fitness industry should have to pay the owners of copyright in sound recordings for the right to play those recordings during exercise classes. The tribunal’s role was to confirm or vary the proposed regime and to make whatever order the tribunal considered reasonable in the circumstances. The tribunal received evidence from 25 witnesses including five economic experts called by PPCA and three economic experts called by Fitness Australia.

On 17 May 2010, the tribunal increased the maximum licence fee from 94.6 cents per fitness class capped at $2654 per annum, to $15 per class or $1 per person.

Fitness Australia sought judicial review of the tribunal’s decision in the Federal Court of Australia, arguing that there had been a breach of the rules of natural justice in connection with the making of the tribunal’s decision. The appeal turned on whether Fitness Australia had been given an adequate chance to respond to all the evidence considered by the tribunal in determining the new rate.

On 13 December 2010, the Federal Court handed down its reasons for judgment, holding that the hearing had been procedurally unfair to Fitness Australia because it took into account a pilot survey that was not presented as being in evidence. The Federal Court has sent the case back to the tribunal for redetermination. Therefore, the question of how much the fitness industry must pay to use sound recordings is yet to be resolved.

The PPCA was ordered to pay the parties’ costs in the Federal Court.