Around the world, the music industry is trying to make up for lost CD revenue by charging nightclubs and other business more to play music.
An article in the New York Times documents how royalty rates are being hiked to generate new revenue. A quote from John Kennedy, chief executive of the International Federation of the Phonographic Industry, says it all: "This has always been seen in the past as a secondary source of revenue," he said. "But with the declines in revenue from physical sales in recent years, it has become more and more important."
The London-based Federation said royalty rates have increased 16 percent in the last year. That's nothing compared to Australia, where nightclubs are now paying 50 Australian cents per customer to play music, up from 7 cents per customer earlier this year. The rates are set to increase again to 1.05 Australian dollars in a few years. The music industry in Australia plans to go after restaurants, fitness centers and television broadcasters next.
Italy's restaurants and bars have agreed on standardized licensing for music. Those that come forward voluntarily to pay royalties will have lower costs compared to businesses that are caught by an inspector.
It seems unfair to me that business are getting penalized for the behavior of music consumers, who themselves haven't done anything but change their consumption habits. “They’re clutching at straws," said Bill Healey, chief executive of the Australian Hotels Association, who is fighting the changes.
This move could backfire, too. What if, instead of simply bowing to the labels, these businesses start playing indie music instead? In extreme cases, I could see some cash-strapped business ditching music entirely. If that happens, everyone loses.
