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IHRSA Warns Australia Music Licensing Issue Could Affect the U.S.

BOSTON -- Faced with a possible 3,000 percent increase in fees for playing copyrighted music in Australian group exercise classes, Fitness First Australia, a chain of more than 85 health clubs in Australia, recently partnered with the International Health, Racquet and Sportsclub Association (IHRSA) to fight back. IHRSA warns if the increase is successful, American record companies could try to do the same here in the U.S.

“Global music companies are looking for new sources of revenue, as sales in their traditional business—the sale of CDs—have dropped,” Tony deLeede, managing director of Fitness First Australia and a member of the IHRSA board of directors, said in a statement from IHRSA. “The music industry has already had a significant victory with nightclubs in Australia. If music companies have success here raising fees for health clubs, it will have an effect around the world.”

IHRSA and Fitness First Australia have pledged $135,000 and are looking for Australian health clubs to match these funds in order to help stop the music industry’s attempts to raise the fees charged to clubs. The current Fitness Class Tariff in Australia, which is paid to the Phonographic Performance Company of Australia (PPCA), has an Australian dollar value of $0.90 ($0.80 USD) per class with an annual cap of $2,654 ($2,302 USD). The PPCA has been studying how music is valued and is suggesting that the proposed fee either be increased to $31.67 ($26.89 USD) per class with no cap—an average increase of 3,172 percent per club—or that clubs be charged a rate of $26.08 ($22.55 USD) per member per month. Fitness Australia says it plans to challenge the model that the PPCA is using to value music in health clubs.

“Either scenario would devastate the industry and has serious implications for clubs in other countries, since PPCA sister organizations around the world may well decide to restructure their fees in a similar way,” IHRSA President Joe Moore said in the statement. “For the sake of the global industry, we need to stop this issue in Australia.”

PPCA has already been successful in increasing fees to the Australian nightclub industry in excess of 1,400 percent.

“The [Australian] nightclub industry did not organize—they did not fight back,” Susan Kingsmill, president of Fitness Australia, said in the statement. “We have no choice. If we don’t fight this, we won’t have an [Australian health club] industry left to fight for.”

The U.S. Copyright Act of 1976 makes it a copyright infringement to play copyrighted music in a public place without the consent of the copyright owner. Although one fitness and health club music provider declined to comment for the story, a representative at Power Music Systems says that because the company owns and controls all of the recordings featured on its CDs, the American recording industry could not charge clubs because they do not represent Power Systems’ music.

On its Web site, IHRSA says that in many cases, the U.S. copyright law has not been accurately interpreted or fairly enforced. Music licensing organizations have heightened efforts to license health clubs that play popular music over public-address systems or use recorded music in fitness classes, according to the IHRSA statement. No further details were given.

“Club operators should have access to current and complete lists of songs licensed by each organization so that they may make an informed decision about music use,” the statement reads.

According to Australian Leisure Management, an Australian health club trade publication, a decision on the Australian music licensing issue is scheduled for 2009.

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