CATCHWORD Copyright ‑ proposed licence scheme licensing the ABC to use music in APRA repertoire ‑ whether scheme should be confirmed, confirmed with variations or not confirmed ‑ nature of Tribunal's jurisdiction ‑ suggested methods of arriving at licence fee - cents per head of population ‑ annual lump sums ‑ percentage of revenue or expenditure ‑ relevance of past dealings between parties ‑ reference to earlier arbitration and Tribunal decisions in Australia and overseas ‑ significance of music in ABC programming ‑ selection of percentage of expenditure as indication of value of licence ‑ determination of base figures on which percentage to be charged. Copyright Act 1968, s 154 and also ss 31, 136, 148 to 152 and 157. Trades practices (restrictive) ‑ implementation of.1icence scheme: said to involve substantial lessening of competition and to restrict entry of other persons into market ‑ discussion of evidence. Trade Practices Act 1974, ss 45 and 46 REFERENCE BY AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED RE AUSTRALIAN BROADCASTING CORPORATION COPYRIGHT TRIBUNAL No. 2 of 1981 Coram: Sheppard J. President and Mr. Allan Horton, Member Date: 6 December 1985 Place: Sydney COMMONWEALTH OF AUSTRALIA COPYRIGHT ACT 1968 IN THE COPYRIGHT TRIBUNAL No. 2 of 19 81 REFERENCE BY AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED RE AUSTRALIAN BROADCASTING CORPORATION Sheppard J. President and Mr. Allan Horton, Member 6 December 1985 REASONS FOR DECISION ARRANGEMENT Introduction...................................................................................................................................................... 2 The Course of the Proceedings..................................................................................................................... 2 The Legislation................................................................................................................................................. 3 The Licence Scheme........................................................................................................................................ 6 The Parties and their Negotiations and Agreements down to the Formulation of the 1981 Licence Scheme................................................................................................................................ 7 APRA................................................................................................................................................................. 7 The Australian Broadcasting Corporation................................................................................................... 9 The History of Negotiations and Agreements between APRA and the ABC..................................... 13 The Case for APRA....................................................................................................................................... 17 The Case for the ABC................................................................................................................................... 20 Questions of Law........................................................................................................................................... 22 The Tribunal's Jurisdiction.......................................................................................................................... 22 Relevance of Provisions of s 152 of the Copyright Act 1968.................................................................. 25 The Lawfulness of a Licence Fee Assessed as a Percentage of Expenditure...................................... 28 The Analogy of Damages for Infringement of Copyright as a Guide to Reasonable Remuneration............................................................................................................................ 29 Submissions of Counsel for ABC based on Trade Practices Act 1974................................................. 30 Earlier Arbitration both in Australia and Overseas concerning the amount to be Paid for Public Performance or Broadcast Rights..................................................................................... 35 The Evidence.................................................................................................................................................. 54 The Extent and Significance of Music in Radio and Television Programmes...................................... 56 The Finances of the ABC............................................................................................................................. 59 Payments by the ABC to APRA.................................................................................................................. 61 Reach and Ratings......................................................................................................................................... 65 Some aspects of the evidence of Mr Freegard and Mr Sturman............................................................ 68 The Quest for a formula which will yield Reasonable Remuneration..................................................... 71 Conclusions.................................................................................................................................................... 80 Summary.......................................................................................................................................................... 86 Introduction In question is a reference brought by Australasian Performing Right Association Limited ("APRA") pursuant to s 154 of the Copyright Act 1968 ("the Act"). The reference relates to a proposed licence scheme for the broadcasting by the Australian Broadcasting Corporation (formerly the Australian Broadcasting Commission) of copyright works owned by APRA. The licence scheme relates to a licence in respect of musical works and, insofar as such works are accompanied by words, to literary and dramatic works. APRA is said to be the owner or prospective owner of the performance rights in those works. In its reference APRA asks the Copyright Tribunal to make such order, confirming or varying the scheme, as the Tribunal considers reasonable in the circumstances. We shall refer to the licence scheme in more detail later on. Before doing so we propose to refer to the course of the proceedings and to the relevant legislation. The Course of the Proceedings The proceedings were commenced on 17 February 1981. That was before the Australian Broadcasting Corporation Act 1983. The Corporation's predecessor, the Australian Broadcasting Commission, was then broadcasting and televising programmes over stations now controlled by the Corporation. Its statutory charter was to be found in Part III of the Broadcasting and Television Act 1942. The Part was entitled, "The National Broadcasting Service and the National Television Service". The reference came before the Tribunal in 1982 and a question was raised as to whether the Australian Broadcasting Commission was the Crown for the purposes of the Act. Lockhart J., sitting as Deputy President of the Tribunal, determined that the Commission was not the Crown; see Ex parte Australasian Performing Right Association Limited; re Australian Broadcasting Commission (1982) 42 A.L.R. 58. Subsequently the Commission requested that a case be stated pursuant to s 161 of the Act so that the decision of the Federal Court of Australia might be sought on the question. The Court agreed with Lockhart J. that the Commission was not the Crown; see Re Australasian Performing Right Association Limited's Reference; Re Australian Broadcasting Commission (1982) 45 A.L.R. 153. The decision of the Court was given on 15 December 1982. Thereafter the matter, so far as the Tribunal was concerned, ceased to be active. Whether this was due to the need for preparation of the parties' cases or for other reasons we do not know; it is not of any consequence to speculate about the cause of the delay that ensued. Eventually the matter was said by the parties to be going ahead. There followed a succession of directions hearings which led to the reference being firmed for hearing on 20 May 1985. The hearing continued until it concluded on 21 June 1985 when the Tribunal reserved its decision. The Legislation Section 154 of the Act is found in Part VI thereof. It opens with s 136 which contains a number of definitions. These include a definition of "licence scheme", which, so far as relevant, is as follows: "'licence scheme' means a scheme ... formulated by a licenser or licensers and setting out the classes of cases in which the licenser or each of the licensers is willing, or the persons on whose behalf the licensor or each of the licensers acts are willing, to grant licences and the charges (if any) subject to payment of which, and the conditions subject to which, licences would be granted in those classes of cases;" "Licence" is defined as follows: "'licence' means a licence granted by or on behalf of the owner or prospective owner of the copyright in a literary, dramatic or musical work, or of the copyright in a sound recording, being: (a) in the case of a literary, dramatic, or musical work - a licence to perform the work or an adaptation of the work in public, to broadcast the work or an adaptation ref the work, to make a sound recording or cinematograph film of the work or of an adaptation of the work for the purpose of broadcasting the work or adaptation or to cause the work or an adaptation of the work to be transmitted to subscribers to a diffusion service; or (b) in the case of a sound recording ‑ a licence to cause the recording to be heard in public or to take a copy of the ,sound recording for the purpose of broadcasting the recording;" Section 154 needs to be read with those definitions in mind. So far as it is material it is as follows: "154 (1) Where a licensor proposes to bring a licence scheme into operation, he may refer the scheme to the Tribunal. (2) The parties to a reference under this section are: (a) the licensor referring the scheme; and (b) such organisations or persons of any) as apply to the Tribunal to be made parties to the reference and, in accordance with the next succeeding sub‑section. are made parties to the reference ……………………. (4) The Tribunal shall consider a scheme referred under this section and, after giving to the parties to the reference an opportunity of presenting their cases, shall make such order, either confirming or varying the scheme, as the Tribunal considers reasonable in the circumstances. (5) An order (other than an interim order) of the Tribunal under this section may, notwithstanding anything contained in the licence scheme to which it relates be made so as to be in force either indefinitely or for such period as the Tribunal thinks fit. (6) Where a licence scheme has been referred to the Tribunal under this section, the licensor may do either or both of the following things: (a) bring the scheme into operation before the Tribunal makes an order in pursuance of the reference; (b) withdraw the reference at any time before the Tribunal makes an order in pursuance of the reference whether the scheme has been brought into operation or not. (7) If the scheme is not brought into operation before an order is made in pursuance of the reference, the scheme as confirmed or varied by the order comes into operation, notwithstanding anything contained in the scheme, forthwith upon the making of the order. (8) After the making of an order in pursuance of the reference, the scheme as confirmed or varied by the order remains in operation, notwithstanding anything in the scheme, so long as the order remains in force." It is to be observed that the Tribunal's power in relation to the reference is to be found in subsec 154(4). It is to make such order, either confirming or varying the scheme, as the Tribunal considers reasonable in the circumstances. It is also to be observed that, pursuant to para. 154(6)(a), the licensor may bring the scheme into operation before the Tribunal makes an order in pursuance of the reference. In para 6 of the reference it was said that the licensor proposed to bring the proposed scheme into operation. That was done by written notification to the Commission on 20 February 1981. It will be necessary to refer to some other provisions of the Act as we proceed, but for the moment we add a reference only to s 31 which provides for the nature of copyright in original works. So far as material ss 31(1) provides that for the purposes of the Act, unless the contrary intention appears. copyright in relation to a work is the exclusive right, inter alia, in the case of a literary, dramatic or musical work, to reproduce the work in a material form, to perform the work in public and to broadcast the work. Sub section (10)(1) defines the expression "broadcast" to mean broadcast by wireless telegraphy. "Broadcasting" has a corresponding meaning. As earlier mentioned the Corporation was established by the Australian Broadcasting Corporation Act 1983. The principal provision) of that Act commenced on 1 July 1983. Section 5 provides that the body corporate that was immediately before the commencing day in existence by virtue of s 30 of the Broadcasting and Television Act 1942 under the name Australian Broadcasting Commission continues in existence by force of the section as a body corporate under and subject to the provisions of the Act under the name Australian Broadcasting Corporation. Reference needs also to be made to the Australian Broadcasting Corporation (Transitional Provisions and Consequential Amendments) Act 1983 the principal provisions of which also commenced on 1 July 1983. Subsection 15(2) of the Act provides that the Corporation may apply moneys in payment, inter alia, of charges, obligations or liabilities that were incurred or undertaken before the commencing day by the Commission or in connection with the performance of its functions or the exercise of its powers and were not paid or discharged before that day. It was no doubt because of the provisions of s 5 of the Corporation's Act and s 15 of the Transitional Provisions Act that the Corporation made no submission that it was not affected by the licence scheme which was referred to the Tribunal in 1981 nor that it was not bound to pay any moneys falling due under the scheme in respect of periods prior to the Corporation coming into existence in 1983 Unless it is necessary to distinguish between the Commission and the Corporation, we shall hereafter refer to them indistinguishably as the ABC. The Licence Scheme The licence scheme is dated l6 February 1981. It was amended in April 1981 and again at the commencement of the hearing. It commences with the statement that APRA is willing to grant a licence to the ABC in the form of a licence thereinafter set forth, subject to the payment of the charges specified therein, and subject to the terms and conditions contained therein. There then follows the licence. It is important that its terms be understood comprehensively. Rather than set out extensive quotations from it, we have appended the licence as attachment A to this decision. The licence is there set out in its finally amended form. The essence of what APRA seeks to achieve is to be found in Clause 1 of the Schedule. The claim is for 2 per cent of the ABC's gross operational expenditure incurred in the provision of radio broadcasting services, including the domestic service and the overseas service, less total direct expenditure incurred by the Commission in the broadcasting of proceedings of Parliament and 1.5 per cent of the Commission's gross operational expenditure incurred in the provision of television broadcasting services, less total direct expenditure of the Commission on the purchase, hiring or production of television programmes, provided that the total amount so deducted shall re no morn than 44 per cent of the ABC's gross operational expenditure in the provision of television broadcasting services during the relevant year The amount incurred by the ABC in the broadcasting of Parliamentary proceedings is not substantial. Thus the amount sought in respect of radio broadcasting is effectively 2 per cent of the gross operational expenditure incurred in the provision of such broadcasting. In the course of his opening counsel for APRA said that it was not intended to include as part of the cross operational expenditure the cost of maintaining the various symphony orchestras which there are in the capital cities of the States, nor the cost of promoting and conducting concerts put on by these orchestras. Later in the hearing counsel for APRA said that it would be prepared further to vary the scheme by replacing the provision, applicable to the gross operating expenditure in the provision of television broadcasting services, which reduced the amount of the expenditure by the amount of the cost of television programmes, with a provision which permitted the deduction of 40 per cent of the operational cost incurred in the provision of television services irrespective of the cost of television programmes. In consequence the licence fee sought in respect of television broadcasts is effectively 0.9 per cent rather than 1.5 per cent of gross operating expenditure incurred in providing television services. The Parties and their Negotiations and Agreements down to the Formulation of the 1981 Licence Scheme APRA APRA is a performing right society. There are performing right societies in most countries in the world. Often there is only one such society in each country. That is the case in Australia and also in New Zealand where APRA also owns the public performance and broadcast rights in music. The members of APRA are, for the most part, copyright owners, usually of music, and are either composers or music publishers. The members make an assignment to APRA of the public performance, broadcasting and diffusion rights, which may be collectively described as the performing rights, in their musical compositions, both past and future, subject to a reservation of "grand rights" to the copyright owner. The assignment made by members is unlimited as to time or place The expression "grand rights" (otherwise "grands droits") generally denotes the rights of publicly performing or broadcasting dramatico - musical works, for example, musical plays (including operas and operettas) in their entirety, excerpts from musical plays when accompanied by dramatic action, music written for ballet, when accompanied by a performance of the ballet, and oratorios or long choral works Grand rights are to be distinguished from small rights ("petits droits"). It is over the small rights which APRA takes the assignments of the public performance rights. Because it is the only collecting society in Australia and because it has, for all practical purposes, complete control over the performance rights of all works performed and broadcast in Australia, using that expression in the sense earlier explained. It has a monopoly in Australia over the broadcasting and performing of musical works. APRA enters into licence agreements with a vast number of bodies and organisations of different kinds. It has licence agreements with each of the television and radio stations in Australia. It has agreements with each of the motion picture companies and companies operating cinemas, with theatres of all kinds, and with most other organisations and operators in the entertainment industry. Arrangements are made in relation to the playing of music in places such as discos and on juke boxes which may be situated in places of amusement or in shops of various kinds. The list is endless. The moneys which it receives from these sources are pooled, but pooled separately in order to differentiate amongst the various sources from which the moneys come. For example, there is a separate pool for commercial radio, another pool for commercial television and another pool again for the ABC. The distribution of the moneys which APRA receives involves a complex operation. Detailed evidence was given of what procedures we're followed and, at the request of counsel for APRA we made an inspection of its Sydney premises where we had explained to us in much detail what exactly transpired. The system is designed, so far as reasonably possible, consistent with the keeping down of collection costs, to ensure that fair payment is received by each copyright owner for the use of his music. The system operates, to a degree, on a statistical sampling process. APRA does not require users to keep a log of the use which is made of music for every week of the year. Weeks are selected and during those weeks each commercial television station, each commercial broadcasting station and a selection of ABC networks provide precise information as to the music used during the selected weeks. This information is passed to APRA and forms the starting point for its assessment of what proportion of a particular pool should be paid to particular copyright owners. As might be expected, much of the music played on radio and television stations in Australia is overseas music, and the performance rights in it are owned by overseas interests. These are usually the collecting societies in other countries. In that event, the payment which is due for the performance of it in Australia goes to the overseas collecting society. Thus much of the money which is collected by APRA in Australia goes overseas, particularly to the United Kingdom and to the United States of America. APRA receives some return from overseas collecting societies, but the amount received is only a fraction of that which it pays to overseas societies. The Australian Broadcasting Corporation We have already referred to the establishment of the Corporation by the Australian Broadcasting Corporation Act 1983 which came into force on 1 July 1983. The Corporation replaced the Commission which had been established on 1 July 1932 (Australian Broadcasting Commission Act 1932). Anew Commission was established in 1942 (the Australian Broadcasting Act 1942 which later became the Broadcasting and Television Act 1942). Section 6 of the Corporation's Act contains its charter. Because of the substantial reliance placed by counsel for the Corporation on the provisions of its charter it is necessary to set out the section in full. It is as follows: "Charter of the Corporation 6(1) The functions of the Corporation are: (a) to provide within Australia innovative and comprehensive broadcasting and television services of a high standard as part of the Australian broadcasting and television system consisting of national, commercial and public sectors and, without limiting the generality of the foregoing, to provide: (i) broadcasting programs and the television programs that contribute to a sense of national identity and inform and entertain and reflect the cultural diversity of, the Australian community; and (ii) broadcasting programs and television programs of an educational nature; (b) to transmit to countries outside Australia broadcasting programs and television programs of news, current affairs. entertainment and cultural enrichment that will: (i) encourage awareness of Australia and an international understanding of Australian attitudes on world affairs; and (ii) enable Australiancitizens living or travelling outside Australia to obtain information about Australian affairs and Australian attitudes on world affairs; and (c) to encourage and promote the musical, dramatic and other performing arts in Australia. (2) In the provision by the Corporation of its broadcasting and television services within Australia. (a) the Corporation shall take account of: (i) the broadcasting and television services provided .by the commercial and public sectors of the Australian broadcasting and television system; (ii) the standards from time to time approved by the Australian Broadcasting Tribunal in respect of broadcasting and television services; (iii) the responsibility of the Corporation as the provider of an independent national broadcasting and television service to provide a balance between broadcasting programs and television programs of wide appeal and specialized broadcasting programs and television programs; (iv) the multicultural character of the Australian community; and (v) in connection with the provision of broadcasting programs and television programs of an educational nature - the responsibilities of the States in relation to education; and (b) the Corporation shall take all such measures, being measures consistent with the obligations of the Corporation under paragraph (a), as, in the opinion of the Board, will be conducive to the full development by the Corporation of suitable broadcasting programs and television programs. (3) The functions of the Corporation under ss (1) and the duties imposed on the Corporation under ss (2) constitute the Charter of the Corporation. (4) Nothing in this section shall be taken to impose on the Corporation a duty that is enforceable by proceedings in a court." The Corporation is constituted as an independent statutory body. It has a board of directors, a chairman and a managing director. The usual provisions are to be found in its Act which one would expect in relation to the incorporation of such a body and the conferring of powers on the body and its board to discharge its various functions. Specific reference should be made to finance which is provided for in Part VI of the Act. Section 67 provides that there are payable to the Corporation such moneys as are appropriated by Parliament for the purposes of the Corporation. The Minister for Finance may give directions as to the amounts in which, and the times at which, moneys referred to in the section are to be paid to the Corporation. By s 68 the moneys of the Corporation shall be applied only in payment or discharge of the expenses, charges, obligations or liabilities incurred or undertaken by the Corporation in or in connection with the performance of its functions or the exercise of its powers, in payment of any remuneration or allowances payable under the Act and in making any other payments that are required by the Act to be made out of the moneys of the Corporation. Section 69 requires the Hoard to prepare estimates, in such form as the Minister directs, of the receipts and expenditure of the Corporation for each financial year and, if the Minister so directs, for any other period specified by the Minister, and the Board shall submit estimates so prepared to the Minister not later than such dates as the Minister directs. Sub section 69(2) provides that the moneys of the Corporation shall not be expended otherwise than in accordance with the estimates of expenditure approved by the Minister. By ss 70(1) the Corporation shall not, without the approval of the Minister, enter into a contract under which the Corporation is to pay or receive an amount exceeding $500.000 or, if a higher amount is prescribed by regulation, that higher amount. Finally, s 70 provides that the Corporation is not subject to taxation under the law of the Commonwealth or of a State or Territory. In evidence is the report of the Corporation for the year ended 30 June 1984. It was the Corporation's first annual report and was the only report available to the Tribunal at the time of the hearing. The report shows that the Corporation operates medium wave (AM) radio stations in all States and Territories of Australia. Many of the programmes are relayed from one station to others. Programmes originate in different studios in different States and Territories from time to time. Sometimes programmes originate in country stations but are usually only broadcast in the area served .by the station from which the broadcast comes. On the other hand, some country stations are relay stations only. Three networks are operated. They are known as Radio 1, Radio 2 and Radio 3. Radio 1 operates for the main part in capital cities and major centres of population providing a good deal of light music, some drama and features, and a large number of spoken word programmes, including much news and news associated programmes, the Parliamentary broadcasts, some religious programmes, a great deal of sporting descriptions and commentaries and some rural, news, information. and talks. Radio 2 also operates in each of the capital cities and most of the major centres of population. It plays a good deal of classical music, as distinct from light music. It has news services, religious services and a number of spoken word programmes of various kinds. It also has most of the drama and features broadcast over the ABC. Radio 3 is a composite of Radio 1 and Radio 2 and is broadcast in country areas. What has been said about the nature of the programmes on these various stations has to be modified somewhat because of a continuing trend, apparent at the time` of the hearing, and presumably still continuing, from music to "talk". This follows a trend which began some time ago in some commercial radio stations. In the case of the ABC, the balance is redressed, to a degree, by the increasing number of frequency modulation (FM) radio services. These usually originate from Sydney or Adelaide and are now broadcast in all capital cities and a great many country centres: The number of FM radio stations available in Australia is increasing. The policy of the ABC appears to be to transfer to the FM stations much of the task of providing music to those who prefer it to talk or mixed talk and music. In accordance with its charter, the Corporation endeavours, as did its predecessor, the Commission, to make available services to the more remote areas of Australia. Sometimes these services are the only radio services available, commercial stations not existing in the areas in question. Until recently the bulk of the cost of the provision and maintenance of such services was borne, not by the ABC, but by Telecom which provides and maintains transmitting and relay equipment throughout Australia for the ABC at Telecom's cost. The only cost which the ABC was required to meet was an annual charge for the provision of land lines. The pre-existing position has now changed to a not insubstantial degree with the introduction of the AUSSAT Satellite which will enable new and improved radio and television services to be provided to the remote parts of Australia. For the year ending 30 June 1986 there will be a charge made to the ABC of approximately $22 million. A corresponding charge will apparently be made in succeeding years. In addition to operating medium wave and FM stations, the ABC also operates some short wave radio stations for inland Australia. Additionally, it operates Radio Australia which is the overseas service of the Corporation. The programmes originate from studios in Melbourne and are transmitted from transmitters at Shepparton and Lyndhurst in Victoria and Carnarvon in Western Australia. The service is extensive and the expenditure incurred on it is substantial. In addition to news, features and talks of various kinds, a good deal of music is also broadcast. The ABC provides television services in all States and Territories of Australia. As in the case of radio, there is substantial relaying of programmes. Services are provided, so far as possible, to remote areas of Australia. Relay and transmitting facilities and associated technical equipment are provided by Telecom. Extensive evidence of programming was given. It was said that the ABC provided programmes which were intended to discharge the obligation imposed on it by its charter. In consequence its programmes were said to be often of a very different kind from those broadcast over commercial radio and television. The History of Negotiations and Agreements between APRA and the ABC We have found it necessary to give an extensive account of the history of the negotiations and agreements between APRA and the ABC because of the substantial reliance placed by counsel for the ABC upon the agreements earlier entered into by the two organizations. In his submission these were the best evidence of what was a fair and reasonable price for the use of APRA music by the ABC. The first licensing agreement made between APRA and the ABC was entered into on 2 July 1934. It was formulated as the result of a Royal Commission which bad been held into broadcasting services generally the previous year. The Royal Commissioner was Owen J. of the Supreme Court of New South Wales. He described APRA in his report as a "super monopoly". The 1934 agreement, which was based in part on his recommendations, provided for the payment of 27,000 pounds per annum and a further sum equivalent to 6 per cent on so much of the gross annual income of the ABC from broadcast listeners' licence fees as exceeded the sum of 250,000 pounds. Licence fees had been imposed prior to the establishment of the ABC; Wireless Telegraphy Act 1905 and regulations made thereunder. For many years after 1934 a proportion of each licence fee was paid to the ABC. The sum of these formed a not inconsiderable part of its income. Licence fees were abolished in 1974 (Broadcasting and Television Act 1974, s 4) but long before their abolition a proportion of each licence fee had ceased to form any part of the ABC's income. From 1948 when the Australian Broadcasting Act 1948 effected certain amendments to the Broadcasting and Television Act, its revenue was composed almost entirely of .Parliamentary appropriations. This has continued to be the case ever since. In 1938 APRA and the ABC submitted the question of what payment should be made by the ABC to APRA for the licence which it conferred to the arbitration of Mr Clive Teece K.C. of the New South Wales Bar. On 16 May 1938 he determined that, for the period from the date of the award, 16 May 1938. to 31 May 1938, there should be paid by the ABC one farthing for every broadcast listener's licence in force in the Commonwealth on 15 May 1938. For the period from 1 June 1938 to 31 December 1938 he determined that the amount should be one halfpenny per month for every broadcast listener's licence in force in the Commonwealth on the fifteenth of each month in respect of which the payment was made (in effect sixpence per year). The .formula evolved by Mr Teece was applied for many years. Notwithstanding that licence fees had ceased to have any relevance to the manner in which the ABC was funded after 1948, the numbers of licences continued thereafter to provide the yardstick for the calculation of the fee paid to APRA. A slight modification to the agreement was made in 1954 when it was agreed that during the five years commencing 1 July 1955, the ABC would pay an additional sum of 2,250 pounds per annum comprising 1,250 pounds on account of the overseas service and 1,000 pounds on account of public concerts. The payments otherwise continued to be assessed upon the basis of pence per broadcast listeners' licence. In November 1956 the Commission began to broadcast television programmes from stations in Sydney and Melbourne. Discussions eventually led to there being made by the ABC a payment of 5,000 pounds for the period of 12 months commencing on 1 July 1958. At that time the ABC still had stations only in Sydney and Melbourne. For music played over radio stations the licence arrangements remained the same, that is, one halfpenny per month or sixpence per year for each licence other than a pensioner's licence for which threepence per year was paid. For the year commencing 1 July 1959 the fee became 3,500 pounds for television from Sydney and Melbourne and 750 pounds for each of the new television stations to be established in Adelaide, Brisbane. Hobart and Perth. The advent of television and the irrelevance of the numbers of broadcast licences apparently precipitated a search for a new formula. As an interim measure the parties agreed to payments of 74,000 pounds and 80,000 pounds respectively for the years commencing 1 July 1960 and 1961. The fee was for the right to use APRA controlled music in domestic and shortwave radio broadcasts, in television services and, for an additional sum of 1,000 pounds, for the use of APRA controlled music in public concerts. The continuing formula decided upon was an amount per head of the Australian population. For the year 1963/1964 it was 1.99 pence per head. For the financial years 1964/1965 and 1965/I966 the amount was increased to 2.1 and 2.2 pence per head respectively. The amounts yielded were approximately 101,004 pounds and 110,000 pounds. It was agreed that from 1 July 1966 the amount to be paid in respect of each financial year would be 2.3 pence per head of population as reported by the Commonwealth Bureau of Census and Statistics on 31 December in each financial year. The amount was to be increased or reduced by reference to a formula which depended on the Consumer Price Index. The new arrangement was formalised in an agreement dated 8 December 1964. This took the parties through to the end of the financial year, 30 June 1967. The formula agreed upon in the 1964 agreement was continued well beyond that date. For the year ending 30 June 1970 the rate per head of population was 2.38 pence (sic) and yielded a gross figure for that year of $245,843.69. In 1971 the Board of APRA decided to endeavour to obtain an increase and contemplated the possibility of a chancre in the formula to a formula similar to that upon which the fee payable by the commercial stations was calculated. The commercial radio stations paid a fee based on 2 per cent of their net advertising revenue. In the case of the commercial television stations the percentage was 1.5 per cent. On 15 ,December 1971 APRA gave the ABC notice that the 1964 agreement would terminate on 30 June 1972. Negotiations for a new agreement began. Letters setting out the various considerations passed between the parties and a number of discussions were held. In the middle of 1972 the parties were diverted by a disagreement which developed about the way in which the formula for increase in the amount payable which depended upon adjustments to the Consumer Price Index, were to be calculated. This led to litigation between them, litigation in which the ABC was ultimately successful; see Australian Broadcasting Commission v. Australasian Performing Right Association (1973) 47 A.L.J.R. 526. In 1975 anew agreement was entered into. It was expressed to operate from 1 July 1974. Notwithstanding the negotiations which had crone on, the old formula was retained. For the near commencing 1 July 1974 the amount of the fee was the amount obtained by multiplying 3.3158 cents by the number of persons comprising the estimated population of Australia as at 31 December 1974 as set out in the report published by the Commonwealth Statistician. In respect of the licence year commencing 1 July 1975 and in respect of each succeeding licence year, the amount was to be ascertained by multiplying the "relevant per capita sum in cents" by the number of persons comprised in the estimated population of Australia as at 31 December of the licence year under determination. The "relevant per capita sum in cents" was to be ascertained by a formula based upon the Consumer Price Index. The agreement is still in existence, subject of course to the licence scheme now propounded by APRA. For the year ended 30 June 1984 the figure by which the population was multiplied was 7.46 cents. It yielded a total sum of $1.252.021. By the agreement APRA authorized the ABC to broadcast all works in APRA's repertoire from all national broadcasting stations, including those carrying Radio Australia programmes and all national television stations and also to perform in public works in APRA's repertoire at paid concerts and free concerts organized or promoted by the ABC anywhere in Australia. As was the case in previous agreements between the parties, grand rights were excluded. The provisions of the licence conferred by the licence scheme now under consideration are similar, except that the licence no longer authorizes the ABC to perform works in public at any concerts. The omission of that provision is a matter of contention between the parties. In 1979 APRA reopened the question of the formula upon which the ABC's licence fee was calculated with the ABC. Negotiations continued in a sporadic fashion until the formulation of the licence scheme which is the subject of this reference. If the APRA scheme were implemented without alteration it would yield a figure in excess of $3,300.000 for the year ended 30 June 1984. The Case for APRA We propose now to refer shortly to the cases of the parties Our statement of their cases is not exhaustive and we shall refer to more of the detail of them when we come to discuss the various matters which need to be taken into account in reaching a decision. We mention, however, that each party filed a most detailed statement in support of its case. We have read the two statements and taken the material into account but have not found it necessary to set out substantial extracts from them. The foundation for APRA's case is that the present basis upon which it is remunerated provides no true guide as to what the value of the APRA licence is. In APRA's submission the only true reflection of that value will be provided by a method of remuneration which is based upon the value the community itself places on the programmes which the ABC broadcasts. The measure of that value is said to be the appropriation which Parliament, as the community's representative, determines to make for the ABC's operations. The base is not, however, the amount of the Parliamentary appropriation, but operating expenditure less certain deductions. But, as was explained in the APRA case, the reason for the selection of expenditure rather than revenue (that is the appropriation) was because it was easier to deduct from the total amount of it amounts incurred by the ABC in respect of certain items which APRA conceded should be left out of account. Thus the circumstance that the base was to be operating expenditure less certain costs, and not the amount of the appropriation, was not inconsistent with its case. That case was based on the amount of the appropriation, but expenditure, rather than revenue, was selected in order to enable the base figure on which the percentage was to be charged the more easily to be arrived at. The reason APRA is prepared to deduct certain costs from the total amount of operating expenditure is that it seeks to equate the ABC with the commercial television stations. It has sought to exclude expenditure items which do not find any parallel in the commercial area. The commercial stations do not broadcast the proceedings of Parliament, maintain orchestra. or conduct concerts. Therefore, consistently with the case which it makes, APRA agrees that the cost of providing these items should be omitted. As will be seen the cost of acquiring or producing television programmes is omitted from the base figures upon which the percentage payable by the commercial stations is charged. For this reason APRA is prepared to make a similar allowance in the case of the cost of acquiring or producing television programmes incurred by the ABC. But when it comes to activities in which both commercial stations and the ABC engage, for example, the presentation of news or the description of sporting events, the fact that there is little, if any, music used provides no reason for leaving out such items of expenditure because commercial stations, as well as the ABC, provide programmes of this kind. This circumstance serves to emphasize that the amount of the appropriation or expenditure (less, in either case, the relevant deductions) can only be a starting point because what has to be arrived at is the value of the music, really the value of the copyright owners broadcast rights which APRA licenses the ABC to utilize. Only a portion of ABC radio and television time is occupied in the transmission of music. As will be seen when we come to discuss the evidence, APRA has given elaborate evidence, based upon the information which it has for the purpose of distributing its income to the various copyright owners, of the proportion of broadcast time which is taken up by the playing of music. A matter upon which APRA places great emphasis is the value of the licence which it confers. It is a licence which, in practical terms. authorizes the broadcasting of all music which is the subject of copyright, no matter where it was composed and however old the copyright in it may be. It authorizes the licensee to broadcast it at any time of the day as often as the licensee chooses throughout the period of the licence. In effect it means that the licensee may confidently use all music available in the world secure in the knowledge that in doing so it will not infringe copyright, either because the music is in the public domain or because the licensee is lawfully authorized to broadcast all music which is still the subject of copyright. As we have mentioned, APRA has drawn heavily on the commercial situation. The amounts which are paid by these stations are, as earlier noted, based upon percentages of advertising revenue received by each station. The percentage paid by the radio stations is 2 per cent of such revenue and the percentage paid by the television stations 1.5 per cent less the cost of programmes, provided that the deduction does not amount to more than 40 per cent of the total operational costs. These percentages are agreed percentages between the commercial stations and APRA, although the 1.5 per cent, which, subject to the programme cost deduction, is paid by television stations, derived originally from an arbitration conducted in 1963 by Sir John Spicer, the then Chief Judge of the Commonwealth Industrial Court. To his reasons for decision we shall refer in some detail later on. There has not been any similar arbitration in relation to the amount to be paid by the commercial radio stations. It is APRA's case that the ABC should be placed upon a similar footing to the commercial stations. The Parliamentary appropriation (or the operating expenditure) is, in its submission, to be equated to the income of the commercial stations, that is, the income they receive from advertising revenue. The application to that appropriation (or expenditure) of the same percentages as have been agreed upon over the years between the commercial stations and APRA will, in APRA's submission, give a true guide to the value of what it is that the ABC receives from APRA. It should be emphasized, however, that APRA's case is not based on the simplistic proposition that, because the commercial stations pay a percentage of their revenue, the ABC should do likewise. We can best explain the approach which APRA makes by quoting from its written submissions, para. 18 of which is as follows "Just as advertising revenue represents the value which the advertisers place on the operations which include the use of APRA music, so the income or its Equivalent, the expenditure of the ABC, reflects the value which the community places on the like operations of the ABC. It reflects what Parliament has decided should be paid for the broadcasting by the ABC of programmes including music. Income, or its equivalent expenditure is, therefore, the most appropriate base with reference to which to calculate the value of a blanket licence to use APRA music. There is no base more appropriate." APRA's contention is that the ABC pays fair market prices for all commodities and services which it uses. The salaries and wages it pays to its staff are, for the most part, either determined by an industrial award or by agreement and are thus themselves also fair market prices for the services which the staff renders. The music used by the ABC should be in no different category from all the other commodities and services which it needs to run its enterprise. The existing formula, based as it is on cents per head of population, will not yield a true market price for the music which is used. Not only is the amount now paid out of kilter with the amount's paid by the commercial stations; a yardstick based on cents per head of population has no relationship to what the fair market value of the music is. The basis should therefore be changed to one which will reflect this value. In APRA's submission this value will be reflected if the same percentages to ABC radio and television expenditure are applied as apply to the income of commercial stations: In APRA's submission, this should be done, "not because it is contended that the ABC is engaged in a commercial operation, but because it is considered reasonable to do so. It is a reasonable reflection of that part of the income or expenditure of the ABC which it is considered appropriate as a return to APRA copyright owners for the right to broadcast their music." In other words, it is a going rate established by what the commercial stations pay. The payments which they make are, objectively speaking, reasonable prices for what they receive. The ABC should pay the same. The Case for the ABC The case for the ABC begins with the proposition that for very many years the parties have entered freely into agreements, some formal and others arising out of a course of dealing, based on cents per head of population. Thus the parties themselves by the course of that dealing, have established what a fair market value for the music is. There is no warrant for any change in that position. Subject to appropriate adjustments being made from time to time to the number of cents to be paid, the existing agreement provides fair return to APRA for the music which is used. Furthermore, the method by which APRA is remunerated by the commercial broadcasting and television stations provides no satisfactory guide as to what the payment by the ABC should be. That is because of the very different functions and purposes which the ABC has, compared with the commercial stations. Pursuant to its charter, the ABC is obliged to provide broadcasting and television services in remote areas of Australia where a commercial operation would not be profitable, and thus viable. Much was made during counsel's submissions of the "tyranny of distance" which is one of the problems faced by an organization such as the ABC in having to provide services to the remote and least populous parts of the Continent. But that was only one factor. Another, and more important factor, was the type of programme which the ABC was bound to offer. Commercial stations follow the demands of the market. They put on programmes which have a substantial popular appeal. In this way they are able to attract advertisers and maintain their revenue at a consistently high level. The ABC is not necessarily engaged in pursuing popular tastes and demands. It is obliged to provide programmes, as best it can, for all sections of the community and also to endeavour to raise standards of public taste and to educate the community in areas which would not appeal, necessarily, to the vast bulk of the population. For these reasons, a change to a percentage of revenue or expenditure basis of remuneration was not warranted. The cents per head of population basis might have its weaknesses and be open to some criticism, but it had not been established by APRA that there was any warrant for changing it. The commercial basis of remuneration had no application to the ABC. In case that might not be the Tribunal's view, counsel for the ABC developed two fall back positions. The preferred one was that there should be fixed a lump sum payment for each of the years covered by the licence scheme. In counsel's submission the Tribunal ought not, in any event, adopt a percentage basis without taking into account the consequence of it in terms of actual money. The very size of the increase involved in the confirmation of the licence scheme without alteration should make us pause and think very hard before acceding to it. Towards the close of the proceedings the ABC made an open offer to APRA in settlement of the dispute between them. The amount offered for the financial year 1984-85 was $1,325,000. For succeeding year the amount was indexed progressively to increases or decreases in "the Average. Weekly Earnings". This expression was defined in the offer. It is unnecessary to refer to the detail of the definition. The offer was rejected. If nevertheless the Tribunal were to take the view that a more satisfactory basis of remuneration was to be found in a percentage of revenue or expenditure, APRA's case should not be accepted in its entirety. That was because the numbers of persons listening to ADO radio or viewing ADO television could not be compared with the numbers listening to or viewing commercial stations or channels. The evidence established that advertising revenue was greater when the numbers of people listening or watching at any given time were greater. The greater the attraction of a programme the more likely it was that ratings would be higher and thus the revenue which the station was able to command itself higher. Since the ABC was, overall any given metropolitan area the least popular station or channel (omitting the Special Broadcasting Service and some ethnic and FM stations) any basis of remuneration which adopted the formula which applied in the case of commercial stations was inappropriate, at least unless .a proper allowance was made by way of a reduction of the percentage to take account of the smaller numbers of people listening to or watching ABC stations. The ABC relied on a number of points of law. It is convenient to discuss now some legal matters including these and those are the matters to which we next go. Questions of Law The Tribunal's Jurisdiction The Tribunal's jurisdiction to make an order is provided for in ss 154(4) earlier quoted. It is to make such order, either confirming or varying the scheme, as the Tribunal considers reasonable in the circumstances. It is to be observed that the sub‑section does not expressly provide that the Tribunal may decline to make an order at all. The question to be determined concerns the meaning of the word 'vary'. Is it wide enough to empower the Tribunal, in the event that it considers the referred scheme totally unreasonable, to substitute for it a scheme which it does consider reasonable? It. was the submission of counsel for the ABC that it was empowered to do so; counsel for APRA submitted to the contrary. The word "vary" and its derivatives are not words of precise meaning. Synonyms are the words "change", "alter" and "amend". In order to determine what the word means in the present case, we must look at it in that particular context in which it is used. Section 154 is in Division 3 of Part V1 of the Act. Part VI is entitled, "The Copyright Tribunal" and Division 3, "Inquiries by, and Applications and References to, the Tribunal". The Division opens with s 148 which provides for inquiries into the amount of royalty payable in respect of records of musical works. The section applies where the Attorney‑General, being of the opinion that the amount of royalty is not equitable, requests the Tribunal, pursuant to s 58 of the Act, to hold an inquiry into the amount of the royalty, or the minimum royalty, payable in respect of records generally or in respect of records included in a particular class of records. Section 149 provides for applications to the Tribunal for determination of the remuneration payable far the making of a recording or a film of a work. The Tribunal's task is to make an order determining the amount it considers to be equitable remuneration to the owner of the copyright. Similar language is used in s 149A which provides for the determination of an equitable remuneration to the owner of copyright for copies made under statutory licence. The words "the determination of an equitable remuneration" are also used in ss 150 and 151 which deal with the determination by the Tribunal of the remuneration payable to the owner of copyright in a recording for the making of a copy of the recording or for the public playing of the recording. The language of s 152 is somewhat different. It deals with applications to the Tribunal for the determination of amounts payable for broadcasting published sound recordings. There the Tribunal's task is to determine the amount payable by a broadcaster to the owners of the copyrights in question. The words "equitable remuneration" are not used. Nevertheless the Tribunal's task is to determine the amount of the remuneration which is payable and in that sense its task is similar to that which is had under the earlier sections referred to: cf WEA Records Pty Limited v Stereo FM Pty Limited (1983) 48 ALR 91 at pp 110-3. The provisions of s 154 are expressed very differently. As already noted, ss 154(4) empowers the Tribunal to make such order, either confirming or varying the licence scheme, as the Tribunal considers reasonable in the circumstances. To be read in conjunction with s 159 is s l57 which provides in ss (2) that .3 person who claims, in a case to which a licence scheme applies, that he requires a licence but that tine grant of .a licence in accordance with the scheme would be subject to the payment of charges that were not reasonable in the circumstances, may apply to the Tribunal under the section. Pursuant to ss 157(6) the Tribunal is to make an order specifying the charges which the Tribunal considers reasonable in the circumstances. The contrast between the language used in ss 148 to 152 inclusive on the one hand and s 154 on the other hand, in our opinion leads to the conclusion that the word "variation" in s 154 is not to be construed so widely that it would empower the Tribunal to substitute for the scheme which is referred under the section a scheme of an entirely different kind in cases where the Tribunal concluded that the referred scheme was wholly unreasonable. In such a case the only course is to make no order on the application. Notwithstanding the absence of any express power to take this course, it seems clear to us that the Tribunal must, by implication, have that power if it is not satisfied that the scheme is reasonable. It follows that the Tribunal's power to vary a scheme will be limited to making variations in the sense of amendments or alterations, but not so to change it as to substitute an entirely different scheme for the one referred. In the present case it would be within our power to vary the percentage of expenditure upon which the proposed formula is based yr to exclude further items of expenditure additional to the direct cost of Parliamentary broadcasts, the cost of maintaining orchestras and the cost of television programmes. Probably the adoption of the amount of the Parliamentary appropriation, rather than the amount of operating expenditure, as the base (with or without deductions) would also amount to a variation. But to substitute for the referred scheme, a scheme which was baled on cents per head at population or which provided :Ear the payment annually of a lump sum, would not be to vary the referred scheme but to substitute an entirely different scheme for it. A party advocating such a course is not without remedy. He may, in addition to opposing the application made under s 154, proceed under s 157. The Tribunal would them have power to give effect to whatever it thought reasonable in the circumstances and be able to act in much the same way as it does under the earlier section, ss 143 to 152. In passing, we should mention that our later reference to decisions of the Performing Right Tribunal in the United Kingdom will show that, in at least one case, a wider view was taken of the meaning of the word "varying" in the comparable provisions of s 25 of the Copyright Act 1956 (UK). However, the provisions of the two sections are not identical. In the United Kingdom it is the licensee who makes the application. Furthermore, there is no provision comparable with s 157 in the United Kingdom Act. We have taken into account the apparent practice in the United Kingdom, but are, nevertheless, of the opinion that the use of the word "varying" in s 154 of the Act here has the meaning we have indicated; cf. The Modern Law of Copyright, Laddie, Prescott and Vitoria p 475. Counsel for the ABC foresaw that this view of the meaning of ss 154(4) might be preferred and asked us, if we thought that the referred scheme was unreasonable, to indicate our view of what we thought a reasonable licence fee should be. Counsel for APRA did not dissent from this course, and, if the need arises, we shall indicate our view accordingly We do so because of the substantial time, trouble and expense in which the parties have been involved in the preparation and presentation of their cases. The case is one where there ought desirably be a. commercial solution, and we should be prepared to do our best to assist in its achievement. Notwithstanding his assent to the course proposed by counsel for the ABC, counsel for APRA pressed upon us a further submission consequential upon our having accepted the construction of ss 154(4) which he advocated. It was that, if we took the narrower view of ss 154(4), as we have done, then it was not for us to substitute our own view of what was reasonable in all the circumstances. If we thought that the licence scheme was, objectively speaking, reasonable, or would be reasonable if some variation of it were made, it was our duty to give effect to it notwithstanding that we ourselves might take the view that a somewhat different licence scheme would be more reasonable. We have reached the conclusion that we should give effect to that submission. Relevance of Provisions of s 152 of the Copyright Act 1968 Sub‑section 152(2) of the Act provides that an application may be made to the Tribunal for an order determining, or making provision for determining, the amount payable by a broadcaster to the owners of copyrights in published sound recordings in respect of the broadcasting, during a period specified in the application, of those recordings by that broadcaster Sub‑section 152(6) empowers the Tribunal to make certain orders. It is unnecessary to refer to the detail of the sub‑section except to say that it empowers the Tribunal to determine, or make provision for determining, the amount payable by the broadcaster to the owners of the copyrights in the sound recordings in question. For the purposes of this case the important provision is ss 152(11) which is in the following terms "Where an application is made to the Tribunal under sub‑section (2) in relation to the Australian Broadcasting Commission, the Tribunal – (a) shall make separate orders in respect of sound broadcasts by the Commission of published sound recordings and in respect of television broadcasts by the Commission of such recordings; and (b) shall not make an order that would require the Commission to pay, in respect of sound broadcasts of published sound recordings during the period in relation to which the order applies, an amount exceeding the sum of- (i) in respect of each complete year included in that period - the amount ascertained by multiplying one‑half of One cent by the number equal to the number of persons comprised in the estimated population of Australia as last set out in statistics published by the Commonwealth Statistician before the making of the order; and (ii) in respect at each part of a year included in that period ‑ the amount that bears to the amount ascertained in accordance with the last preceding sub‑paragraph in relation to a complete year the same proportion as that part of a year bears to a complete year." As best we could understand the reliance placed by counsel for the ABC on this provision, it was that it provided an indication that Parliament had placed its imprimatur an the existing basis upon which APRA is remunerated by the ABC. At the least, so it was submitted, the provisions of ss 152(11) provided the :tribunal with guidance as to whether the licence scheme propounded by APRA was reasonable. Since it proposed an entirely different basis for the calculation of the remuneration to be payable, the section indicated that such a. basis was not .s reasonable one. In addition to relying on the distinction which there is between ss 152 and 154 and the absence of any similar words in s 154, counsel for APRA referred us to the second reading speeches of the then Attorney-General, the Honourable Nigel Bowen, Q.C., MP (as Bowen CJ then was), when the Copyright Bill 1967 and the Copyright Bill 1968 were introduced into Parliament. The 1967 Bill was not proceeded with. A new Bill was introduced in 1968. In the course of his second reading speech in support of that Bill the Attorney-General said: "In the case of .a commercial radio station, the Tribunal may not fix an amount payable in respect of the broadcasting of records by that station which exceeds one per cent of the gross annual revenue of that station. In the case of the broadcasting of records by the Australians Broadcasting Commission by means of its radio, broadcasts, the Tribunal may not fix an annual royalty which exceeds one‑half cent per head of population. These limits have been set to allay fears expressed by both the commercial broadcasting stations and the Australian Broadcasting Commission that the payment of royalties for the broadcasting of records could impose a substantial financial burden on them. The limits have been fixed in the light of the special circumstances now existing in Australia in relation to the broadcasting of records and are not intended to imply that any particular royalty or rate of royalty is appropriate for the broadcasting of musical copyright works." (Hansard, Vol H of R 59, 15 May 1968 p 1535). the emphasis is ours. We would only take head of a second reading speech if we thought there were an ambiguity in the language used in the relevant provisions of the Act. We do not think that there is any ambiguity. It is our view that s 154 deals with an entirely different subject matter from that dealt with in s 152. We would not, therefore, have thought the presence in s 152 of ss (11) had any bearing upon the way in which our task under s 154 should be approached. If, however, there is any ambiguity, then what the Attorney General said when introducing the 1968 Bill is plainly indicative of an intention that provision of the Copyright Act other than s 152 were not to be at all controlled or affected by its provisions. It may be that the formula for which s 152 provides in ss (11) was derived from the basis upon which APRA was then remunerated by the ABC. That is only surmise; we gave no information on the point. But if we were satisfied that the formula provided for in s 152 had come from the then existing basis upon which APRA was remunerated for its broadcast right, that would not of itself provide a reason why that basis should not be changed, so far as concerns a licence scheme referred under s 154, if the dictates of reasonableness required that course. Our conclusion is, therefore, that the provisions of s 152 do not circumscribe an applicant under s 154 in relation ta the licence scheme which he may propound, nor da they circumscribe the Tribunal in its determination of the question of whether such a scheme is reasonable. The submissions of counsel for the ABC based on s 152 are therefore rejected. The Lawfulness of a Licence Fee Assessed as a Percentage of Expenditure In the submission of the ABC a licence scheme levying a percentage of the ABC's operational expenditure was incapable of being a scheme which was reasonable in the circumstances' within the meaning of ss 154(4) of the Act. The submission was founded on the proposition that the licence scheme proposed by APRA amounted to a scheme to tax a Parliamentary appropriation. It was not therefore one which the Tribunal ought to approve even if it thought that at was otherwise reasonable. The starting point for the development of the submission was found in the provisions of ss 69(2) of the Australian Broadcasting Corporation Act earlier referred to. The section is one of those in Part VI entitled "Finance". Sub‑section 69(1) provides that the Board of the Corporation shall prepare estimates, in such farm as the Minister directs, of the receipts and expenditure of the Corporation .far each financial year, and. if the Minister so directs, for .any other period specified by him. The Board is to submit estimates so prepared no 1ater than such date as the Minister directs. Sub‑section 69(2), the provision relied upon by counsel, provides that the moneys of the Corporation shall not be expended otherwise than in accordance with the estimates of expenditure approved by the Minister. The submission involves the proposition that a licence scheme which proposes a fee to be arrived at as a percentage of expenditure is, if not illegal, then per se unreasonable. We are of opinion that the submission should be rejected. Any statutory corporation such as the ABC must carry on its affairs by making estimates of its expenditure and endeavouring to keep within those estimates. If it finds that the estimates are insufficient for its needs. It may need to make revised estimates and seek the approval of the appropriate Minister to them. That would be the course which the ABC would be bound to follow if its estimates proved inadequate. It is the course which it in fact follows. So much appears from the evidence of Mr Oliver who was, at the time he gave evidence, the ABC's Budget Officer. That being the case, we see nothing unlawful in the implementation of a scheme such as APRA propounds. What it would involve would be the estimation of the entirety of the ABC's expenditure; the deduction from it of irrelevant costs, and then the addition to the remaining expenditure of sums arrived at by applying the relevant percentages. The .licence fee so calculated would itself become an item of expenditure and, form part of the estimates sent to the Minister for approval pursuant to ss 69(2). The Analogy of Damages for Infringement of Copyright as a Guide to Reasonable Remuneration In each of the cases which have so far come to the tribunal, the Tribunal has sought guidance as to the proper approach to its task from cases dealing with the measure of damages to be awarded in infringement cases. The Tribunal has found particular assistance in the decision of the House of Lords in General Tyre and Rubber Co v Firestone Tyre and Rubber Company [1976] RPC 197, particularly per Lord Wilberforce at pp 212-5. We refer to the decisions of the Tribunal in Report of the Inquiry by the Copyright Tribunal into Royalties payable in respect of Records Generally published 24 September 1979 at pp 97-101, WEA Records Pty Limited v Stereo FM Pty Limited (1983) 48 ALR 91 at pp 110-3 and Copyright Agency Limited v Department of Education of New South Wales (1985) 59 ALR 172 at pp 181-183. In each of those cases the Tribunal was not concerned with the question of whether a licence scheme should be confirmed but with the question of what should be paid to the owner of the copyright by way of fair or equitable remuneration. The word "equitable" is found in s 1494 of the Act providing for applications to the Tribunal for the determination of remuneration payable to the owner of copyright for copies made under statutory licence. As mentioned, the word "equitable" is not used in s 152 which is the section which concerned the Tribunal in the W.E.A. case. Nevertheless the Tribunal in that case thought that substantial help was to be obtained by reference to the approach adopted by courts in assessing damages for the infringement of industrial or intellectual property rights. Counsel for the ABC has submitted that this approach is of no help or relevance in the present case except insofar as the evidence might disclose that there is a going rate. 1f there be no going rate, however, the submission was that the more broad based approach :adopted by courts in infringement cases did not provide .assistance. That was particularly because the Tribunal's task in the present case was different from its task in the earlier cases. Its task was not to determine equitable remuneration: rather it was concerned with the question whether it should approve, that is, confirm, a particular scheme with or without variations. Because of the differences in the Tribunal's task., we think that there is some force in the submission, but in the end we will need to consider what is reasonable in the circumstances in order to provide ourselves with a guideline as to what view we should take of the reasonableness or otherwise of the APRA scheme. We do not find it otherwise necessary to deal with the submission. Submissions of Counsel for ABC based on Trade Practices Act 1974 In the course of his final address counsel for the ABC raised for the first time the question of some potential breaches by APRA of the Trade Practices Act 1974 in the event that the licence scheme were to be implemented. It was, to say the least, unfortunate that such allegations were not raised earlier. Evidence could have been led by the ABC to support its claims and APRA would have had the opportunity, if it were necessary to meet any such evidence. Counsel for APRA did not oppose the matters being raised. In any event, as questions of possible illegality were brought to the Tribunal's attention, we felt obliged to consider the submissions and the matters put in support of them. Notwithstanding written submissions on the matter, it remains far from clear what evidence, if any, is relied upon to support the claims of the ABC. Furthermore, it is not completely clear to us which particular provisions of the Trade Practices Act were the subject of supposed contravention in the event that the licence scheme were to come into force. In his submissions counsel for the ABC relied upon potential breeches of ss 45 and 46 of the Act if the licence scheme were brought into operation. He abandoned an earlier attempt to rely on s 45A. Before we deal in detail with these claims, it is necessary to consider what relevance they have to the Tribunal's task.. At the risk of repetition we note that ss 154(4) of the Copyright Act provides that the Tribunal shall consider a scheme referred to it and "shall make such order, either confirming or varying the scheme, as the Tribunal considers reasonable in the circumstances". It was submitted on behalf of APRA that even if the Tribunal did come to the conclusion that the scheme may in some respect infringe the Trade Practices Act, it would nevertheless not be a matter which the Tribunal should take into account in reaching its conclusion. That was because jurisdiction in trade practices matters was conferred on the Federal. Court exclusively of .all other courts except the High Court; s 86 of the Trade Practices Act. We reject the submission. If the proposed scheme itself revealed that its implementation would transgress the law, or if evidence led in the proceedings pointed to that being the case, it would not be either lawful or reasonable for us to confirm the scheme unless it were varied to overcome the illegality. Our course in a case of this kind is clear. In North West Salt Co. Limited v Electrolvtic Alkali Company [19141 A.C. 461 Viscount Haldane L.C. said (p 469):- "My Lards, it is no doubt true that where on the plaintiff's case it appears to the Court that the claim is illegal, and that it would be contrary to public policy to entertain it, the Court may and ought to refuse to do so But this must only be when either the agreement sued on is on the face of it illegal or where, if facts relating to such an agreement are relied on, the plaintiff's case has been completely presented. If the point has not been raised on the pleadings so as to warn the plaintiff to produce evidence which he may be able to bring forward rebutting any presumption of illegality which might be based on some isolated fact, then the Court ought not to take a course which may easily lead to a miscarriage of justice. On the other hand, if the action really rests on a contract which on the face of it ought not to be enforced, then, as I have already said, the Court ought to dismiss the claim, irrespective of whether the pleadings of the defendant raise the question of illegality." We refer also to the speech of Lord Moulton at pp 476-7 and to the decision of Devlin J (as he was ) in Elder v Auerback [1950] 1 KB 359 at p 371. We do not sit as a court of record but as an administrative tribunal. Nevertheless, the parties have filed detailed statements of their cases and also points in support of those cases, each has led extensive evidence. The Tribunal's power to call evidence without the consent of both parties is at least doubtful; cf ss 167(2) of the Act. In any event, it would be quite impractical for it to do so. It is therefore appropriate, in our opinion, to apply by analogy what has been said in the authorities to which we have referred. No reference to any potential infringement of the Trade Practices Act was made by the ABC in its case or in its points in support of that case or, at least in icy direct way, in the evidence. As we haves said, no mention of the matter was made until counsel far the ABC embarked upon his final address. The find address of counsel far APRA was then complete, although, of course, he was afforded a reply. The authorities referred to establish that, while it is necessary that the Tribunal. consider a potentially relevant illegality that appears clearly to arise on the face of the evidence, it is another thing altogether to suggest that the Tribunal will lightly infer illegality or make findings that serious allegations have been established unless the evidence is clear and cogent. Section 164 of the Copyright Act provides that in proceedings before it, the tribunal is not bound by the rules of evidence. However, we adopt what was said by the Tribunal in the WEA Records case (48 ALR at p 119): "Counsel for the record company accepted that not all the relevant evidence was available in relation to the trade practices issues which had been raised. It was suggested that s 164 could assist the Tribunal in such a situation. In our opinion the mere fact that tire Tribunal is not bound by the rules of evidence does not mean that it should not base its decisions on the material before it." Thus a party making serious allegations, such as are involved in the ABC submissions, must substantiate them and not rely on generalisations or assertions unsupported by the evidence or other material before the Tribunal. We turn to the substance of the allegations made. After a good deal of discussions counsel said that he would put his submissions on the questions in writing. He agreed that these would represent the totality of what he wished to put in relation to the natter and would replace earlier oral and written submissions. Written submissions were lodged after we reserved our decision. These were answered in writing by counsel for APRA. The submissions, in our opinion, fail. adequately to specify or particularize in what precise respects the provisions of the Trade Practices Act would be contravened if the scheme were implemented. Furthermore, the evidence, if there be any, upon which the allegations are based is, in our opinion, quite insufficient to found them. With due respect to counsel, we feel bound to say that the submission has substituted broad generalization and speculation for evidence or facts. Although it is not entirely clear, counsel for the ABC appeared to rely on ss 45(2) of the Trade Practices Act. So far as relevant the sub‑section is as follows: "(2) A corporation shall not – (a) make a contract or arrangement, or arrive at an understanding, if: ………………………………… (iii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition:…." We shall assume that the relevant "corporation" is APRA, the relevant "proposed contract" is the licensing scheme referred to the Tribunal and that the relevant provision is that which obliges the ABC to pay a proportion of its expenditure. In paragraph 15 of the ABC's submissions is found what appears to be the essence of the s 4 argument: "The effect of APRA's monopoly and its licence scheme if approved will be to tie ABC to APRA without the practical possibility of obtaining individual licences or licences from another copyright collecting group, to broadcast music. Such an arrangement is likely to have the effect of substantially lessening competition in the market." The submissions then proceed to assert a somewhat cryptic definition of the market. However, we .assume that the market counsel intended to refer to was that for the supply to broadcasters of the right to broadcast musical works in which copyright subsists. It is unnecessary to consider the substance of the argument for the reason that there is insufficient evidence to make any relevant findings of fact. There was no satisfactory evidence, if any evidence at all, as to the relevant market, the nature of competition in that market or the likely effect of the provision of the proposed contract on competition in that market. For this reason alone we reject the submission based on s 45 of the Trade Practices Act. The fact that we do so makes it unnecessary to express an opinion on the substance of s 45 submission. Without an adequate factual foundation for the submission, it is impossible to come to grips with the substance of it. We make it clear, however, that our failure to deal with the substance of the submission is not to be taken as an indication that we would consider it well founded, even if more detailed evidence were led. Sub-section 46(1) of the Trade Practices Act, so far as it is relevant to the ABC case provides: "46. (1) A corporation that it in a position substantially to control a market for goods or services shall not take advantage of the power in relation to that market that it has by virtue of being in that position for the purpose of: …………………………….. (b) preventing the entry of a person into that market or into any other market: or (c) deterring or preventing a person from engaging in competitive conduct in that market or in any other market." The ABC case was that the corporation referred to at the beginning of the subsection was APRA. The person referred to in paragraphs (b) and (c) would be either the ABC itself or individual composers of musical works. The relevant market referred to in paragraphs (b) and (c) would presumably be the market for the supply to broadcasters of the right to broadcast music in which copyright subsists. We did not have the benefit of any submissions from counsel for the ABC on the correct interpretation of some of the important and difficult phrases found in s 46, such as "take advantage of" and "for the purpose of". But again we are saved the necessity of considering questions of substance. The fact of the matter is that there is no sufficient evidence upon which we can possibly find that the implementation of the scheme by APRA will prevent the ABC or any other person from entering any relevant market or will deter or prevent the ABC or any other person from engaging in competitive conduct in any market. We recognize that there may be a question as to whether a person complaining of a breach of s 46 has to establish these matters or may succeed if it be established that the conduct complained of may have the tendency to prevent or deter what is proscribed. We express no view. But if a case could successfully be made upon that basis, there is, in the present case, no evidence upon which such a case could be found. Furthermore, there no sufficient evidence which establishes that APRA, by implementing the scheme, if it be confirmed, has or will have the purpose of preventing the entry of any person into any relevant market or deterring any person from engaging in competitive conduct in any market. In paragraph 22 of his submissions counsel referred to three United States decisions. We have considered these, but are of opinion that they have no relevance to the present problem because the statutory provisions upon which they are based are materially different from ss 45 and 46 of the Australian Act. In the result the submissions made by counsel for the ABC in relation to potential breaches of the Trade Practices Act by APRA, if the licence scheme be implemented, are rejected. Earlier Arbitration both in Australia and Overseas concerning the amount to be Paid for Public Performance or Broadcast Rights That concludes our treatment of questions of law which the parties' submissions raised far consideration. We find it convenient next to refer in some detail to certain decisions of arbitrators and tribunals both in Australia and elsewhere resolving disputes between performing right associations and broadcasting and television companies or authorities over the amount of licence fees. We have earlier referred to the Royal Commission held soon after the establishment of the ABC and the Teece Arbitration in 1938 the award in which for so long remained the basis for the calculation of the fee which was paid. Another significant arbitration took place in 1963. In 1962 pursuant to s 13A of the Copyright Act 1912, there was submitted to the award of Sir John Spicer, who was the Chief Judge of the Commonwealth Industrial Court, the determination of what was a fair and just licence fee which the commercial television stations should pay for various periods of their operation. The substantial question was what should be paid by stations which had been in existence for more than 12 months for each period of 12 months commencing on 1 July 1960 and ending on 30 June 1967. Spicer G.J. awarded APRA 1.5 per cent of the gross earnings of each of the stations during each such period of 1 months from the broadcasting of advertisements or other material. That was the origin in Australia of a licence fee fixed upon a percentage of gross revenue of television stations, advertising revenue being the principal, if not the only source of income, received by these stations. The commercial radio stations had earlier agreed to a similar basis of calculation of the licence fees payable by them. In 1961 an agreement was entered into with APRA which provided for the payment to it of one per cent of advertising revenue of the stations. The percentage rose to the present: 2 per cent at the end of 1964. It has remained unchanged since then. Reasons for Spicer C.J.'s award were attached to it. Some of the statements made in the reasons .are of relevance In the present reference. Nevertheless we should bear in mind that the arbitration was in respect of the operations of commercial television stations and not the operations of a national broadcasting and televising corporation such as the ABC. That, is an important point of distinction and one upon which counsel for the ABC places great reliance. Spicer C.J. made the following points: (2) Commercial television operators, like commercial radio operators, receive no revenue from those who view or listen to their programmes. The revenues they receive for their television productions come wholly from advertisers. No doubt Spicer C.J. was there contrasting the position which then existed in relation to national broadcasting and television. People who owned radio and/or television sets were then required to pay a licence fee. (3) The amount paid by the advertiser varies with the hour of the day and from station to station. The advertiser is paying for the right to appeal to audience. The character of the audience may change from hour to hour but the larger it is expected to be the more the advertiser can be induced to pay. (4) The audience seeks to view programmes, not advertisements. The more attractive the programme the larger the audience is likely to be. (5) The audience's attention is won by programmes which include many features other than music, "but music does play a not insignificant part in the programmes produced". The evidence disclosed that music was played during at least part of the time occupied by approximately 40 per cent of commercial television programmes. Spicer CA. continued: "Its significance varies front program to program. It may be merely background to what is essentially a visual performance, it may aid the introduction or completion of an otherwise non‑musical item, or it may be presented as a feature in itself played or sung by performers visible on the television screen. Each of these uses considered separately would obviously have varying values." (6) A measure of the value of the whole programme televised is provided by the amounts paid to the operator by advertisers. The advertisers seek to buy an audience. What they will pay is measured in the main by what is believed to be the size of the audience. That in turn depends upon the attractiveness of the programme (as perceived by the audience). Its value to the advertiser as an audience gatherer is represented by what he pays to the operator. (7) His Honour's conclusion, after discussing these general matters, was:- "If one were called upon to place a value on the music performed in a particular program it seems to me not unreasonable to have regard to the value of the whole program and endeavour to assess what proportion of that value is attributable to the music. This is not an easy task but the approach is one which commends itself to me. You at least start with one factor which is ascertainable with certainty, namely the monetary value of the whole performance of which music forms a part. Some proportion of that value represents value attributable to the music. What proportion it should be is a problem I discuss later." It is clear :from what is later said in his reasons that Spicer G.J. drew to a substantial degree an overseas experience for the approach which he adopted in para (6). Amongst other things he said: "Experience in other countries where commercial television operates upon a basis similar to that prevailing in Australia indicates a wide acceptance by performing right associations and operators of the principle of payment of a percentage of receipts from the sale of station time. It is not without significance that this method has been adopted in countries where the operator is a public authority as well as in countries where the operators are private commercial enterprises." The emphasis is ours. We are of opinion that much of what Spicer C.J. said in the numbered paragraphs above remains as relevant today as it was in 1963 when television in Australia was in its early stares of development. We bear in mind the warning of counsel for the ABC against taking too much from it in a case which involves the question of what should be paid to APRA by a national broadcaster. But one of the matters which the decision serves to underline is that in the commercial area money is paid by advertisers for the numbers of people particular programmes are likely to attract. Later we shall need • to say something of ratings, of audience reach and of the significance of the two. Counsel for APRA sought to play down this aspect of the 1963 decision, but it seemed to us at an early stage of the hearing that, if the fee was to be determined upon a basis akin to that which applies in the commercial area, it was difficult to put aside questions which arise as to the ratings of ABC programmes and the reach of ABC television and radio stations. Our attention was drawn to much overseas material. We have found reference to what has been said by tribunals in other countries of assistance. We do not propose to refer to the entirety of the material which there is but we do indicate that we have taken it all into .account giving it such weight as seems to be appropriate. The most useful references which we were given come from the United Kingdom and from Canada. In 1967 and 1972 there were arbitrations conducted in the United Kingdom by the Performing Right Tribunal to determine licence fees to be paid by the British Broadcasting Corporation (BBC) to the Performing Right Society (PRS). In considering these decisions it should be borne in mind that at all times the owners of radio and television sets in the United Kingdom have been obliged to pay licence fees. These fees are apparently set at such a level as to provide the BBC with the entirety of the revenue it requires to run its home service television and radio operations. All the licence fees are paid to it. Its income is not apparently supplemented by a Parliamentary appropriation. Its Overseas Service is in a different category. It is funded by Parliamentary appropriations known as "grants in aid". In 1967 the Performing Right Tribunal determined that the fee payable to PRS should be a sum per calendar month equal to one and 19/24d. multiplied by the total number of paid receiving licences whether for sound only or for sound and television combined. The payment was indexed by reference to the quarterly index figure of retail prices. The PRS had proposed a different rate but not a different formula. The PRS case was based substantially on the value of the PRS licence which conferred an unlimited right upon the BBC to broadcast the entirety of the PRS repertoire of music at any time throughout the year. That repertoire was accepted as covering, for practical purposes, all music available in the United Kingdom and subject to copyright. The APRA licence here is, as we have said, of a similar kind. The Performing Right Tribunal specified a number of factors affecting value which it used as a guide in reaching its decision. These were as follows: "(i) the fact that the right to broadcast is (at any rate in theory) unlimited as regards the entire P.R.S. repertoire; (ii) as against this, the limitation, in both practice, of the listening public, both absolutely and in relation to any particular item of music; (iii) the variation in potential listening, according to the time of day of the broadcast (iv) the dilution of P.R.S. music with other material, such as music in the public domain and non-musical items; (v) the concurrent broadcasting of P.R.S. music over different channels; (vi) the varying emphasis on P.R.S. music according to the type of sound programme, according also to whether the broadcast service is Home or External and according to whether it is on sound or television; (vii) the limitation on the theoretical absolute freedom of choice, due to the restrictions placed on the BBC by its Charter; (viii) the future limitation on such freedom due to the restriction on "needle-time" (the right to broadcast on gramophone records); (ix) the extent, from time to time, of the public demand for the broadcasting of P.R..S. music of the available kind; (x) the competition for listeners, both within the BBC, as between sound and television, and outside the BBC, as between the BBC and other broadcasters; (xi) the limitations on the optimum amount of broadcasting in relation to the total available revenue; (xii) the proportion of its financial resources which the BBC actually allocates for expenditure on the broadcasting of P.R.S. music, as opposed to other material; (xiii) what is received by the P.R.S. by way of royalties by users of P.R.S. music other than the BBC; and (xiv) changes in the value of money and consequently in the cost of living." After listing these various factors, the Tribunal continued "To put a specific value, as between the parties, on any one of these elements is quite impracticable. To try to extract one, as of itself the measure of value, from the balance of them all, is unrealistic. Some of them tend to enhance the value to one party. Some do so to the other. Some, indeed, offer both advantages and disadvantages to the same party. As an instance of this, whereas the Charter of the BBC sets limits to its freedom to use P.R.S. music to the fullest possible extent, the revenue which the BBC enjoys under the provisions of the Charter renders it immune from the financial impact of competition. Thus, the more a competing broadcaster attracts new listeners by offering popular programmes which the inhibited from offering, the greater the financial benefit to the BBC. The additional receiving sets which such listeners .are so encouraged to acquire produce revenue which accrues, not only to the competitor, but directly to the BBC. The benefit to the competitor arises indirectly out of increased receipts, which in no way affect the advantage to the BBC. Such competitors do, on the other hand, reflect the enhanced value of P.R.S. music, in that they provide an additional source of revenue concurrently payable to the P.R.S. " The considerations mentioned in the latter part of this paragraph have, no relevance in Australia because no part of the ABC's income has in any recent period been derived from licence fees. The Tribunal said that the PRS case was dependent upon one factor as affecting the change in the value of PRS music as between July 1962, the starting date of the expired licences, and April 1966, the proposed starting date of any new licence. This factor was the increase in the number of hours of broadcasting PRS music. The Tribunal said: "Underlying this simple formula is the assumption that the enhanced value of P.R.S. music determined simply by the increased number of PRS music hours of BBC broadcasting, multiplied by the total number of receiving licences in force. The first fallacy of this assumption is that every P.R.S. music hour is of equal value to the BBC. That is clearly not the case, as the P.R.S. has itself demonstrated in having regard in its formula to .a lower value for the broadcasting of late night and early morning music. Another fallacy is the further assumption that by broadcasting P.R.S. music, the BBC is offering it for enjoyment to every potential listener of an age to enjoy it, within range of its transmissions, and that the music so offered is for all practical purposes, to be deemed to be so enjoyed. To maintain this selectivity completely ignores those many counterbalancing factors already noted which enter into any realistic computation of value. Not only so (sic), but even taken by itself, the assumption cannot be supported. The value of availability is never absolute. It varies infinitely with the readiness and the ability at every given moment to take advantage of it. This is not to say that the availability implicit in broadcasting is totally irrelevant. On the contrary, the number of receiving licences issued is evidence that a great, if fluctuating and incalculable, number of occasional listeners do take advantage of it. What requires qualification is its adoption as the primary test of value." It is not profitable to analyse the decision further except to say that the Tribunal placed great weight upon the history of the bargaining which had taken place in previous years between the parties. Early in its decision it expressed the view, that, subject to adjustment in respect of certain factors which it mentioned, the Tribunal was disposed to regard the existing royalty, whether for sound or for television, as the foundation on which the computation should be based. Later it said, "None of the evidence adduced had persuaded the Tribunal that the royalty … arrived at in 1964 as between freely bargaining parties, was other than a reasonable figure in the circumstances in which, and over the period for which, it was fixed." The Tribunal also said: "The Tribunal have adopted the amount per receiving licence solely as a method of computation, as in the formula on which the parties came to agreement in 1964. They do not accept the receiving licence because of any relation to the size of audience." The 1972 arbitration arose because of the continued dissatisfaction on the part of PRS with the amount it was receiving from the BBC. In correspondence it proposed a change in the formula which was to form the basis upon which tine fee was to be calculated. Four options were suggested and became the subject of consideration by the Tribunal. In the way that the matter had to be considered by the Tribunal the BBC had to discharge an onus which lay upon it of showing that the royalty proposed by the PRS under each of the options was unreasonable. The Tribunal was of the opinion that the BBC had discharged its onus in this respect and its task then became that of determining "such royalty as the Tribunal considers reasonable in the circumstances." The Tribunal referred to the difficulty of the task which it had. The Tribunal first referred to the question whether it was open to the PRS to depart from a formula which had for so long been in existence. The Tribunal was of opinion that it was. It said that during the currency of a licence agreement the parties are bound by its terms; but after its expiry there was nothing which was necessarily unreasonable in a party saying that he made a bad bargain on a previous occasion and seeking to rectify the error when negotiating the terms of the new licence. Reference was then made to a number of factors. These were the cost and standard of living in the United kingdom both of which ware said to have increased in the years since the last arbitration, the increased user of PRS music, the value of the PRS repertoire and the relative value of that repertoire to BBC Radio and BBC Television. In the course of discussing the value of the PRS repertoire, the Tribunal referred to a recently negotiated agreement between the PRS and the Independent Television Contracting Companies. The agreement was for a term of three years, from 1 January 1972, giving the contracting companies the right to broadcast the PRS repertoire for an initial royalty at the rate of 936,000 pounds per annum. It was contended by the PRS that the agreement was cogent evidence of the value of the PRS repertoire to BBC television. The Tribunal continued: "… it is to be borne in mind that the ITV Companies are a consortium of 15 companies and the burden of the royalty of 936,000 pounds is shared between them. It is also, in our view. not irrelevant to bear in mind that the ITV Companies as commercial concerns are in a better position to adjust their revenue to meet escalating costs than the BBC whose relevant income is derived from licence fees fixed from time to time by the Government. But, giving full weight to these considerations, it is difficult to see on what ground it can be maintained that the BBC should pays, in respect of its use of the PRS repertoire on TV., a royalty substantially less than that freely negotiated between the Contracting Companies and the PRS." APRA places substantial reliance upon the latter portion of the above quoted passage. The fee paid by the commercial television stations to APRA was originally an arbitrated fee but subject to the change which came about when a deduction for programme costs from advertising revenue was agreed upon, the arbitrated fee has remained the fee ever since. All agreements between APRA and the commercial television stations in Australia have been based freely and voluntarily upon the formula evolved by Spicer G.J. in the. 1963 arbitration. Much of the Tribunal's discussion of the relative value of the PFS repertoire to BBC radio and BBC television respectively is relevant. In part the Tribunal said: "On the face of it, the value of the repertoire far Radio is far greater than for TV, because (i) the use of the repertoire on the national radio networks is between 7 and 8 times what it is on BBC 1 and BBC 2, and (ii) a great deal of the music on TV is background or incidental music. It is plain, however, that it would be unrealistic to treat the respective values as being proportionate to the use for the purpose of assessing the royalty. The effect of doing so would be to produce a royalty far in excess of anything claimed by the PRS. In this connection, it is, we think, proper to take into account the enormous contributions which the BBC by its radio services has made, and continues to make, in the field of music by creating and sustaining public interest in and appreciation of music, and by its patronage and support of the musical profession. There is no doubt that the PRS fully recognise this. Conversely, there in some force in the argument submitted to us by the PRS that music on TV should be regarded as a constituent of a far more expensive package, and that for this reason, as well as for the reason that TV audiences are far larger than the Radio audiences, a larger share of the royalty can be attributed to TV than could be justified on the basis of creative use, or by the quality of importance of the musical element in the programmes ... Bearing all these considerations in mind, we think it is broadly fair to treat the radio element in the global royalty as being roughly twice the TV element." In the upshot the Tribunal, by majority, adopted a variation of what was described as the PRS "Formula B". This was a licence fee calculated as a percentage of the BBC's licence revenue and grant in aid. As earlier mentioned, the licence revenue was the amount necessary to run the BBC's home services and the grant in aid was the amount necessary to run its Overseas Service. The Tribunal found the original formula as proposed by the PRS unreasonable because of the size of the percentages. Its conclusion was that the percentage should be 2 per cent of the licence fees received and the amount of the grant in aid. In 1980 the Performing Right Tribunal was concerned with a problem which in Australia would have attracted this Tribunal's jurisdiction under s 152 of the Act. The United Kingdom legislation has no provision similar to s 152. The applicable section was s 25 which, although not identical to the Australian section 154, is the United Kingdom counterpart of it. The Tribunal's decision is not, therefore, of direct relevance to the problem we have. Nevertheless, there are statements in its reasons which we think help illuminate the problem which we have. The scheme in question was one whereby Phonographic Performance Limited (PPL) formulated a licence scheme in which it offered to grant licences to the members of the Association of Independent Radio Contractors Limited to broadcast such gramophone records in which the members of the PPL owned the copyright. Pursuant to the scheme, PPL granted licences to 19 Independent Local Radio Companies (ILR) as and when they come on air during the years 1973 to 1976. The detail of the terms of the licence which was granted need not be referred to except to say that the licence fee was to be a percentage of net advertising revenue rising from 3 per cent in the first year of operation to 7 per cent in the fifth year. At an early stage of its decision the Tribunal said: "We start with this. Under Section 12 of the Copyright Act 1956 the record companies have a copyright in their sound recordings. The great bulk of the record companies ‑ some 90 per cent or more ‑‑ have assigned the copyright in their records to their alter ego PPL. It follows that the ILR companies have no right to broadcast those records without the licence of PPL. PPL is entitled by virtue of its ownership of the copyright to demand a royalty for granting such licence, and it is entitled, as it. seems to us, to demand a substantial, as distinct from a nominal royalty, notwithstanding that the broadcast of the records on ILR may confer a benefit on the record companies or some of them by promoting the sales of their records. This situation is the result of the proprietary right of PPL. There is no right under our law to expropriate another man's property on the ground that such expropriation would be financially beneficial to him. The only limit on the proprietary right of PPL is that the royalty demanded must be reasonable in all the relevant circumstances ‑ reasonable, that is, not in some a priori or philosophical senses but reasonable as a matter of business. The function of this Tribunal is to ensure that copyright royalties are reasonable in cases which are referred to it." Later the Tribunal said: "There is no doubt that BBC Radio has over the years made an enormous contribution to the well‑being and quality of the musical profession in this country, and to the appreciation of music by the public generally. The BBC has always recognised that it has a duty, as the national broadcasting organisation dependent to a large extent an musical programmes, to do all it can within the limit of its resources, to promote high musical standards and competence, and for that purpose to provide employment opportunities for musicians. As a former Director‑General of the BBC, Sir William Haley, said: 'Every art has certain enduring values … The corpus of these valves is classical repertoire. Broadcasting has a duty to that repertoire to present to succeeding generations ... the great body of work for appraisal and assessment. In art almost no judgment is final ... lt is not enough far broadcasting to satisfy its listeners with what .at any moment is customary and comfortable. It must range the known confines of art, creating the conditions for performance if they do not exist ... Responsibility to the practitioner of the art would be a matter of self‑interest if it were nothing else. Without practitioners any art dies. Broadcasting must encourage the young, keep filled the pool of talent, .and generally so arrange its patronage that it not only draws an the masters of today, but trains by use and experience the masters of tomorrow.' Guided by this philosophy, the BBC spends millions of pounds every year on live music and the employment of musicians. This fact redounds to the benefit of the recording industry, whose products are dependent on the availability of experienced musicians of high quality and competence. It also incidentally benefits the ILR companies, which in turn are largely dependent on the availability of high quality musical recordings." It is to be observed that, although the Tribunal was concerned with questions of copyright in works, it took. into account in the passage quoted the interests of performers as distinct from copyright owners. It should be mentioned in this connection that the Tribunal permitted the Musicians' Union to make submissions as an "interested party". We are not here concerned with any question of the encouragement of performers as distinct from composers. But much of what the Tribunal has said in relation to musicians seems to us to be as relevant to composers as it is to musicians. In 11983 the Tribunal had to consider a proposed change in the method to be adopted in calculating the licence fee payable by the commercial television companies as distinct from the BBC. Tire Tribunal said that the principal issue which it had to determine was whether the right basis for the calculation of the royalty to be paid by the television companies for the use of PRS repertoire was one which adopted a percentage of the advertising revenue of the companies. That had not been the basis upon which the fee was arrived at previously. The agreements which had theretofore applied all provided for lump sums to be paid in respect of the various years which were involved. Of the earlier negotiations the Tribunal said: "In the view of the Tribunal it is impossible to ignore the significance of the negotiations and Agreements between the two sides over such an extended period of years. Basically those Agreements were, in the view of the Tribunal , arm's length, freely‑negotiated, commercial agreements and represent, in the Tribunal's opinion, the coincidence of those compromises which commercial men make to reflect a11 of the factors which they consider relevant when they in fact reach commercial agreements." Later the Tribunal said: "The Tribunal however has the benefit if extended hindsight, and while giving very considerable weight to what the parties have agreed, it is not conclusively bound by those agreements. If in the event the parties' agreements have not turned out to give what the Tribunal considers to be proper weight to all of the factors which the Tribunal considers relevant then it does not regard itself as precluded by past agreements from establishing a reasonable basis for royalties from 1 April onwards." In the course of its discussion of the problem the Tribunal said: "In an illuminating piece of evidence Mr Freegard the Chief Executive of the PRS told us that the PRS was now pushed to come to this Tribunal because the royalty was a derisory proportion of the Companies' revenue. The Tribunal does not however consider that it is self-evident that there is or should be some fixed relationship between royalty and NAR (net advertising revenue), and it appears to the Tribunal that, if there is to be any fixed percentage relationship, then both that relationship and the percentage rate must be justified. It will moreover be apparent that if royalty is fixed as a percentage of NAR a very small difference in the rate determined produces a very considerable difference in the amount of royalty produced, because of the size of the advertising revenues: in 1986 a change of 0.01% in the rate could be expected to produce a change of over 100,000 pounds in royalty. It will be apparent that since the Licence Scheme before us operates as from 1 April 1980, three full years had elapsed prior to the hearing before the Tribunal, and thus the Tribunal can consider the royalty for those years in relation to ascertained facts rather than on projections. This is we consider important, because at the end of the day the Companies pay, and the PRS receives money, not percentages. In the view of the Tribunal it would certainly not be right as to years which have passed to fix a percentage and let .the monetary, product be what it may in consequence; it is the result, not the mechanism which is of prime significance. It follows accordingly that, while .for years which are past percentages may be deduced from figures of royalty determined to be reasonable by the Tribunal by reference to the known NAR for those years, it is for the unknown future that any percentage if applied will be significant. Although its preference for the basis of a fixed percentage of NAR was presented as an issue of principle, it is no doubt the commercial judgement of the PRS that it is in the interests of its members to gear the royalty to a percentage of NAR if it can when it anticipates that NAR will rise significantly. As we have remarked in paragraph 34 above, it was accepted in argument for the PRS that .a necessary corollary of its contention was that if NAR fell then the royalty would correspondingly fall, but we are satisfied that the PRS on the balance of probabilities has concluded that this is a lesser possibility than that NAR will rise." The Tribunal further said: "The Tribunal accepts that changes in the number of television licences issued gives a rough measure of changes in the size of potential audience, in proportionate, although not in absolute terms. Over the period of sixteen years covered by the Table, the size of the potential audience has increased, again by something in the region of 30%, the increase taking place more evenly over the period. In the opinion of the Tribunal changes in the size of potential audience is also a relevant: factor in the determination of a fair royalty to be paid by the Companies as an indication of the value to the user of the licence to use the PRS music." Later the Tribunal said: "We do not think that the proportion which the number of PRS music hours broadcast bears to the total number of hours of television broadcasting by the Companies is a meaningful relationship for the Tribunal on this Reference. There is no material change we think in the significance of the music contribution to the programmes; there are so many variables of which music is only one." The Tribunal referred to the 1972 BBC reference and to the conclusion that the Tribunal in that case had by majority reached. But it explained that decision as having no relevance to its task because the Tribunal in the 1972 reference was presented with a choice, in effect, of selecting from one of four alternatives. It selected, with a substantial variation, the second formula which was suggested by the PRS. In reaching its conclusions the Tribunal (in its 1983 decision) said that it thought it was relevant to take into account as .factory guiding it in the determination which it had to make, changes in the size of audience watching independent television, changes in the numbers of hours of music from the PRS repertoire broadcast by the companies and changes in the size of that repertoire as enhancing the choice of the companies. It also took into account changes in the retail price index, the Previous levels and bases of royalties agreed between the parties, some reflection of any substantial changes in the general standard of living and some limited :account of changes in the relative PRS administrative costs The Tribunal continued: 'The Tribunal is unable to accept that there is any adequate correlation between the use of music from the PRS repertoire by the Companies and the NAR of those Companies. Mr Freegard for the PRS gave evidence that in his view NAR reflected mare accurately than any other possible pointer the relevant factors in the determination of reasonable royalty. The question is however in our view whether the fact that music is ‑ or may be to a greater or lesser extent ‑ part of the package which attracts the television audiences and accordingly generates NAR, establishes or helps to establish a sufficient connection between music and NAR to make it reasonable to relate the royalty for the music use directly to NAR. We are satisfied it does not. First the television programme or commercial is the product of a wide variety of artistic and technical skills, of which music is only a part and not we think. in general the predominant part, the smaller the significance of the contribution of a part to the whole, the less certain can any attribution of generative effect be. (The contrast with sound radio and, say grand opera is we think. illuminating). Second, many factors influence NAR which are wholly irrelevant to the music component in the programmes; we particularly instance the success of television advertising as against all other forms of advertising, and the commercial evaluation by sales directors of companies of where their companies' advertising is best to be placed for the greatest cost effectiveness. Third, NAR takes no account of some at least of the factors which we consider material, such as the increase in the PRS repertoire and changes in its costs." The Tribunal's conclusion was that the licence scheme propounded should be varied by substituting for the basis of calculation of the licence free propounded in it, lump sums which were specified for each of the years ending 31 March 1981 to 1986. For the years after the decision the amounts determined were subject to a clause which provided for adjustments according. to the latest "Quarterly Index". In Canada there are substantial similarities to the broadcasting and television systems which operate in Australia. The Canadian Broadcasting Corporation (CBC) is the national broadcaster and televiser of programmes. There are commercial radio and television stations. In addition (and here the position differs from that in Australia), there is a substantial intrusion into Canada of radio and television broadcasts from stations in tile United States. Unlike the position in Australia, there are two collecting societies in Canada, the Composers, Authors and Publishers Association of Canada Limited (CAPAC) and the Performing Rights Organization of Canada Limited (PROCAN). Far many year the CBC has paid a fee to the two societies based upon a number of cents per head of population. As in Australia the commercial television and radio stations have, on the other hand, paid a percentage of their net advertising revenue. In 1983 PROCAN, but not CAPAC, endeavoured to bring about a change in the basis of the calculation of the fee payable to it for the use of its repertoire on CBC programmes. The matter came to be determined by the Copyright Appeal Board. In the early part of its decision the Board noted that, translated into unit figures and percentages, PROCAN's request would raise the tariff to an equivalent of eight cents per inhabitant of Canada which was an increase of 174 per cent. PROCAN's objective, as state by the Board, was to put the CBC and private broadcasters, both radio and television, on the same footing in the overall computation of fees, as was the case with private broadcasters, to distinguish between radio and television broadcasting by creating a specific and distinct tariff .for each that would make allowance for the specific attributes of each of the activities, and to receive, over the long term and with a gradual increase from year to year, fees from the CBC that would be equivalent to those received from the private sector on a comparative basis. The Board noted that PROCAN proposed to differentiate between the CBC tariff and that of the private commercial stations. The former was to be based on CBC's expenditures, whereas the latter was based on the income of these stations. In other words what PROCAN sought to do was very similar to what APRA seeks to do in the present case. The arguments relied upon by PROCAN to support its case are also similar to those used by APRA in the present proceedings. An account is given of them in the Canadian Board's decision. A reading of that part of it is instructive, but we have not included it here. The Board gave a detailed account of the history of the CBC tariff. The per capita formula which existed in 1983 was adopted in 1967 at the request of PROCAN. The formula was applied thereafter and the only change was in the amount of the unit contribution. The Board dealt with the various arguments put on behalf of PROCAN, saying that it had some sympathy with some of them. Amongst other things, the Board said: "As to PROCAN's contention that the current per capita method of calculation is artificial and irrelevant, the Board agrees that it does not bear a direct relationship to the value of the music within CBC operations. Further the present method of calculation does not take into account either economic forces or changes in the level of CBC operations. Nor does it afford any measure of comparability with the other broadcasting tariffs. Although the Board recognises the arbitrariness of the present system, it must be remembered that this system has enjoyed a long history relatively free of dispute. This serves to indicate to the Board that the tariff basis has been workable and acceptable to all parties. Therefore, evidence before the Board must be strong and conclusive before the Board will see fit to deviate from the present method of calculation." But the Board also said: "Recognising that the CBC has virtually no income from advertising and therefore its revenues cannot be used for measuring against private broadcasters, PROCAN contends that costs and expenses are the best and immediately available factors for comparisons between CBC and private broadcasters. As such they should form the basis of a comparable tariff rate. However, the Board feels that PROCAN's approach has been too simplistic for it fails to recognise certain exceptional costs and expenses which result directly from the CBC's important objectives of public broadcasting. The CBC is a corporation created by the laws of Canada to serve definite public needs and unlike private broadcasting stations, is not established to earn a profit. Instead it is, intended to achieve specific social, cultural and national identity objectives. A few examples of these goals include the accessibility by all Canadians to radio and television programs, the promotion of both official languages, as well as native languages and cultural programming, the development of the Canadian cultural industries and the establishment of an international presence. As a consequence, the nature and extent of CBC costs are not directly comparable to those of private broadcasters. Furthermore, the Board supports the CBC view that audience is an important factor to be considered in any comparison between the CBC and private broadcasting. Recognition must be given not only to CBC's ability to reach an audience but also to its actual share of the listening audience. In the case of the private broadcasting tariffs, this audience size factor is a major determinant in the level of revenues received by private broadcasters." The emphasis is ours. The Board then referred to an important matter which is not a matter that arises in the present case. It was the standardization of the structure of tariff items between the two collecting societies. The Board expressed the view that this was desirable and the fact that CAPAC had not sought the same change as had PROCAN meant that, if it gave effect to PROCAN's submissions, there would be an unevenness between the tariff paid to the two associations. In concluding the Board said: "Although sympathetic with PROCAN's aim of establishing relativity between the CBC broadcasting tariff and those of private broadcasters, the Board is not convinced that all the important factors have been considered and play their appropriate roles in the formula proposed. Particularly the failure of the formula to recognize. the exceptional mature of many of the costs associated with CBC broadcasting as well as the questions of audience share and the use of public domain music leave much doubt in the mines of the Board members as to the fairness of the proposed formula. Furthermore, because the present tariff has proven to be satisfactory and workable over a significantly long period of time, the Board does not see fit to change it at this time." The balance of overseas evidence which there is may be referred to shortly. There are no other decisions of tribunals, boards, or arbitrators to which our attention has been drawn. There is evidence of .a number of agreements and practices which exist in other countries. He had the benefit of the evidence of Dr Walter Dillenz who is the Deputy General Manager of the Austrian Society of Composers, Author and Publishers. Additionally, statements were tendered from witnesses in other overseas countries, including Canada and Japan. As well, a number of agreements .are in evidence. All this material discloses the manner in which licence fees are calculated in a variety of overseas countries. The evidence suggests discernible balance in favour of a percentage of revenue as being he accepted measure of the value of the public performance and broadcast rights used by the various broadcasting and television organizations in the world, whether commercial or governmental. Nevertheless, there are substantial differences in the circumstances which exist in other countries. For instance. in New Zealand, where APRA is the owner of the public performance and broadcast rights, the basis of remuneration has been a percentage of revenue since 1983. Previously it was based on cents per head of population. But it has to be understood that the Broadcasting Corporation of New Zealand broadcasts advertisements and the percentage is not of Parliamentary appropriations or operating costs, but of advertising revenue less certain deductions. In the United States there is no national broadcasting service. There are two collecting associations and advertising revenue is the base upon which the fee is calculated. In Austria there is no commercial broadcasting or television service. The income of the authority providing the service comes from both licence fees and advertising. The licence fee payable to Dr Dillenz' organization is calculated as a percentage of the total of these. It is not useful to make further detailed reference to the overseas evidence. But the clear conclusion from the totality of it is that it establishes the truth of what Spicer CJ said more than 20 years ago, namely that it indicates "a wide acceptance by performing right associations end operators of the principle of payment of a percentage of receipt from the sale of station time." His Honour went on to note that the same method had been adopted in countries where the operator was a public authority as well as in countries where operators were private commercial. enterprises. Understandably both parties placed substantial reliance on various aspects of the overseas material. Plainly there is something in it for them both. For ourselves, we are grateful for the assistance it provides but we should not let it weigh too heavily upon us. Our task is to find a solution to the problem we have which, notwithstanding the similarities with like problems in other countries, is in many respects peculiar to Australia because the Australian broadcasting and television system is, to a degree, unique and not the same as that which exists in any other country Nevertheless the overseas decisions do serve to draw attention to number of important points These are: 1. The history of previous negotiations and dealings is important. If parties have arrived freely and willingly upon a basis of remuneration which has been adapted for a long period, this is :a relevant factor to be taken into account. 2. Music will be used in a variety of ways in both television and radio programmes. Sometimes it will be featured. Sometimes it will be theme or link. music. Sometimes it will be very much in the background. On other occasions music used will not be the subject of copyright because it is in the public domain. And for long periods there may be no music played at all. 3. It is not appropriate to ignore the extent of the audience reached by stations and the ratings which particular stations and programmes have. If the analogy between the basis upon which the licence fee paid, by commercial stations is to be drawn upon, it is important to Acknowledge that the more popular a programme, the more likely it is that higher revenue will be attracted. 4. There appears to be unevenness in the decisions of the Performing Right Tribunal in the United Kingdom as to whether a percentage of revenue provides any guide at all to the value of music which is played over television and radio stations. The 1972 decision seems to have been based on the fact that it did provide some guide, imperfect though it was. The opposite view was taken by the Tribunal which decided the Independent Television Companies' application in 1983. We feel bound to say that the decision of the Tribunal in that case appears to us to run counter to world wide trends. But in fairness to the Tribunal, it should be said that its conclusions were drawn in a case involving television companies. In one of the passages from its decision which we have quoted it distinguished the television and radio areas, pointing out that music on television did not play nearly so prominent part as it did on radio. The Evidence We should now make some general comments on the evidence called in the proceedings. It was most extensive, there being over 100 exhibits, many consisting of great numbers of pages. The exhibits included substantial portions of the Report by the Committee of Review of the Australian Broadcasting Commission (known as the Dix Report) and a history of the ABC ("This is the ABC", Melbourne University Press, 1983) by K.C. Inglis. The hearing occupied 21 days and during this time a great deal of oral evidence was called. The witnesses from APRA were Mr J.L.Q. Sturman, its Managing Director, Mr A.J. Stern, its Distribution Manager, Mr A. Jeliba, its Financial Controller and Mr B.R. Cottle, its Legal Officer. Also called in its case were Mr M.J. Freegard, the Chief Executive of the Performing Right Society in London, whose evidence is referred to in some of the United Kingdom Tribunal decisions, Dr Walter Dillenz, the Deputy General Manager of the Austrian Society of Composers, Authors and Publishers, Ms Sandra Forbes, the Executive Director of the Australian Book Publishers' Association, Ms A.C. Wales, the Executive Officer of the Australian Writers' Guild, Mr R.D. Mackie, the Managing Director of Boosey & Hawkes (Aust) Pty Limited, the music publishers, Mr T.M. Jeffrey, .a film producer, Mr R.G. Meale, a reader in composition .at the University of Adelaide and .a composer of serious music and Mr B.D. Lloyd, a senior consultant, to Peat, Marwick and Mitchell who carry on practice as chartered accountants. Witnesses called on behalf of the ABC included many members of its staff or former staff. These were Mr Stuart Revill, its Assistant Managing Director, Mr W.R. Oliver, its acting Federal Budget Officer, Ms Margaret McDonald, the Head of Audience Research, Miss A.C. Rowe from the Copyright Department, Mr J.P. Treffry, Acting Co‑ordinator of Metropolitan and Regional Radios Stations, Mr M.A. Corban, the Assistant Director of Music, Mr D.A. Hayes, the Product Development Manager, Mr C.M. Farrell, the Executive Producer, Department of Children's Programmes, Mr B.D. Buchanan, the Executive Producer of Television Features. Mr R.S. Ellis, the Controller of Administrative Cervices, Mr I.F. Wearin, the acting Federal Controller of Concerts, Mr. A.C. McNeish, the Chief Sound Librarian, Mr. R.C. Stendell, a former producer and presenter with Radio Station 2JJJ, Mr. A.W. Wyndham. formerly controller of Radio 1, Mr. C.W.T. Muir, the Head of Television Drama, Miss J.A. Cooper, the acting Head' of the: English language programme, Radio Australia, Mr R.D. Harrison, the Controller of Radio 2M, Mr. M.H. Shrimpton the Head of Television Entertainment and Music, Mr. B.C. Webber, formerly the Director of Radio Entertainment, Mr. H.W. Tucker, the acting Director of Education and Mr. Denis Andrew, an engineer. Additionally, there were called in the ABC's case Mr. R. Selsby who is the National Media Director of George Patterson Pty Limited, which has carried on an advertising agency for many years, Mr. W.A. Faulkner, a Director of McNair Anderson Associates Pty Limited, which regularly conducts audience measurement surveys, and Mr J.L. Crocker, a consulting actuary. All the witnesses gave their evidence helpfully and straightforwardly. We, have no hesitation in saying that we accept each witness called before us, not only as a witness of truth, but as a witness endeavouring to do his or her best to assist us in the difficult task which we have. In addition to calling witnesses orally, both parties supplemented their evidence by tendering, without objection, statements of evidence from a number of people who were not called. We do not need to refer to the detail of these. Obviously it is impossible in writing a decision of this kind to refer to every aspect of the evidence or to the detail of every witness's evidence. As best we can, we have considered the whole of it and taken it into account in reaching our conclusions. We have already referred, and shall continue to refer, to various aspects of the evidence, sometimes without acknowledging the source of it, because it does not seem to us to be useful to do so. There are five aspects of the evidence which we need to mention specially. They are the extent of the use of music by radio and television stations and the significance of music in the presentation of radio and television programmes, the finances of the ABC, the payments which have been made by the ABC to APRA in the past and also the payments which have been received by APRA from the commercial television and radio stations, the significance of audience reach and the ratings of programmes and of radio and television stations, and some aspects of Mr. Freegard's and Mr. Sturman's evidence To these matters we now go. The Extent and Significance of Music in Radio and Television Programmes In recent years there has been a change in the format of radio programmes provided over a number of commercial radio stations. This is due to a trend on the part of many stations to move away from programmes largely based on music to programmes based much more on "talk". Some stations have not reflected this trend; an example is provided by Radio Station 2CH in Sydney. But others have. Radio Station 2GB in Sydney provides, perhaps, the prime example. To take account of this trend APRA has recently evolved a new formula to provide for the amount to be paid as a licence fee by commercial radio stations. It has introduced what is known as a band approach which enables licensees to select from a range of alternatives depending upon the amount of music they expect to broadcast. A station still. transmitting a great deal of music will select .a basis of remuneration similar to that now in existence. On the other hand, a station which is mainly providing public interest programmes will select a formula which will involve it in paying substantially less. If it turns out that the :amount of music played is greater than forecast, the agreement provides for additional payments to be made. The trend which is apparent in commercial radio is to be seen developing in ABC radio programming for its AM stations. Its ability to do this has been made easier by the existence and continuing growth in the numbers of FM stations throughout Australia. The number of these is increasing and many country listeners now have access to FM stations. The numbers of people who will have this facility will gradually increase as the years go by. The ABC has made it its policy to move much of its continuous music broadcasts to the FM stations and to increase substantially the amount of talk programmes on its AM stations. It would nevertheless be wrong to take the view that music plays an insignificant part in ABC AM radio broadcasts today. It was clear that a number of the ABC witnesses who were called had the impression that the amount of music played over ABC stations had reduced substantially in recent years. But evidence produced by APRA based on records provided to it by the ABC of music played over ABC AM. stations showed that, despite the changes which have come about, a considerable amount of music is still played over those stations. The APRA evidence established that the average use of APRA music on Radio 1 is 35.96 per cent, on Radio 2 19.12 per cent, on Radio 3 26.78 per cent, on ABC‑FM 31.36 per cent and on JJJ 86.58 per cent. It is to be emphasized that the percentages are of broadcasts of music in the APRA repertoire. The percentages do not include music in the public domain. The percentage of ABC television time taken up by the playing of music is approximately 30 per cent. It should be understood, that the percentages, both for radio and television, do not distinguish between music which is featured and that which is not. Also in evidence is a tabulation showing the use of music on Radio 1 and Radio 2 from the year 1960/1 to the year 1983/84. This shows an increase in total music hours from 7,049 to 7,700. The figure has fallen over the last ten years from a peak of 8,400 hours. There is also a tabulation for Radio 3 which shows an increase from 6,423 to 7,088 hours for the same period. Another tabulation shows the growth of air time on ABC radio and television. It shows a steady growth, due in part to the fact that at least until 1976 the numbers of stations increased each year. One of the matters upon which reliance is placed by APRA is the increased reach of the ABC due to the ever increasing number of both radio and television stations up to the middle 1970's. There is no trend in television similar to that in radio of a movement from music to talk. The amount of music now being used on television programmes is roughly the same as it has been for many years. Obviously there is far less featured music on television. Its use on television is mainly as theme, link or background music. There is, however, some featured music. An example is provided by the ABC programme, Countdown, which is televised on Saturday and Sunday evenings. On other occasions serious music is featured. There are sometimes performances of complete operas. But in relation to works of that kind it is likely that, if the work is still in copyright, grand rights, rather than small rights, will be involved with the consequence that the broadcast would not be the subject of the licence here in question. A further factor which should be mentioned is that the ABC provides an opportunity for the playing of serious music composed by Australians over both radio and television which is not provided by any other radio or television organization. Substantial complaint was made about the level of remuneration received by a number of modern Australian composers, particularly of serious music. The complaint is understandable, but it is true to say that if it were not for the ABC, their music would be most unlikely to be played over radio or television at all. The parties are at one in the importance of music in both radio and television broadcasting. Neither suggested that music was insignificant or unimportant to programming. Perhaps the most succinct comment about this was made by Mr Revill, who is the Assistant Managing Director of the ABC. He described music as "the other language" of broadcasting and television. Mr T.M. Jeffrey has worked in the motion picture and television production industry for the pass 26 years. He has acted variously as producer, director and writer. His motion picture credits include The Removalist, the Odd Angry Shot, Weekend of Shadows, The Best of Friends and Fighting Back. He was asked to describe his view of the significance of music and the various uses of it in film. He said: "It can be approached in a very simple way, that music can be used just for opening and closing titles to introduce the programme ‑ particularly in my case, I would like to be able to speak about drama programmes because that is what I basically concentrate on - one can simply have music as a background to the opening .and closing titles. However, with tile cost of programmes and the importance, emotionally, that music can play generally when one talks about music one talks about it as being a very major portion of the sound track to a programme; because, in my view, music can add, enhance, heighten the dramatic content of a programme or a film. It cannot only merely serve the dramatic content of the programme it can in fact, I believe, add to it and can strengthen the drama, the mood, and so forth, which the writer and the director and the producer wish to create at any particular time, so it can serve a number of purposes in a film." Mr Jeffrey said that must music for films today was specially composed for them. This applied both to films to be shown in the cinema and on television. Strangely, however, music is not to the forefront of a film maker's budget. Mr. Jeffrey said that the music was not usually commissioned until the film was almost complete. Composers had to be content with what money could then be found. The assessment of the significance of music involves a balancing exercise. The repertoire which APRA has to offer is a most valuable one and if it were not available television and radio stations would be in a difficult position. If performing right societies did not take assignments of all public performance and broadcast rights, special arrangements would need to be made with a host of copyright owners, many of them overseas. Broadcasters would always be concerned as to when the use of particular music might involve an infringement. The tendency would be "to play it safe" and thus be restricted in their choice of available music. Their access to "the other language" ‑ to use Mr. Revill's expression, would, from a practical point of view, be substantially confined. On the other hand, music is only one component of radio and television programmes. The percentages earlier given show the extent of its use. The fact that it is but one of a number of components which together make up the totality of programming material broadcast over radio and television stations is one of the matters which makes the task of valuing the right which the APRA licence confers so difficult. The Finances of the ABC As earlier mentioned the ABC depends for its revenue upon Parliamentary appropriations. It does receive some revenue from the sale of records and publications of various kinds from shops it conducts in the capital cities, and it also receives a certain amount of income as the result of concerts held by its symphony orchestras in various parts of Australia. The orchestras also receive certain subsidies and there are programme sales, in respect of the concerts. These it seems, together with other miscellaneous income, totalled almost $13 million for the year ended 30 June 1983 and $14 million for the year ended 30 June 1984. These sums are to be compared with Parliamentary appropriations totalling $261 million for the year ended 30 June 1983 and $292.5 million for the year ended 30 June 1984. The sums we have mentioned make up the total income which was provided to the ABC to conduct its domestic services. It received an additional appropriation of $9.25 million in the year ended 30 June 1983 and $8.9 million in the year ended 30 June 1984 for its overseas service. The accounts which are prepared for the ABC divide payments into three main categories, namely, Radio - Domestic Service, Television and Other Activities. Total operational payments for radio amounted to $70.5 million in the year ended 30 June 1983 and almost $78 million in the year ended 30 June 1984. No separate figures were taken out in respect of the cost of broadcasting the proceedings of Parliament, but, somewhat to our surprise, Mr Oliver said that the cost was below $100,000 per year. Television costs for the year ending 30 June 1983 were $146.3 million and for the year ending 30 June 1984, $164.5 million. Although some items stated under particular sub‑headings would suggest that programme costs can be calculated fairly simply, this is not the case. Mr. Oliver made available detailed figures covering all aspects of the ABC's expenditure, but he was unable to give a break‑up of them in order to enable APRA to determine what sum should be deducted from the total outgoings to give affect to its willingness to allow programme costs of up to 40 per rent of the total amount of, expenditure to be deducted. That was no doubt the reason why APRA eventually agreed that the deduction should in fact be 40 per cent. Under the heading "Other Activities" are listed the costs of maintaining orchestras .and concerts and the costs of merchandising. In each of the more recent years the costs of orchestras and presenting concerts have amounted try approximately $22 million. The costs of merchandising were $4.6 million and $5.8 million respectively. General administrative expenses amounted to $15.27 million in the year ended 30 June 1983 and $17.3 million in the year ended 30 June 1984. The operational expenses for the overseas service of the ABC (Radio Australia) were $8.3 million and $8.7 million respectively for the two years. We have set out the figures mentioned in the last few paragraphs because they are important in understanding the impact which APRA's claim would have if it were granted. We realize that the figures may be somewhat difficult to understand set out in this way, but in order to assist the reader we have appended to the decision a copy of receipts and payments for the year ended 30 June 1934 (attachment B). The figures for the previous year appear in columns to the right of those for the 1984 year. Although the financial year ending 30 June 1985 is now complete, we do not have figures for this year. It is not important for our purposes that they be referred to. Payments by the ABC to APRA There are tabulations in evidence showing the amounts which have been paid by the ABC to APRA for each of the years ending 30 June 1954 to 30 June 1984 respectively. The payment received in respect of the year ended 30 June 1984 was $1,252.021. A comparative tabulation shows the amount paid to APRA by Australian commercial radio and Australian commercial television for the year ended 30 June 1984. These amounted to $3.5 million and $7 million respectively. We have appended the tabulation to this decision (attachment C). The reference to a "retrospective judgment" in respect of the year ended 30 June 1964 is a reference to an adjustment that needed to be made after the arbitration conducted by Spicer C.J. in 1963. A further tabulation is designed to show the amount of the ABC payment to APRA in each of the years ending 30 June 1961 to1984 inclusive as a percentage of ABC expenditure. From the year ended 30 June 1965 that expenditure is broken down into two figures, that for the ABC's domestic services and that for its overseas service. From the year ended 30 June 1977 there is a further breakdown showing the separate expenditure on domestic radio and television as well as upon Radio Australia. The tabulation shows a downwards trend from the year ending 30 June 1961 when the percentage was 0.887 per cent to the year ending 30 June 1974 when it had fallen to 0.32 per cent. It then increased to a peak of 0.601 per cent for the year ended 30 June 1979, but began to fall again, and for the year ended 30 June 1984 was 0.499 per cent. A copy of the tabulation is appended to the decision(attachment D). Counsel for APRA relied strongly on the tabulation as an indication that the amount paid by the ABC is far too low and has been so for many years. In his submission it discloses that the ABC is not, and has not in the past been paying, anything approaching a fair market price for the music which it uses. At this point it is convenient to mention evidence by APRA to show that the amount it was receiving under the existing formula of cents per head of population was substantially less than that being received from the commercial stations, whether television or radio. We are to a degree, inhibited from discussing this evidence fully because much of it was based on confidential information and publication of the evidence was restricted. The end result of a number of analyses and calculations which were done was a comparison between "the average per minute licence fee" paid to APRA by commercial stations for the year ended 30 June 1984 and "the average per minute licence fee" which was paid or would be paid by the ABC for the same year if certain assumptions were made. In order to assist the comparison, there was calculated, in relation to the commercial stations, not just a "simple average" but also a "weighted average". For commercial television the simple average was 63 cents per minute and the weighted average $2.35 per minute. This was compared with an average for the ABC of 18 cents per minute as .at present and 44 cent per minute if the proposed licence scheme were confirmed. For commercial radio stations the simple average was l0 cents per minute and the weighted average, 23 cents per minute. Under the present formula the ABC radio average was said to be 3.5 cents per minute. Under the proposed licence scheme it would rise to 9 cents per minute. In each case the amount presently received by the ABC was well under both the simply end weighted averages. If the licence scheme were confirmed without variation, the amount which would be received would still. remain well under both averages. This evidence, which was given by Mr. Cottle, APRA's Legal Officer, and Mr. B D Lloyd of Peat Marwick and Mitchell, became the subject of much controversy. The two witnesses were cross-examined at some length and evidence to rebut the implications of their evidence was given on behalf of the ABC by Mr J L Crocker, a consulting actuary. A number of reports, tabulations and analyses were tendered, many of which are confidential exhibits. Mr Crocker's attack on the exercise conducted an APRA's behalf struck at the method adopted to achieve the weighted averages for the commercial stations. Amongst other things he said: "I feel that the concept of weighting is a correct one, but I do not agree in the way that it has been used in this document and in particular that the point in weighting is to reflect the importance of different elements and by getting a weighted average in effect you have got to apply that to why you might call the weighted average minute and the methodology used here provides perhaps an appropriate weight for application to commercial stations but neglects totally matters such as market share which would alter the relative importance of the particular figures you are using; that is attempting to arrive at a cost per market where the importance of that market for the ABC will be different from the commercial stations." Mr Crocker also though that there was an element of double counting in the approach which the APRA witnesses had taken. Later he said: "If rather than using the weighted average approach you were to look at each market, strike a rate for that market and then apply factors to get a value of the music for that market, then I would accord completely with the commercial style approach. What has been done with the weighted average concept is to try and short circuit that calculation and rather than doing a calculation for each market, coming with a dollar value being the commercial cost of the music. It has attempted to get are overall factor and then multiply that at the end." In a report which is part of the evidence given in confidence, Mr. Crocker made a number of calculations as to what the annual licence fee payable by the ABC should be, if the percentages paid by the commercial television and radio station were used as a guide. In accordance with the evidence referred to above, Mr. Crocker weighted the ABC usage figures which he obtained from its annual report for the year ended 30 June 1984 by reference to the market share enjoyed by its various stations. He had no figures for country stations and made two calculations one based on the country stations having a market share of 50 per cent and the other based on their having market share of 25 per cent. What Mr Crocker was attempting to do was to give full effect to the fact that the ABC's market share overall for both radio and television was very much below that of the commercial stations. His analyses showed that in the large centres of population the radio market share ranged from 10 per cent in Sydney and Melbourne up to 14 per cent in Perth. In television the range was from 9 per cent: in Melbourne up to 1 per cent in Perth. These percentages suggest to us that his assumption of a 50 per cent country share for the ABC in both radio and television was somewhat generous and that his 25 per cent assumption may be nearer the mark. If it were adopted, upon the calculations which Mr Crocker made, the licence fee to be paid by the ABC would be a composite of $317.000 for radio and $524,000 for television, a total of approximately $840,000 or$400,000 less than the fee which is being currently paid. If the figures resulting from the assumption of a 50 per cent share of the market in country areas were used, the figures would be $747,000 for radio and $877,000 for television, a. total. of approximately $1,625,000. It was because of these calculations that the ABC apparently decided that a fair licence fee to be paid to .APRA was $1,350,000 which was the amount subject to adjustment, of its open offer. The different approaches of Mr Cottle and Mr. Lloyd on the one hand, and Mr. Crocker on the other, are but reflections of the different approaches adopted by the parties to the problem. Really there is a fundamental difference between them which underlies the presentation of their cases. This difference will emerge somewhat more clearly when we come to discus Mr Freegard's evidence. But it raises for consideration the question of whether one ignores audience reach :and the ratings of programmes and stations or whether one takes them into account. The APRA case is substantially based on the width of the licence which it confers on broadcasters such as the ABC and thus what is claimed to be the very great value of it coupled with the fact that all the music in its repertoire is then available for the broadcaster to use as it sees fit. The fact that it may not use it in such a way as to attract maximum audiences is not a relevant consideration. The important factor is that the repertoire is available. Thus what the broadcaster has is the freedom to use any part of the repertoire as often as it choose and in whatever manner it chooses. The value of the licence ought not be cut down because a broadcaster so uses what is available to it as not to attract large audiences. The ABC contends, on the other hand, that if the licence fee paid by the commercial stations is to be used as the guideline it would not be right to omit audience attraction from consideration. The greater the audience the commercial stations attract, the greater wall be their net advertising revenue. As they succeed so does APRA because the percentages yield higher returns from the stations which attract the larger audiences. Thus audience attraction is critical factor in the amount of the licence fee paid by the various commercial stations to APRA. If the commercial basis is to be used as a guideline it must be used in its totality. Audience attraction must be taken into account. That is what Mr Crocker attempted to do. Obviously this is a critical issue for us to decide. We shall say more about it later. For the moment we say that we have found the evidence given by Mr Cottle, Mr Lloyd and Mr Crocker and their various analyses and tabulations helpful. With no disrespect to them, we would say, however, that it would seem to us to be unwise to accept precisely the result of any of their calculations. Obviously we are in an area that is not capable of precise calculation or quantification. But the evidence has helped to highlight the different :approaches of the parties, and so far as figures are concerned, to direct us into the range of figures which, depending upon our views on points of principle, will provide us with a guide as to what is, and what is not reasonable. Reach and Ratings The principal evidence given about this matter was given by Mr R Selsby, an experienced advertising agent. In the course of his evidence there were tendered a number of McNair Anderson surveys. These are confidential and publication of them was restricted. Accordingly, we are again faced with tile problem of not being able, unless we publish a separate confidential decision, to refer fully to the evidence. We do not think that this is of substantial moment. Mr Selsby explained the two concepts of ratings and reach and also gave evidence of what a potential advertiser on radio or television would look for when determining when and an what station or channel to advertise. He also explained to us how stations and channels set their rates. Ratings give one an indication of the likely level of audience size. Reach, on the other hand, gives an indication of the number of people reached during at least one quarter of an hour of a selected period during which a particular station or channel is broadcasting. Reach relates to stations; ratings to both programmes and stations. More usually ratings will be significant to advertisers on television in relation to programmes and significant to advertisers on radio for particular time spans during the day or evening. Reach is a factor which is taken into account, but has not nearly the importance of ratings. Counsel for APRA relied strongly on the reach figures that showed quite a high proportion of people watched or listened to ABC stations at some point of time during the day. The reach of ABC television channels was not nearly as high as the reach of the commercial channels, but, nevertheless, it usually exceeded 50 per cent. That of the commercial channels usually exceeded 80 per cent. Another statistic is that of station share trends. These for the period 6.00 a.m. to 12.00 midnight during a ratings survey taken last year indicated that between 9 and 11 per cent of people principally watched ABC television channels. Tho percentages for the commercial channels in Sydney were always above 25 per cent and often exceeded30 per cent. As we understand the evidence, this is the usual trend. The peak viewing time :For television is between 6.00 p.m. and 11.00 p.m. each day. Ratings figures given for a variety of programmes showed that by far the most popular programmes were those shown an the commercial channels. The position in relation to radio discloses the same trend. Although the ABC has a substantial reach, its ratings for its various stations are, with some minor exceptions, well below those for the commercial stations. However, it should be said in relation to radio that, because the ABC's audience attraction must be looked at overall, that is by accumulating the totality of its stations in a given area, for example, Sydney, its total ratings for such .an area do not compare unfavourably with some of the commercial stations with the consequence that the disparity does not appear to be as marked as it is in the case of television. Mr Selsby said that the television channels basically used the rating levels or audience size to calculate their charges so that the greater the audience the higher the fee charged by the station. He said that audience reach figures established that 85 per cent of the available audience watched each commercial channel at least at some time during a given week. The comparable figure for the ABC was between 50 and 60 per cent. He was asked whether the reach figures would be of use or value to an advertiser. He said that reach performance of a scheduler is useful to the advertiser, but the most valuable thing for an advertiser was firstly to get the right sort of audience in individual spots. He added: "The reach performance it important but if you have a lower rating station like the ABC you would obviously need to have a lot more spot on that to come up to the 50 per cent or 60 per cent than you would on a commercial station." He said that the commercial channel charges differed for prime time according to audience size. "by the audience rating for individual programmes ... if a commercial station his a higher average commercial rating than another one, they would attract greater revenue." Mr Selsby said that approximately 80 per cent of television advertising expenditure was incurred in advertising during the evenings and only approximately 20 per cent during other periods. Mr Selsby made it clear that an advertiser would not be advised simply upon the basis of what was in the published McNair Anderson surveys. Advertising agents, such as George Patterson Pty Limited, of which Mr Selsby is the National Media Director, would themselves have a great deal more information upon which their advice to a potential advertiser would be based. We do not find it necessary to say more of ratings and reach. Mr Selsby's evidence establishes to our satisfaction what, in any event, we think is probably well known by the community namely, that ratings for ABC stations and programmes are usually lower than those for commercial stations and programmes. The question ultimately for us will be what the significance of that circumstance is. Another matter which the evidence establishes is that the higher the rating for a particular television programme or a particular radio station, the more advertising revenue that programme or station is likely to attract. The higher the revenue, the higher the licence fee to be received by APRA from the commercial stations will be. Some aspects of the evidence of Mr Freegard and Mr Sturman Mr. Freegard, it will be remembered is the Chief Executive of the Performing Right Society Limited in the United Kingdom. He has been employed by the Society since 1964. He has been Secretary and Deputy General Manager. He was appointed to his present position in 1969. The evidence to which we refer is substantially argumentative but we find it helpful because it, like the decisions of the various tribunals to which we earlier referred, tends to encapsulate the many considerations which need to be taken into account in reaching a conclusion. Mr Freegard, not unnaturally, espoused the point of view that audience share was not a highly relevant factor in the determination of what licence fee should be paid by a national broadcaster for the broadcast right in music. He drew a distinction between the purposes of such a broadcaster and the purposes of commercial broadcasters. He was asked why he did not regard the actual audience in relation to the BBC as being significant, as distinct from the potential audience. He said: "The BBC is under an obligation under its charter and under its licence from the Home Office to provide a service not only of mass entertainment, but also a service which will provide for the interests of minorities. We consider that it is just as important to the BBC to be able to fulfil those obligations as it is to be able to reach a mass audience; and therefore, if the BBC considers it appropriate to spent a substantial sum on the provision of, for example, as it does, a classical music and highbrow drama, current affairs radio channel. The actual listening audience to which it is addressed are usually very small in relation to the total potential audience. We think that is just as valuable to the BBC as the provision of mass entertainment. It is a public service broadcast and not a mass entertainment." Later he added "They (the BBC) should pay a price in relation to the resources which the community has thought fit to place at the BBC disposal. It might not be a commercial price because the BBC might place lower value ‑ I do not know ‑ in the provision of public service broadcasting; but I think, our philosophy would be that we would expect tire BBC to pay a royalty which, having regard to the royalties paid for the copyright music which it does choose to broadcast in fulfilment of its obligations and objectives under its charter, is fair having regard to what is paid by commercial broadcasters in relation to their income, the income which they generate from the sale of advertising and their use of music. There ought to be a correlation. ………………………………………………………………………………………… With the public service broadcast those considerations to my mind do not rise. The public service broadcaster is fulfilling objectives of a social nature, and a cultural nature in part, laid down for him by society as a whole and he has to make a judgment as to what resources from the total resources made available to him should be devoted to that particular objective, and even though he may know perfectly well that to put down a particular programme will only attract a small minority, he feels it is necessary for him to do that because if he does not, that kind of material will never be broadcast. Mr Freegard expressed the firm opinion that the approach based on a percentage of revenue was the right approach for the calculation of the licence fee to be paid by a broadcaster such as the BBC or the ABC. He said: "I believe it is the right approach, your Honour, for this reason: there is a long standing principle, which I think is widely accepted, under which the author of a work, either a composer or copyright owner, creator of a work, is entitled to be associated with the fortunes of his work; and so if a playwright writes a play which commands wide public interest he is entitled to a royalty, and usually gets a royalty, which reflects that public acclamation, if you like. Now, in the field of broadcasting copyright music, because copyright music ‑ the whole repertoire of works is an important constituent part in the programming of any broadcasting organization, then the totality of the authors and composers of those works collectively, ought to share in the fortunes of those works. In other words, their reward ought to be related in some way to the extent to which the works are exposed to the public by that means. In the case of the commercial broadcaster it should come about as a result of the successful exploitation of the work. In the case of the public service broadcaster it is a payment that should be related to the value which the community as a whole, through parliament or whatever mechanism is devised for funding the public service broadcaster. It should be related to those resources." The emphasis is ours. Later he said that in the case of the public service broadcaster the actual listening audience ought not to be so relevant as it was in relation to commercial stations because of the obligation the public service broadcaster had to serve minorities. He added: "If it is considered important enough for the community to set aside funds to put .at the disposal of the public service broadcasting entity to serve minorities as well as majorities, then that is a priority that society has, as it were, set down and those who create the works which enable that broadcasting entity to carry out that function should have a reward which is related to the total resources which the community thinks worthwhile to be devoted to those priorities." To the same effect is the evidence of Mr Sturman, who is the Managing Director of APRA. He was asked whether he saw .any relevance in determining a fee by reference to the number of people who were likely to be reached. He said: "No, I do not really, your Honour. I think audience has some indirect relationship only in valuing the broadcast right of music. It is the sponsor, either the advertiser or the government, that pays the bill that is really influenced I think by audience. In other words, an entirely commercial setting. I think the advertiser will want to reach a maximum market, a maximum selective market, may well pick a radio station that has a big audience rating. Another advertiser may well pick a station that appeals to the over 40's or the 25 to 35. He is much more selective. Therefore, audience is relevant but not the size of the audience so much as the nature of the audience involved." Mr Sturman was also asked about the justification for using expenditure as a basis rather than revenue. He said: "In choosing the expenditure formula, your Honour, we picked an existing basis. It seem to us that provided we equate such things as orchestra costs and parliamentary broadcast time and related activity then we can get a fair comparison between tie operations of the ABC, bearing in mind that by picking expenditure we already give the ABC a very considerable concession because there is no profit factor built into their expenditure as there is with a commercial station which must have another 15 per cent factor involved over expenditure to make it a worthwhile venture. Accordingly not only do we deduct that profit factor, we deduct parliamentary broadcast costs. We make allowances for excluding orchestras and I am sure there are other factors such as the transmission costs that we have agreed to exclude. We end up with a very much reduced expenditure figure by comparison with the revenue of commercial stations." We have now referred to sufficient of the detail of the evidence. We propose to come more directly to the determination of the questions at issue between the parties. The Quest for a formula which will yield Reasonable Remuneration We think that we should approach our ultimate task of deciding whether the licence scheme should be confirmed (with or without variations) by examining the question of what formula or basis is the most likely to yield equitable remuneration. As earlier noted, our jurisdiction is limited ‑ see the earlier discussion under the heading "The Tribunal's Jurisdiction". But it is only by analyzing where each suggested basis of remuneration leads that we can come to a conclusion as to whether the licence scheme is itself reasonable or will become reasonable if certain variations to it are made. What are the available bases for remunerating APRA? Those suggested in the course of the hearing were: (i) Cents per head of population (ii) Annual lump sums (iii) Percentages of (a) revenue (b) expenditure Are there any others? Counsel did not suggest any. The overseas material does not suggest any. The only other basis which has occurred to us is one which arises from a consideration of Mr Crocker's evidence. It would be possible to take as a starting point the licence fees paid by all the commercial stations, television and radio, and apply to the total a percentage derived from the overall audience which is attracted by ABC stations as compared with the total audience attracted by the commercial stations. We do not consider this approach to be sound because: (a) it is undesirable to tie the licence fee payable by the ABC to the amount of the licence fee paid by other organizations which, although carrying on similar activities, are of a different nature, and; (b) the calculation of the appropriate percentage would be a complex and difficult task. It would involve the investigation of an uncertain factual situation which, in any event, might vary considerably from year to year. Neither of the parties has advocated this course. Neither has been heard on its advantages or disadvantages. In all the circumstances we propose to put it aside. In an absolute sense, none of the bases suggested in the course of the hearing is unreasonable. Each has been adopted at various times in Australia with the exception of that based on a percentage of expenditure. Subject to the same exception, each has been adopted in other countries. None may therefore be discarded out of hand. Nevertheless, it is possible to make a judgment as to whether one basis or another will best reflect the value of the subject matter of a licence in the particular circumstances of a given situation. The valuation of what any copyright owner confers when he licenses a person to use all or any of the rights which he has is more often than not a difficult exercise. It will be less difficult if there is a going rate. That is what has been looked for in infringement cases when damages are sought. That analogy has been thought appropriate by this Tribunal in cases before it under other sections of the Act; see pp. 45‑47 above. Here there is a going rate, namely, the pence or cents per head of population formula which has been used by the parties since 1964. It has been increased from time to time in accordance with the formulae upon which the parties have agreed. The parties to an ongoing relationship such as that in question here are not tied to a basis of remuneration earlier agreed upon for all time. Subject to the provisions of ss 154 and 157 of the Act, they may renegotiate the terms on which they do business. If one party wishes a higher fee, he may attempt to obtain it. The laws of supply and demand will determine whether the parties will continue to do business and, if so, on what basis. In this case the parties obviously must continue their relationship. APRA has the music which the ABC needs for its programmes. APRA needs the outlet and exposure which the ABC is able to give it and the money which will be paid in consequence of the use of its music by the ABC. Sections 164 and 157 remain in the background and could operate so as to compel the parties to do business on .a particular basis if they were unable to agree. That is what this case is about. Also in the background are public interest considerations which suggest that the ABC should not be without access to APRA music. Upon the basis that we approach the question by putting aside problems which arise because of the nature of our jurisdiction, our task is not therefore, concerned with any question of whether business may not be done between the parties, but what is the most reasonable basis upon which they should conduct it. Cents per head of population is such a basis because of the previous dealings of the parties, but it does not follow that either should be held to that basis for ever more. In this regard we agree with statements made by the United Kingdom Performing Right Tribunal which we have earlier quoted; See p 65 above. An initial question therefore arises as to whether the cents per head of population formula is inherently reasonable or unreasonable. It may have been adopted as the yardstick by the parties for almost twenty years, but in the light of the application which is now made to us, we must consider whether it is likely to yield an amount which will be a true reflection of the value of the right which the APRA licence confers. We say immediately that we find it difficult to perceive on what basis it could be said that cents per head of population could be any real indication of that value. There is nothing in the evidence which suggests any basis for this view. Counsel for the ABC was quite unable in his submissions to point to any factor which would make it a reasonable indication of the value of the licence ether than the prior dealings of the parties. Mr Revi11 was asked about the matter. He said: "…I believe the basis on which we had agreements with our APRA colleagues was fair because it took into consideration the potential audience that existed in Australia namely, the total population." However, this answer needs to be contrasted with later evidence which he gave, namely: "Is it just that that is the history of it and what the parties themselves have arrived at over the years and therefore it ought to continue on that basis?… I think that is the bulk of the argument, yes." Regrettably we were not provided with the evidence of any witness from the ABC who was in a position to speak for it as Mr Sturman had done for APRA. Naturally, it was for counsel to determine what witnesses would be called on behalf of the ABC and we must deal with the case as it has been presented to us. But we confess that we have felt the lack of assistance that might have been provided if the Managing Director or a member of the Board of the ABC had been called in order to explain to us why it was that a formula based on cents per head of population was the appropriate one. We have not taken anything from the absence from the witness box of such a witness except that it has served to reinforce us in our conclusion that, subject to what Mr Revill has said in the evidence above quoted, there is no basis of reason in the cents per head of population formula otherwise than that which is provided by its adoption by the parties over a long period. It follows that counsel for the ABC could make no case based upon the retention of a formula calculated as a number of cents per head of population except that this had been the way the parties had done business since 1964. We do not underestimate the weight of that case, but we are concerned to point out that its strength lies in past practice rather than on some apparent relationship between the formula and the real value of the APRA licence to the ABC. On this question the second decision of the Canadian Board to which we referred, when discussing the overseas material, is relevant. The Board plainly saw the weakness of a cents per head of population approach as a guide to the value of the right, but would not change it because of the previous history of the dealings between the parties and particularly because of the unevenness which would follow if one performing right society were placed upon one basis of remuneration and the other upon an entirely different basis. What then is to be said of the other bases? Obviously it will always be possible to fix a lump sum indexed to the cost of living. This is what the United Kingdom Tribunal did in the case it had in 1983 involving the Independent Television Companies. But while no such fixation could be said to be otherwise than reasonable, such an approach does involve a high degree of arbitrariness. There is no indication in the Tribunal's 1983 decision of how it arrived at the lump sum figures which it. awarded. That is no criticism of the Tribunal. But it does suggest that the method adopted has the weakness that it involves an almost entirely judgmental exercise and the high degree of arbitrariness to which we have referred. A percentage of revenue has a long history of acceptance as a measure of the worth of copyright. It is accepted in the area of literary works where the owners of copyright books receive a percentage of retail sales. It also applies in the case of sales of sheet music where again percentages of sales are taken as a guide to what the copyright owner should receive. And it is accepted in the theatre and concert areas where copyright owners receive a percentage of the box office receipts. The philosophy underlying this approach must be the one referred to by Mr Freegard in his evidence, namely, that over the years the copyright owner has been perceived to have an interest in the success or otherwise of his work. If it is highly successful and substantial returns are yielded, he should receive more. If his work is a failure, he will receive little or nothing. This approach has particular application in commercial cases, that is where the licensee, in this area of copyright use, the broadcaster, is a commercial entity. As earlier noted, it is not, however, the approach adopted by the United Kingdom Tribunal in its 1983 decision. which concerned the Independent Television Companies. We think there were two reasons for this. One was that the Tribunal baulked at adopting percentages of revenue because of the very high figures which would be yielded unless a very small percentage were taken. The Tribunal took the view that, in order to be realistic, it should look, not to the formula, but to the end result so that it might perceive what the actual effect of its decision on the parties was likely to be. Furthermore, the Tribunal was conscious that in television music does not play the part it does in radio broadcasting. That distinction was plainly drawn by it. Percentages of revenue are also taken as the measure of the value of the broadcast right where the broadcaster is a public corporation providing a national service as is the case here. But in every case to which our attention has been drawn, the revenue of the broadcasting authority has come not from Parliamentary appropriations (except in respect of the grants in aid made to the ABC in order to operate its Overseas Service) but from licence fees or from advertising or both. Furthermore, in no case has expenditure been used as the basis upon which a percentage is to be charged. The problem must be approached with it in mind that music by no means comprises the totality of any broadcast whether by a radio or a television station. We have attempted earlier to give some indication of the amount of music which is broadcast in proportion to other types of material and we have mentioned that the use of music varies. Sometimes, more usually on radio stations rather than television stations, it will be featured; at others it will be background, theme or link music. Its use for those purposes ought not to be underestimated. The evidence earlier quoted from Mr Jeffrey in relation to the importance of music in film demonstrates what we mean. A further matter to be remembered is that all music is not the subject of copyright. Much of the music which is used, particularly by the ABC, is out of copyright because of its age. We must endeavour to establish the value of the right without falling into the error of making some allowance favourable to the ABC which leads to copyright owners in effect subsidising it. It is not for copyright owners, or any other private group in the community, to subsidise a public instrumentality unless they do so willingly. The ABC pays for all other services and commodities which it uses at commercial prices. It should not be entitled to the benefit of the licence without paying a commercial price for it also. But this does not mean that it is not relevant to take into account the provisions of its charter which we have earlier set out or the nature of its programs, some of which are designed to assist the Australian composer, particularly of serious music, but also, to a degree, of more popular music. It is not wrong to take those matters into account in reaching :a commercial solution to the problem because, if the composers of the music were themselves negotiating with the ABC as to the terms upon which their music would be played., both they and the ABC would take into account in reaching their bargain the fact that there was benefit to the composer in having his music played. As we have earlier said, much serious music would not be played at all on television or radio if it were not for the ABC's programming policy. In relation to all these matters we refer what was said by the Tribunal in the Copyright Agency case (supra 59 A.L.R. at p 200). The APRA case seeks the application of the commercial percentages paid to it by commercial television and radio to the ABC's expenditure. But in the course of its evidence and submissions it was concerned to play down, or discount altogether, as a relevant factor, the size of the audience which the ABC's programmes attracted. Audience size is a relevant factor in the amount of remuneration which APRA receives from the commercial stations because their revenue is earned as a result of advertising. The more attractive a programme, the more an advertiser pays and the greater the station's revenue. If the commercial example is to be drawn upon, it seems to us that one must draw on the whole of it. Audience attraction must become a relevant factor and the plain fact of the matter is that ABC programmes do not usually attract the large audiences which are attracted by the commercial stations. However, when the matter is properly analyzed, the APRA case does not really depend upon the commercial example at all. Although the starting point is the expenditure of the ABC, it is in reality its revenue, or at least a portion of it, upon which APRA seeks to charge a percentage. The ABC's revenue comes to it from quite a different source from that received by the commercial stations. Its revenue is a Parliamentary appropriation. What APRA makes out of this as is made clear in the passages from Mr. Freegard's evidence earlier quoted, is that the amount of the Parliamentary appropriation is the value which the community may be seen, through Parliament, to put upon the total operations of the ABC. Since music is an essential part of the various programmes, the copyright owner should share in the total amount of the value which the community places upon the broadcasts. The only way this can be done is by the application of a percentage to revenue or expenditure. The advantage to APRA's case ofapproaching the matter in this way is that it diverts attention from the fact that ABC programmes do not have the overall audience attraction which programmes put on by the commercial stations usually do. The disadvantage is that it demonstrates that there is no warrant for the mechanical application of the commercial percentages to the ABC's revenue or expenditure. Nevertheless, having given the matter due consideration, we have reached the conclusion that we should accept APRA's broad approach but not the complete case which it makes. Our principal reasons for doing so are as follows (a) The courses open to us are t o leave things as they are, to determine, as best we can, a lump sum or to devise a formula consisting of a percentage of revenue or expenditure. (b) Although the present formula has been in force for many years, for reasons earlier given, we do not think it leads to a true reflection of the value of the APRA licence. (c) The fixing of .a lump sum has the weakness of the high degree of arbitrariness to which we have earlier referred. (d) Remuneration to copyright owners is, more often than not, calculated upon the revenue which the user receives for the broadcast or performance of the. Works which he uses. In this respect the estimation of what is a reasonable price has little parallel outside the field of copyright There are some parallels; for example, rentals for shops in shopping centres being fixed upon the basis of turnover. (e) The monetary value of the ABC to the community is quantified by the amount of the Parliamentary appropriation made in order that it may conduct its operations. (f) The adoption of a percentage of revenue or expenditure provides the parties with a formula which will continually reflect inflationary trends .and also the value which the community, through Parliament from time to time places upon the ABC's operations. For reasons earlier given, we do not perceive why the acceptance of APRA's case should lead us to conclude that the percentage of revenue paid by the commercial stations should be applied to the ABC's revenue or expenditure. In our opinion. The commercial experience is relevant, but only one of a number of relevant factors which should guide us in arriving at an appropriate percentage. Our task is to fix upon a percentage which will, as far as reasonably possible, suit the circumstances, of these parties. In order to arrive at an appropriate percentage, a number of considerations need to be taken into account. These in some cases would lead to a higher percentage being awarded and in other cases to the award of a lower percentage. The considerations include the following: (i) The nature and extent of the licence which APRA confers should be properly comprehended. We have earlier referred to this. But in summary it should be emphasized that the licence confers .a right to broadcast the whole of the music in the APRA repertoire as often as the ABC chooses at any time of the day over all or any of its many broadcasting and television stations. What use the ABC makes of the licence is a matter for the ABC. The APRA repertoire is so extensive that the ABC may confidently use all available music secure in the knowledge that there is only the remotest chance that it will ever infringe any copyright owner's performance rights. Either the music will be part of the APRA repertoire or it will be out of copyright. (ii) The ABC should pay a fair commercial price for the right which the licence confers unaffected by the consideration that it is providing a public service. In other words, it should pay a price for the right which the licence confers which is fair in commercial terms just as the prices it pays for other commodities and services are fair. (iii) The ABC does not attract large audiences. (iv) The ABC must be guided by its charter and does endeavour to provide programmes in accordance with it. It also provides assistance to Australian composers because of the exposure which it is prepared to give their work. (v) The commercial percentages should be regarded as the ceiling. No percentage higher than the commercial percentages would be appropriate. APRA does not suggest that they would. (vi) The continuing trend from music to "talk" must be taken into account. It is not easy to do this because the trend is still developing. APRA has offered to make some adjustment similar to its band approach in the commercial area but it is difficult to see what this could be. In any event the ABC is in a different position from commercial stations because it operates all kinds of stations providing all sorts of programmes. The fact that Radio 1 may have moved to "talk", may be one thing, but that does not mean that there is not a balancing effect brought about by the increasing numbers of ABC FM stations which, for the most part, play music. The matters we have specified are not exhaustive. As our later discussion will show other matters need to be taken into account as well. The above analysis approaches the matter as if what was sought was a percentage of revenue; in fact it is a percentage of expenditure. However, we see no difficulty about this. Obviously what is intended is to exact a percentage of' revenue. But it is more convenient to use expenditure (which derives from revenue) because it is then easier to make the various deductions than it would be if revenue were taken as a base. It is operating costs only upon which the percentage is to be levied. This does not include either capital costs or a number of other costs which APRA concedes should be omitted. If revenue were to be taken as the base, a much more elaborate statement of what is to be deducted would be required. Conclusions We must now come to conclusions on what the percentages for both television and radio should be and on what base those percentages should be charged. We propose to come to conclusions about base figures first of all. Before coming directly to this question, there is one matter strongly relied upon by counsel for the ABC with which we should deal. He placed considerable weight on the fact that the ABC was required by its charter to provide, and did in fact provide, radio and television programmes to remote parts of Australia. In many remote areas ABC programmes are the only ones available, commercial radio and television not being a viable operation. We agree that the ABC does serve remote areas and will do so increasingly now that the AUSSAT Satellite is in operation. But we are bound to say that the ABC's operation into remote areas is largely, if not entirely, a relay operation, that is, the programmes are relayed either from Radio Australia or .from the ordinary radio and television networks. Furthermore, until recently the cost of providing and maintaining such relay services was paid by Telecom subject to there being some annual charge made for landlines. As earlier noted, the position has changed somewhat with the introduction of the AUSSAT Satellite. There will now be payable by the ABC an annual charge for the use of it. For the year ending 30 June 1986 that charge will be approximately $22 million. The only question in our minds is whether we should reduce the basic expenditure figure upon which the percentage is to be charged by the amount paid for the use of the Satellite. Music will, of course, be played as part of the programmes transmitted to the remote areas which the Satellite enables the ABC to serve. For that reason we do not consider that the basic figures should be reduced, but we do think that we should take the fact that the ABC does broadcast to remote areas, whether by use of the Satellite or not, generally into account in arriving at the appropriate percentages. This is something we have done, but not in any precise way. It is simply one of the considerations which we have borne in mind when reaching our conclusion as to what an appropriate percentage should be. We next mention Radio Australia. We were asked to reduce the basic figure by the amount of the cost of operating this service. We are not prepared to do this. Our reasons for this are twofold. Firstly, the same considerations apply as apply in the case of the Satellite. Secondly, the parties themselves have, by their course of dealing, contemplated that it was appropriate to allow something to APRA for the fact that music was played over Radio Australia. In 1955 a specific sum was assigned to it. In later years the cents per head of population formula was applied to it inasmuch as APRA licensed the ABC to play its music over Radio Australia as well over its other stations. We can now be more specific :about base figures. Attachment B is a statement of the ABC's receipts and payments for the year ending 30 June 1984. The total amount expended for operational costs in providing domestic radio services was $78 million. The operational costs for Radio Australia were $8.7 million. The total of these two figures is $86.7 million and is the amount upon which the percentage we decide upon for radio services will be charged subject to there being made a proper allowance for the costs of providing parliamentary broadcasts. As earlier mentioned the direct costs of these is comparatively small – less than $100,000 according to Mr Oliver. But, according to a number of the ABC witnesses, parliamentary broadcasts have a serious effect on general programming and upon the ABC's ability to attract audiences. When Parliament is sitting, ordinary programmes are said to be disrupted. Those following such programmes turn to other stations, usually commercial stations, or switch off the radio. Support for this impression by these witnesses was to be found, so it was submitted, in certain statistical evidence which was before us. We do not find it possible to reach a clear conclusion on whether this detrimental effect exists or not. What can be said is that the fact that the ABC broadcasts Parliamentary proceedings on a regular basis is one of the matters which distinguishes it from commercial stations. APRA, when propounding its claim, sought to make allowance for this difference by omitting from the figure on which the percentage was to be charged, in order to arrive at its licence fee, the cost incurred in broadcasting the proceedings of Parliament. What came as a surprise, we think to APRA as well as to ourselves, was the comparatively minimal cost of broadcasting the proceedings. To deduct an amount of approximately $100,000 to take account of the fact that the ABC broadcasts Parliamentary proceedings would not, in the range of figures which are in play, make any significant reduction in the licence fee to be paid. For that reason we propose not to make any deduction for the cost of broadcasting the proceedings of Parliament. Rather we shall take into account, in reaching our conclusion as to what the appropriate percentage for radio should be, the fact that those proceedings are broadcast and may have some detrimental effect on ABC programming generally. The other matters to be omitted from expenditure do not give rise to similar problems. The cost of maintaining orchestras and conducting concerts is separately shown in the accounts which are Attachment B. For the year ended 30 June 1984 these costs were $22.5 million. They are not included in the figure of $78 million which is the cost of providing domestic radio services. In the same section of. the accounts is stated the cost of merchandising which we understand to include the cost of operating the ABC shops. This cost was approximately $6 million. We would not include that figure in the base upon which the percentage is to be levied any more than we would include the cost of maintaining orchestras and conducting concerts. That leaves television programme costs. In the way that the case was conducted it may be accepted that these costs amount to forty per cent of the total operating costs incurred in providing television services. Thus, as we have earlier said, if the appropriate percentage for television was 1.5 per cent, that percentage would become 0.9 per cent once the cost of providing programmes had been taken into account. Again we think that the best way of making proper allowance for this deduction is by taking it into .account in the percentage which is fixed rather than in any deduction from the base upon which the percentage is charged. Before coming to deal with the question of what percentages should be fixed, there is one matter that we should make clear. The reason why APRA was prepared to deduct from the base figures the cast of broadcasting the proceedings of Parliament, the cost of maintaining orchestras and presenting concerts, and the cost of producing programmes for television was because it thought that the deduction of these items would the more equate the ABC with the commercial stations. Counsel for the ABC pointed to many other areas of the ABC's operation which did not involve the broadcasting of music. The presentation of news and sporting descriptions and commentaries provide examples of this. Why, he asked, were these not excluded along, for instance, with the cost of broadcasting the proceedings of Parliament? The answer lies in the need to fix a percentage on overall costs. This is what is done in the commercial area. (although, in relation to revenue) and, in other countries, in the case of national broadcasters as well. Plainly much of what the commercial stations broadcast also does not consist of any music at all. Earlier we attempted to give some indication of the amount of music played over ABC stations as compared with other types of material. If one were not to take the course which APRA proposes, the exercise of determining a base figure upon which a percentage would be charged would be far more complex than that which is suggested and that which applies in many other countries in the world as well as in the commercial area of radio and television in Australia. The fixation of an appropriate percentage involves a judgmental exercise. We are unable to give further reasons for our decision than have already appeared. We have taken, so far as we are able, all relevant factors into account and given them appropriate weight. We have decided that the appropriate percentage for radio is 1.25 per cent and that for television 0.6 per cent. We have looked at what this will mean in money terms to the parties. For the year ended 30 June 1984 the licence fee will rise from the existing figure of $1.25 million to a figure somewhat more than $2 million. That is a substantial increase, although not an increase of nearly this proportion which APRA claimed. The size of the figure does not suggest to us that the decision of which we have arrived is at a11 excessive. Indeed it is our opinion that it is an the conservative side of what might have been awarded. We should, perhaps, add that we are conscious that we are living through times of economic restraint. But this should not be regarded as an ordinary case which has led to an increase of more than 60 per cent. At the heart of our decision is the conclusion that the basis upon which APRA was being remunerated in the past was inadequate. The fact that it is shown to have yielded far too low a figure is but a consequence of our conclusion that the formula should be changed. There can be no question about our jurisdiction to vary the licence scheme to give effect to our decision. What we propose is a t rue variation of the scheme. We bear in mind the submission made by counsel for APRA that in the end it was a question of our deciding, not what we ourselves would have awarded, but whether the APRA licence scheme was reasonable. We are prepared to confirm it, but we wou1d regard it as unreasonable unless it were varied in accordance with the decision which we have indicated we propose to make. Two matters remain to be mentioned. The first of these concerns the fact that the licence scheme does not confer on the ABC a licence to perform works in the APRA repertoire at ABC concerts. The history of the negotiations and dealings which we have earlier recounted discloses that such a licence has always been conferred by APRA until the present proposal. In 1955 a specific sum was assigned to cover this matter. Counsel for the ABC has submitted that we should vary the licence scheme so as to provide that the formerly existing position should be retained. Having given the matter due consideration, we have decided that we should accede to this submission with the consequence that the licence scheme will be varied to include a provision that the ABC be licensed to perform works in the APRA repertoire at its concerts. No additional sum will be payable. The remaining matter concerns a submission that the new licence fee, which will apply from 20 February 1981, should be phased in. In other words, in the submission of counsel for the ABC, we should not leave the situation as one in which the new formula will, apply to the calculation of the licence fee payable by the ABC to APRA for years prior to that ending 30 June 1986. What should be done, in his submission, is that we should fix amounts, in each case an amount less than that which would be derived by the application of the new formula, so that the impact of our decision upon the ABC is not as great as would otherwise be the case. We have decided not to accede to this application. The ABC has had notice of the proposed licence scheme since 1981. The provisions of the Act are such that it applies in terms from 20 February 1981 subject to such variations as we consider should be made. Since 1981 there has been substantial inflation in the community. Furthermore, there is no provision which would enable there to be any award of interest on moneys which, in the view of the matter which we take, should have been paid in past years. Notwithstanding these conclusions, we would be prepared to give consideration to varying the licence scheme by providing that moneys due to APRA by the ABC in respect of the licence fee payable for the years ending 30 June 1981 to 1985 inclusive not become wholly payable until 1 July 1986. We are prepared to consider this course because of evidence which suggests that current estimates may not enable the total payment to be made from funds available in the current financial year without there being some adverse effect on other aspects of the ABC's operations. Although the licence scheme makes some provisions in relation to payment of increases in the licence fee for past years, there is a question in our minds as to our power to vary the scheme to postpone payment in the way that we think may be desirable. It is a matter on which we would need to hear counsel. We should add that we would be unlikely, in any event, to make any such variation unless there were evidence which demonstrated the need for it. It is perhaps unnecessary to mention that the ascertainment of what is due for past years will involve not only the giving of credit for what has been paid, but also the removal from past operating expenditure for each year of the amount already paid to APRA before the appropriate percentage is applied. Summary In summary then we have decided that the licence scheme should be confirmed but subject to the following variations: 1. The percentage provided for in sub-paragraph 1(a) of the Schedule will be 1.25 per cent rather than 2 per cent. 2. The words from and including the word "less" down to the end of the sub-paragraph will be omitted. 3. The percentage provided for in sub-paragraph 1(b) of the Schedule will be 0.6 per cent rather than 1.5 per cent. 4. The words from and including the word "less" down to the end of the sub-paragraph will be omitted. 5. The licence scheme will be amended to make it clear that the operating costs of the ABC upon which the percentages are to be levied do not include the cost of providing and maintaining orchestras, conducting concerts or of running the ABC Shops. 6. The licence scheme will be amended so as to provide that for the fee which is payable the ABC is to have a licence to use in its concerts all works in the APRA repertoire. We do not propose to make formal orders at this stage. We propose to stand the matter over for a short time to enable counsel and the parties to consider what we have said. When the matter is again in the list counsel for APRA are to bring in short minutes of order to give effect to our decision. We shall then also consider any application that either party may make in relation to costs. I certify that this and the 86 preceding pages are a true copy of the reasons for decision herein of the Copyright Tribunal. [Note: This is a copy and page numbering differs from original] Associate to President Dated 6 December 1985 ATTACHMENT A see page 6 AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED LICENCE SCHEME FOR AUSTRALIAN BROADCASTING COMMISSION AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LIMITED is willing to grant a licence to The AUSTRALIAN BROADCASTING COMMISSION in the form of the Licence hereinafter set forth, subject to the payment of the charges specified therein, and subject to the terms and conditions contained. therein. DATED THE 16th day of February 1981 For and on behalf of Australasian Performing Right Association Limited Signed JL Sturman …………………………………… J.L Sturman Managing Director LICENCE 1. In this Licence "the Association" means Australasian Performing Right Association Limited; "the Commission" means Australian Broadcasting Commission; "broadcast" means a wireless sound transmission, whether made in conjunction with a wireless image transmission or not; "date upon which this licence comes into operation" means the date upon which the Licence Scheme. of which this Licence forms part comes into operation by virtue of Part VI of the Copyright Act, 1968; "dramatico‑musical work" means an opera, operetta, musical play, revue or pantomime, insofar as it consists of words and music written expressly therefor, but does not include any such work where a broadcast is given by means of a cinematograph film which has been made primarily for exhibition in motion picture theatres; "licence year" means the period of twelve months commencing first July of the year to which reference is made; "licensed territory" means the Commonwealth of Australia; "works in the Association's repertoires" means all and any musical works (including such words or lyrics as are normally associated therewith) the right to broadcast in which is from time to time during the term of this licence vested in or controlled by the Association for the licensed territory. 2. As from the date upon which this Licence comes into operation and until the due termination or expiry of this Licence and subject to the conditions and limitations hereinafter contained the Association grants to the Commission A LICENCE to broadcast works in the Association's repertoire from national broadcasting stations (including those carrying Radio Australia programmes), national television stations and such television repeater stations, national broadcasting translator stations and national television translator stations which distribute the Commission's programmes when distributing any of the Commission's programmes. 3. In consideration of the Licence herein granted the Commission shall make payments to the Association in accordance with the provisions set out in the Schedule hereto. 4. The Licence herein granted shall extend to and authorise any, public musical entertainment given by or under the authority of the Commission either in its studios or in other premises provided that the whole or any part of the entertainment is broadcast as part of the Commission's programmes, and the audience (if any) is admitted to the entertainment without payment. 5. This Licence is strictly limited to the acts hereby expressly licensed and does not extend to or include any other incidental or implied rights or powers. 6. This Licence shall not extend to or authorize: (a) The broadcasting in their entirety in any manner whatever of dramatico‑musical works. (b) The broadcasting of excerpts from any dramatico-musical works if broadcast with dramatic action and/or stage costume and/or scenic accessories. (c) The broadcasting of vocal performances with instrumental accompaniment only (ie without dramatic action, stage costume or scenic. accessories) of excerpts from any dramatico‑musical works as aforesaid, if the Association shall have notified the Commission in writing that such excerpts are prohibited from broadcasting by such means. Excerpts other than the one thus excluded may be so broadcast by the Commission subject to the general limitation that the Commission may not broadcast without written permission more than two excerpts from such work in any one programme. The Association shall not prohibit any such excerpts from broadcasting under this provision unless such excerpts have also been prohibited from broadcasting generally by commercial radio and television stations in Australia . (d) The broadcasting by purely instrumental means (ie without dramatic action, stage costume or scenic accessories) of excerpts from any dramatico‑ musical work as aforesaid, if the Association shall have notified the Commission in writing that such excerpts are prohibited from broadcasting by such means. Until such notifications (if any), such excerpts may be so broadcast by the Commission without limitation. The Association shall not prohibit any such excerpts from broadcasting under this provision unless such excerpts have also been prohibited from broadcasting generally by commercial radio and television stations in Australia. (e) The broadcasting of oratorios or major choral works (that is choral works exceeding twenty minutes' duration) in their entirety or excerpts therefrom if the duration of any such excerpts exceeds twenty minutes. (f) The broadcasting of the whole or any part of the music written for a ballet if accompanied by a visual representation of the ballet. For the purpose of this clause, "ballet" means a choreographic work to be accompanied by music, having a story, plot or abstract idea, devised or used for the purpose of interpretation by dancing and/or miming, but does not include country or folk dancing, nor tap dancing, nor precision dance sequences. (g) The vocal performance of songs in broadcasts of a theatre or music hall programme in respect of which songs the Association has notified the Commission that the television rights have been reserved to a particular artist except where performed by such particular artist or by other persons with the approval of the person controlling the said rights. (h) The broadcasting (unless authorized in writing by the Association or the copyright owner) of any music accompanied by any words other than those (if any) published or otherwise associated therewith by the publisher for Australia; or of any musical work in any adapted or rearranged form, or in such manner as to burlesque or parody the work. 7. The Association will give the Commission, on request, all such information as the Association reasonably can give respecting works claimed or represented as being works for the time being in the Association's repertoire. 8. Without prejudice to clause 6 hereof the Association reserves the right to withhold permission to broadcast or to restrict and exclude from the operation of this Licence the broadcasting of any work or works for the time being in the Association's repertoire provided no commercial records thereof has been issued for retail sale to the public in Australia and provided further that the total number of such works which may be withheld at any one time shall not exceed three hundred. The Association agrees to give notice in writing to the Commission of any works permission to broadcast which is withheld or restricted as above provided and undertakes at all times to use its best endeavours to make the range of works that may be broadcast as wide as possible. 9. Where a restriction notice has been given by the Association pursuant to clause 8 hereof in respect of a work which has previously been broadcast by the Commission under this licence then the restriction notice shall not be effective for a period of thirty (30) days after the giving thereof provided the Commission upon receipt of the said notice first furnished evidence that the work has been specifically included in a programme arranged before receipt of the notice for broadcasting within that said period of thirty (30) days. 10. (1) The Commission shall send to the Association at its registered office a return in such form as may be reasonably required by the Association of all musical works performed in public or broadcast from time to time in whole or in part by it and such return shall show in respect of each musical item: (a) The title thereof; (b) The name or names of the composer, author, arranger and publisher thereof and if a commercial gramophone record or a film is used the name of the manufacturer and identification number of the record or the title of the film and the name of the producing company thereof; (c) The number of minutes and seconds occupied in performing or broadcasting the time, and (d) In the case of broadcast by means of a sound film, whether the performance is featured or background. Provided that in respect of any programme recorded overseas or by a television station operator within Australia other than the Commission the foregoing obligations shall be deemed to have been complied with if the Commission sends to the Association at its registered office a return setting out: (e) The title of the programme; (f) The episode number of such programme (if any); (g) The name of the producer where available; (h) The music cue sheet relating to the programme; (2) The Commission shall take all reasonable care to ensure the correctness of all the information required by sub‑clause 1 of this clause but having taken all such reasonable care the Commission shall not be responsible for or in any way liable in respect of errors or omissions. (3) The said return. shall be sent to the Association with all reasonable despatch if practicable within one week, but in no case later than four weeks from the date of broadcasting . (4) The Commission shall give to the Association such further information as to its programmes or any such musical works as aforesaid as the Association may from time to time reasonably require and may be available in the records for the time being normally kept by the Commission for its own purposes. (5) The Commission shall in all published programmes and in the said returns adhere to the titles of such musical works as aforesaid and the names of composers, authors, arrangers and publishers thereof as appearing on the works themselves or records or films thereof and no substituted titles shall be used in the said programmes or returns. 11. Subject to the due observance by the Commission of conditions terms and restrictions contained in this Licence the Association agrees to indemnify the Commission its servants and agents from all actions and suits of whatsoever nature that may be brought against it or any of them in respect of broadcasts by the Commission of music in the Association's repertoire or represented by the Association to the Commission as such and the Association further agrees to indemnify the Commission its servants and agents in respect of all legal costs incurred by it or them in defending any such actions or suits which may be brought against it or them as aforesaid PROVIDED THAT the Commission shall promptly notify the Association of any such actions or suit and shall permit the Association to conduct the defence thereto in the name of the Commission. 12. Irrespective of the date upon which this Licence comes into operation it shall be deemed to have commenced as from20 February 1981~and subject to the terms and conditions hereof and subject also to any order made by the Copyright Tribunal shall remain in force until terminated by the giving of not less than three months notice in writing from either party to the other to expire on the 30th June in any year. SCHEDULE 1. In respect of the licence granted to the Commission the Commission shall pay to the Association in respect of each licence year covered by this agreement the. following fees: (a) 2% of (i) the Commission's gross operational expenditure incurred in the provision of radio broadcasting services (including the Domestic Service and the Overseas Service) less (ii) total direct expenditure incurred by the Commission in the broadcasting of proceedings of the Parliament of the Commonwealth; and (b) 1.5% of (i) the Commission's gross operational expenditure incurred in the provision of television broadcasting services. less (ii) total direct expenditure of the Commission on the purchase, hiring or production of television programmes provided that the total amount so deducted shall be no more than 40% of the Commission's gross expenditure under sub‑paragraph (i) of this paragraph during the relevant licence year. 2. For the purpose of determining the fees payable under clause 1 of this schedule, the Commission's gross operational expenditure incurred in the provision of radio and television broadcasting services shall be taken to mean and include all of those items of expenditure set out in the Annual Statement of Receipts and Payments of the Commission under the heading "payments ‑ Operational", for the licence year under determination. 3. A proper statement of the expenditure claimed to be deductable from gross operational expenditure pursuant to sub‑clause 1(a)ii verified by a responsible officer of the Commission shall be supplied to the Association before the Commission shall be entitled to have any such deduction taken into account in calculating licence fees. 4. Payment of the Licence fees under this Licence shall be made as follows: (a) In respect of the period commencing on the date upon which this Licence comes into operation and ending on 30th June, 1985 ("the said period"), the Commission shall pay the Association on or before the 31st December, 1985 the difference between (i) the amount produced by the application of the formula set out in clause 1 of this Schedule to the said period, and (ii) the amount already paid by the Commission to the Association as Licence fees in respect of the said period. (b) In respect of the licence year commencing 1st July, 1985, the Commission shall: (i) make a provisional payment on or before the last day of each of the twelve months in the said licence year of $250,000; and (ii) pay the balance (if any) of the actual fees due for the said licence year, ascertained in accordance with clause 1 of this Schedule, on or before 31st December, 1986. (c) In respect of the licence year commencing 1st July, 1986, the Commission shall: (i) make a provisional payment on or before the last day of each of the twelve months in the said licence year of $260,000; and (ii) pay the balance (if any) of the actual fees due for the said licence year, ascertained in. accordance with clause 1 of this Schedule, on or before 31st December, 1987. (d) In respect of the licence year commencing 1st July, 1987, and each succeeding year, the Commission shall: (i) make a provisional payment on or before the last day of each of the twelve months in licence year under determination of an amount equal to one‑twelfth of. the total fees paid for the whole of the licence year ended twelve months prior to the commencement date of the licence year under determination; and (ii) pay the balance (if any) of the actual fees due for the said licence year, ascertained in accordance with clause 1 of this Schedule, within six months after the expiration of the licence year under determination. 5. If, in respect of any licence year during the currency of this agreement, the total of provisional licence fees paid in respect of such licence year exceeds the total of licence fees finally payable in respect of such year, the Association shall make an appropriate refund of the excess fees to the Commission. ATTACHMENT B – See page 61 Statement, of Receipts and Payments for the year ended 30 June 1984 General Activities RECEIPTS Notes 1983‑84 1982‑83 $ $ $ $ Funds on hand 1 July (2) 220 61 Net Parliamentary Appropriations Operational 274 356 000 246 406 000 Capital 18 061 000 14 380 000 292 417 000 260 786 000 Other Receipts Merchandising (including Publications) 5 950 778 4 804 528 Public Concerts 5010 465 5 247 983 Subsidies for Symphony Orchestras 1 366 597 1 281 708 Sale of Programs 1 341 112 1 090 210 Sate of Land and Buildings 91 915 ‑ Miscellaneous 385 719 400 333 14 146 586 12 824 762 TOTAL RECEIPTS $306 563 806 $273 610 823 PAYMENTS ‑ OPERATIONAL Notes 1983‑84 1982‑83 $ $ $ $ Radio ‑ Domestic Service Salaries General Program Service 36 979 383 26 705 539 News Service 9 091 898 8 484 718 Engineering 8 314 985 14 934 011 $54 386 266 $50 124 268 Expenses Production of Programs General Program Service 13 605 781 10 178 254 News Service 2 941 933 2 491 354 Engineering 2 713 446 3 450 444 $19 261 160 $16 120 052 Purchase of Programs 250 347 325 696 Broadcasting Rights 800 878 1 074 112 Transmission Channels 3 223 762 2 885 245 $23 536 147 $20 405 105 Total Radio – Domestic Service $77 922 413 $70 529 373 Statement, of Receipts and Payments for the year ended 30 June 1984 General Activities PAYMENTS – OPERATIONAL (continued) Notes 1983‑84 1982‑83 $ $ $ $ Television Salaries General Program Service 44 769 199 24 211 184 News Service 6 078 469 5 733 849 Engineering 18 227 585 32 195 800 Production Services 11 727 536 11 404 499 Film Services 12 008 913 11 915 225 $92 811 702 $85 460 557 Expenses Production of Programs General Program Service 22 178 990 15 654 023 News Service 4 414 342 4 021 314 Engineering 6 884 954 8 180 750 Production Services 2 484 411 2 205 651 Film Services 3 011 955 2 781 091 $38 974 652 $32 842 829 Purchase of Programs 14 163 861 11 827 208 Broadcasting Rights 2 925 511 3 455 710 Transmission Channels 15 613 656 13 288 115 $71667 680 $61 413 862 Total Television $164 489 382 $146 874 419 Other Activities Orchestras and Concerts Salaries Musicians 13 309 639 12 953 587 Other 2 452 840 2 332 083 $15 762 479 $15 285 670 Expenses 6 732 212 6 659 976 Total orchestras and Concerts $22 494 691 $21 945 646 Merchandising (including Publications) Salaries 1 328 455 878 812 Expenses 4 459 750 3 728 437 Total Merchandising $5 788 205 $4 607 249 Total Other Activities $28 282 896 $26 552 895 Administration (7) Salaries 13 386 415 12 116 784 Expenses 4 418 717 3 157 106 Total Administration $17 805 132 $15 273 890 TOTAL OPERATIONAL EXPEND. $288 499 823 $259 230 577 General Activities (continued) PAYMENTS – CAPITAL Notes 1983‑84 1982‑83 $ $ $ $ Plant and Equipment Engineering 9 943 076 9 149 742 Production Services 222 104 224 302 Film Services 1 124 823 1 217 684 General Equipment 2 596 150 1 839 176 Total Plant and Equipment $13 886 153 $12 430 904 Construction of buildings $1 730 219 $1 479 139 Acquisition of sites and buildings $1 916 529 $469 983 TOTAL CAPITAL EXPENDITURE $17 532 901 $14 380 026 TOTAL PAYMENTS $306 032 724 $273 610 603 Funds on hand 30 June (2) 531 082 220 $305 563 806 $273 610 823 The accompanying notes to the accounts are an integral part of and are to be read in conjunction with the Statement of Receipts and Payments Radio – Overseas Service (Radio Australia) RECEIPTS Notes 1983‑84 1982‑83 $ $ $ $ Funds on hand 1 July (2) 58 Net Parliamentary Appropriations Operational 8 715 000 8 317 000 Capital 2000 000 $8 915 000 940 000 $9 257 000 TOTAL RECEIPTS $8 915 058 $9 316 986 PAYMENTS – OPERATIONAL Salaries General Program Service 4 938 549 4 213 074 News Service 1 647 699 1 497 639 Engineering 273 885 805 891 $6 860 133 $6 516 604 Expenses Production of Programs General program Service 1 300 242 1 135 214 News Service 357 795 347 166 Engineering 463 357 160 066 $1 721 394 $1 642 446 Transmission Channels 118 460 157 936 $1 839 854 $1 800 382 TOTAL OPERATIONAL EXPEND. $8 699 987 $8 316 986 PAYMENTS – CAPITAL Plant and Equipment 180 338 804 898 Construction of buildings - 135 058 TOTAL CAPITAL EXPENDITURE $180 338 $939 956 TOTAL PAYMENTS $8 880 325 $9 256 942 Funds on hand 30 June (2) 34 733 58 $8 915 058 $9 257 000 The accompanying notes to the accounts are an integral part of and are to be read in conjunction with the Statement of Receipts and Payments ATTACHMENT C - see page 61 COMPARISON OF PAYMENTS MADE TO APRA BY (a) ABC (b) COMMERCIAL RADIO STATIONS (C) COMMERCIAL TELEVISION STATIONS 1954 – 1984 Year ABC Australian Australian Commercial Radio Commercial Television 1953‑ 1954 $ 95,891 $ 106,202 $ 1954‑1955 97,744 110,988 1955‑ 1956 98,461 113,390 1956‑ 1957 102,682 115,415 15,194 1957‑ 1958 104,947 119,593 28,000 1958‑ 1959 114,174 123,701 36,000 1959‑ 1960 124,228 128,002 48,298 1960‑ 1961 150,000 159,448 52,000 1961‑1962 162,000 199,340 52,020 1962‑1963 174,000 212,304 52,002 1963‑1964 186,000 219,888 245,080 636,110 (including retrospective judgement) 1964‑1965 192,982 260,324 413,002 1965‑1966 210,442 324,362 570,806 1966‑1967 223,317 360,325 449,145 1967‑1968 240,450 415,152 509,230 1968‑1969 240,423 470,920 667,092 1969‑1970 246,844 549,453 618,798 1970‑1971 258,392 684,006 658,945 1971‑1972 266,853 704,712 745,689 1972‑1973 263,681 760,133 896,733 1973‑1974 287,812 846,549 1,031,099 1974‑1975 521,697 919,713 1,210,155 1975‑1976 513,451 1,029,560 1,375,273 1976‑1977 597,312 1,194,696 2,334,508 1977‑1978 656,241 1,431,522 2,986,251 1978‑1979 718,591 2,759,836 3,212,456 1979‑1980 802,798 2,102,373 3,893,237 1980‑1981 894,205 2,468,157 4,330,447 1981–1982 1,012,445 2,711,235 5,394,112 1982‑1983 1,149,496 3,038,056 6,813,301 1983‑1984 1,252,021 3,499,242 7,005,338 ATTACHMENT D - See Page 62 ABC PAYMENT TO APRA ABC PAYMENT TO APRA AS A PERCENTAGE OF EXPENDITURE TOTAL OPERATIONAL EXPENDITURE ABC RADIO & TV & RADIO/AUST TOTAL OPERATIONAL EXPENDITURE ABC TOTAL OPERATIONAL EXPENDITURE RADIO AUST 1960 – 61 150,000 0.887% 16,916,728 ₤8,458.364 1961 – 62 162,000 0.861% 18,817,048 ₤9,408,524 1962 – 63 174,000 0.844% 20,626,170 ₤10,313,085 1963 – 64 186,000 0.749% 24,822.952 ₤12,411.476 1964 ‑ 65 192,982 0.616% 31,320,853 $30,572,832 $748,02 1965 – 66 210,412 0.607% 34,651,878 $33,877,379 $774,49 1966 – 67 223,317 0.574% 38,893,618 $37,953,151 $940,46 1967 – 68 240,450 0.576% 41,709,843 $40,684,028 $1,025,81 1968 – 69 240,423 0.523% 45,999.674 $44,804,608 $1,195,06 1969 – 70 246,844 0.484% 51,006,790 $49,734,178 $1,272,61 1970 – 71 258,392 0.452% 57,167,902 $55,663,089 $1,504,81 1971 – 72 266,853 0.417% 63,992.813 $62,241,023 $1,751,79 1972 – 73 263,681 0.374% 70,548,630 $68,560,549 $1,988.08 1973 – 74 287,812 0.324% 88,856,603 $86,195,100 $2,661,50 1974 – 75 446,697 0.388% 115,264,261 $111,744,433 $3,519,828 1975 –76 513,451 - - - TOTAL OPERATIONAL EXPENDITURE OF DOMESTIC RADIO TOTAL OPERATIONAL EXPENDITURE OF TELEVISION 1976 – 77 597,312 0.537% 111,131,000 $36,462,000 $70,164,000 $4,505,000 1977 – 78 656,241 0.559% 117,338,000 $38,249,000 $74,344,000 $4,745,000 1978 – 79 718,591 0.601% 119,512,000 $39,633,000 $78,691,000 $5,188,000 1979 – 80 802,798 0.598% 134,199,000 $42,404,000 $86,045,000 $5,750,000 1980 – 81 894,205 0.585% 152,805,000 $47,923,000 $98,648,000 $6,234,000 1981 – 82 1,012,445 0.514% 196,913,000 $61,624,000 $127,208,000 $8,081,000 1982 – 83 1,149,496 0.509% 225,719,086 $70,529,000 $146,874,000 $8,316,986 1983 – 84 1,252,021 0.499% 251,110,987 $77,922,000 $164,489,000 $8,699,987