Fact Sheet
Restaurant industry tariff review
Background
PPCA is a non-profit organisation which collects licence fees and distributes them to record
labels and Australian recording artists.
PPCA licenses restaurants and café operators to play sound recordings in their premises
under Tariff R, which applies to all those recordings (both Australian and international)
which are protected under copyright law.
Artists and labels are entitled to receive a fair return for their work, particularly when it is used
to help drive profits in commercial enterprises.
The draft licence scheme
PPCA plans to introduce a new Tariff R1 covering the use of licensed sound recordings used
by restaurants and cafés. This is in line with PPCA's broad-based review of tariffs applying to
businesses which use recorded music to add value to the services they offer to the public.
To date, PPCA has collected and analysed a range of relevant information about the
restaurant and café sector much of which is in the public domain. This has been used to
formulate a draft licence scheme.
PPCA proposes replacing the flat annual fee payable under the current scheme with a new,
fairer, more flexible scheme which will better reflect the value music contributes to the
restaurant and café industry.
The proposed scheme will increase the fee paid to PPCA and will be calculated on a number
of factors including:
• seating capacity
• liquor licensing status
• number of meal sessions offered (ie breakfast, lunch and dinner)
• days of operation
• the average price charged for a single main meal (per session)
PPCA has provided the draft scheme set out in the table below to its relevant licensees for
consultation purposes. In proposing these figures PPCA has proceeded on the basis that a
restaurant or café may not reach its maximum seating capacity on all days. The proposed
scheme is based on the number of meal sessions offered, the average price of a main meal
(per session), as well as factoring in the venue’s liquor licensing status, as illustrated in the
table below. PPCA’s aim is to bring the proposed scheme into effect as of 1 October 2009.
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Proposed Scheme
Average Cost of A: Under $15.00 B: $15.01 to C: $25.01 to D: Over $35.01
Main Meal per $25.00 $35.00
Session
Unlicensed Licensed Unlicensed Licensed
One Session $0.05 $0.075 $0.10 $0.15 $0.22 $0.34
Two Sessions $0.09 $0.135 $0.18 $0.27 $0.40 $0.61
Three Sessions $0.12 $0.18 $0.24 $0.36 $0.54 $0.81
The rates in the table above would apply per person of seating capacity for each day of
operation and are inclusive of GST.
To illustrate the new fee structure, under the proposed scheme:
an unlicensed restaurant or café with a capacity of 50 seats, open for two sessions a
day (falling within Category A, ie, main meal under $15), would pay a rate of $4.50 for
music per day of operation, for all the recorded music used by the venue. This is
approximately a dollar more than the price typically charged for a single cup of coffee.
a moderately priced licensed restaurant with a capacity of 120 seats, open for three
sessions a day (falling within Category B ie, main meal between $15.01 to $25.00),
would pay a rate of $43.20 for music per day of operation, or 36 cents per customer per
day based on capacity.
The draft tariff is designed to apply to businesses which are open to the public, whose
income is derived mainly from the sale of food, with or without beverages, and which has
space available to consume the food/beverages on the premises. It will not apply to an
establishment operating within a club or multi-function venue (for example a restaurant or
café in a pub, club, motel or entertainment complex) if there is no seating area designated or
reserved for the consumption of food.
Value of music to the restaurant industry
The Australian restaurant and café sector generated income of $9.7 billion during 2006-07.
Music is widely used by the restaurant and café industry and contributes positively to the
ambience and atmosphere of an establishment. For example, research indicates that more
than 75 per cent of a sample of cafés and restaurants typically use music in their day-to-day
operations.
Research also shows that where used effectively, music can lead to a significant increase in
the time spent by consumers in restaurant and café environments, and an increase in their
expenditure on food and beverages, in a range of between 10% to 70%.
Currently a restaurant or café with a seating capacity of 60 pays PPCA just $62.04 a year for
all the recorded music it uses. Conservatively assuming that the venue attracts 30
customers a day and is open for business 200 days of the year, this works out to be
approximately one cent per person per day.
Cafés and restaurants are generally open for business between 7 and 9 hours per day. A
significant majority open for lunch and/or breakfast (in addition to dinner) at least one day per
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week and almost all establishments are open at least 5 days per week. A considerable
amount of recorded music is played over extended periods such as these.
PPCA believes that the fees for recorded music should be updated to a reasonable
commercial rate and one which better reflects the value that recorded music contributes to a
restaurant or café.
Consultation
PPCA seeks to implement a new tariff which is fair, and tailored to the marked diversity of the
restaurant and café industry. PPCA believes that its draft scheme would operate fairly in
relation to all businesses whether they are fast food restaurants, independently owned
venues, part of a chain, informal or high-end establishments.
PPCA believes that an important advantage of the proposed scheme for licensees will be the
ability to make quarterly payments which would also allow for seasonal changes to menus or
hours of operation to be taken into account.
PPCA is approaching its affected licensees (that is, those which would fall within the new
tariff R1) for their submissions and provision of information in relation to the draft scheme.
Consideration of written submissions and the consultation process will continue for a three
month period, ending on 15 August 2009. It is PPCA’S current intention to bring its proposed
tariff into effect on 1 October 2009. PPCA will credit amounts paid by licensees beyond that
date towards payment of fees under the new tariff.
If you are operating in the restaurant or café sector you may wish to contact your industry
association to seek further information.
If you would like to make a submission direct to PPCA, you should please contact PPCA in
writing before 20 August 2009. Your communication should be marked “PPCA Tariff R
Review” and sent to PPCA by post or by email using the details below. PPCA will keep any
financial or economic information provided in support of your representations confidential to
its review team if so requested. Only written submissions will be considered.
PPCA
PO Box Q20
Queen Victoria Building NSW 1230
Email: tariffreview@ppca.com.au
For any other licensing enquiries, PPCA’s Licensing Department may be contacted on: 02
8569 1111.
For media enquiries, please contact Nicole Hart:
Email: nhart@ppca.com.au
Telephone: 02 8569 1151
www.ppca.com.au
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