The gym and health club industry has attacked a decision by the Copyright Tribunal to increase license fees required to play music at their locations by 1,500%, adding thousands to yearly costs and threatening the viability of smaller, independent gyms.
But the recording industry has said the decision will give artists a fair deal, arguing they have been underpaid for too long and gyms have been getting away without paying their fair share.
The Copyright Tribunal decided the current license fee of 96.8 cents per fitness class, capped at $2,654 a year, will be increased to $15 per class. Gyms say this could increase costs by up to $25,000 per year.
The decision was prompted by a submission from the Phonographic Performance Company of Australia.
Gyms say they are now being forced to adopt unlicensed music in order to avoid paying the fees, with some of the country’s largest health clubs refusing to pass the costs on to consumers.
Fernwood chief executive Diana Williams says she is very disappointed with the decision, which will prompt the franchise to adopt unlicensed music to avoid paying hefty fees.
“To put it lightly, we are very disappointed. It’s a huge increase for running a health club, and now we have to go down the royalty-free format because we don’t want our members to pay more money.”
Williams says the decision could put a lot of smaller gyms out of business, with many of them unable to pay thousands in new fees.
“Quite potentially smaller operators could fall away. It’s a huge amount of money for them to pay, and a huge pressure for them.”
“We chose not to push those costs onto consumers, because we think Fernwood’s attraction is the fun environment, not the loud thumping music. I don’t think it’ll impact as much here as other clubs, which may have the music as the number one ingredient of their atmosphere.”
Andy Mallinson, spokesperson for Fitness First, says the industry is incredibly disappointed with the decision, as it goes too far and adds a significant burden to smaller businesses.
“It is a very big increase, we’re very disappointed in it, even though it doesn’t have an immediate impact for us because we’ve been moving to more unlicensed music anyway. So it doesn’t affect us too much, but it is disappointing.”
Mallinson says that while larger chains will be able to absorb the cost of the new license fees, smaller, independent gyms will not be able to control the costs and could eventually pass them on to customers.
“We knew there was going to be an increase, but they’ve put up fees by 1,500%. You take a smaller operator which could have been paying $1,500 per year for that class, now they could pay up to $25,000 a year.”
“Any gym operator has three decisions: they can pass that on to their members, absorb it, which is huge, or they can seek alternatives. We’ve moved away from licensed music so we don’t incur those fees and therefore protect our members, but it’s tough for many other operators.”
Additionally, Fitness First chief executive Lauretta Stace said in a statement that for the average-sized fitness centre with 1,500 members, running 30 classes per week, the cost will increase by over $20,000 per year.
“The international record companies, who are represented by the PPCA, have shot themselves in the foot by demanding outrageously high copyright licensing fees from the fitness industry, the majority of which go straight into record company coffers.”
Stace echoed Mallinson’s claims that gyms will now begin to move towards unlicensed music, which she says will be a detriment to the record companies as their music will no longer be heard.
Les Mills, the largest provider of choreographed exercise classes has already developed a product that is PPCA copyright free, allowing gym operators like Fitness First to introduce high quality music that is not subject to PPCA copyright.
“The reaction from gym members has been highly supportive so we now expect that all gyms will move to alternative music options.”
But the recording industry believes it is finally getting a fair deal. PPCA chief executive Stephen Peach said in a statement the new fee structure will deliver a more beneficial structure for Australian recording artists.
“Today’s decision by the independent umpire represents an important improvement for artists and labels whose music is widely used in fitness classes to attract and motivate participants. The Tribunal has recognised the previous scheme undervalued the undoubted contribution music makes to the fitness industry.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
