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Australian Lawyers and Consultants

Music On-line No Longer Free

July 1998

Thousands of Australian companies use hold music to assist in the running of their business by keeping clients entertained whilst they are waiting to be attended to. It was decided recently in Telstra Corporation Limited v Australasian Performing Rights Association (APRA) that music composers will now be entitled to copyright royalties for the use of their music on hold. The Court found that Telstra infringed the Copyright Act by the transmission of copyright music over telephone lines.

APRA viewed the decision as a positive one for its 20,000 members since it enables APRA to collect composers’ and songwriters’ royalties if their music is either transmitted to Telstra subscribers over telephone lines or broadcast to mobile telephone receivers.

APRA had argued that Telstra participated in use of copyright in provision of ‘on-hold’ music in three different ways: firstly, where a person made a call to a Telstra service centre and music was played whilst the person’s call was kept on hold; secondly, ‘on-hold’ music was played when people called certain government business and organisations to which Telstra provided a transmission facility; and thirdly, a person would hear music ‘on-hold’ when calling CustomNet, a service provided by Telstra.

APRA was of the view that in regard to conventional telephones, Telstra caused musical works to be transmitted to subscribers to a diffusion service in the fashion referred to above. In relation to mobile telephones, APRA argued that the music amounted to a broadcast via the mobile telephone system.

Two of the judges, Justices Dawson and Gaudron, noted that it did not matter that the service of receiving music was not wanted by the user of the telephone. They pointed out that the essential function of telephone services is to assist communications, although systematic transmission of music on hold was in their view a diffusion service, "being a service of distributing broadcast or other matters to callers who receive the music". Moreover, they held that this was consistent with s 26(5) of the Copyright Act which provides that "where a service of distributing incidental to, or part of, a service of transmitting telegraphic or telephonic communications, a subscriber to the last-mentioned service shall be taken, for the purposes of this section, to be a subscriber to the first-mentioned service."

In regard to the finding of there being ‘broadcasting’ by reference to mobile telephones, ‘broadcast’ is defined in s 10 of the Copyright Act to mean ‘transmit by wireless telegraphy to the public’. ‘Wireless telegraphy’ is defined to mean ‘the emanating or receiving, otherwise than over a path that is provided by a material substance, of electromagnetic energy’. Mobile telephones have a radio transmitter and a radio receiver by which communication is made to a nearby base station. It is via the base station that radio transmission to and from a mobile phone so connected occurs to the rest of the telephone network. For the High Court, this transmission on the mobile telephone system constituted a ‘broadcast’. Interestingly, Justices Dawson and Gaudron felt that it did not matter that in the ordinary course of events, only one person uses a particular mobile phone at any one time. They felt that as the broadcast was aimed at the public it was in fact a broadcast to the public.

Justice Kirby alluded to the consequences that are likely to apply with other information and communication technologies including facsimile services, video conferencing and data transmission. He noted that telecommunications carriers and perhaps even Internet service providers may become liable due to Internet users downloading works protected by copyright. Justice Kirby felt that this may be a job better left to Parliament.

The importance of this issue is highlighted by the legal action initiated by APRA against the Internet service provider OzEmail for infringing the Copyright Act. In June 1996, APRA approached Internet service providers with a licensing proposal under which licence fees would be set at a nominal $1 per subscriber per year and the licence revenue would be passed on to the composers whose music had been transmitted over the Internet. Negotiations with the Internet Industry Association of Australia (the peak representative body at the time) failed. Hence, legal proceedings were commenced by APRA against OzEmail.

This dispute between APRA and OzEmail was settled out of court in early June 1998. Under the terms of the settlement, APRA will receive an undisclosed payment from OzEmail on behalf of it and other Internet service providers after the parties agreed that legislative amendments to the Copyright Act would make the action a waste of time. The changes to the Copyright Act proposed by the Federal Government would remove liability from Internet service providers for music transferred over the Internet without APRA-licensed approval and place it with the content provider. APRA has indicated that it intends to work with the Internet service providers to police the transmission music and other performances over the Internet.

For further information, contact Joe Lederman at BALDWINS, Australian Lawyers & Consultants.

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