Administration

MBE 148/45 Glenferrie Road

Malvern, Vic 3144
Phone: 03 9507 2315
Fax: 03 9507 2316
Email: admin@mca.org.au
Website: www.mca.org.au
ABN 85 070 619 608
Executive Director
Tel: +61 (0)2 9251 3816
Fax: +61 (0)2 9251 3817
Email: mca@mca.org.au
Music. Play for Life campaign
Music Council of Australia
Tel: 02) 4454 3887 or 0439 022 257
Email: tina.mpfl@mca.org.au
Website: www.musicplayforlife.org
Australia’s representative to the International Music Council

Better Regulation Office

By email entertainmentreview@dpc.nsw.gov.au
August 5, 2009

Dear Sir / Madam

The Music Council of Australia is the national peak music organisation with a council of 50
representing the broad spectrum of music activities in Australia.

The Music Council appreciates the opportunity to comment on the Options Paper
regarding the Review of the Entertainment Industry Act 1989 prepared by the Better
Regulation Office and the Office of Industrial Relations.

The Music Council welcomes the recognition in the Options Paper of the value of the music
industry to the New South Wales economy.

The Music Council notes that the government considers regulation is necessary in the
entertainment industry for three main reasons, namely

• many performers are in a weak bargaining position;

• many performers are reluctant to or unable to afford legal remedies;
• there are conflicts of interest where a representative acts for both a performer and a
venue.

Broadly, the Music Council supports these findings.

The model proposed in the Options Paper proposes:

• Maximum agent fees of 10 per cent.

The Music Council supports this recommendation.

• Written contract if fees charged are above 10 per cent.

 The Music Council assumes this excludes agents, for whom it is proposed that fees are
capped at 10 per cent. The Music Council notes that managers offer a much more
complete service than agents and that the normal rate of 20% applies. However, the
use of the terms “agent” and “manager” is not consistent and so the specification in a
written contract of the services to be offered for a fee in excess of 10 per cent would
show how the fee is justified and protect both the performer and the manager.

• Mandatory use of trust accounts except where the transaction is below $1,000

The Music Council supports the mandatory use of trust accounts. Consistent with other
professions where persons have fiduciary duties to others, the Music Council considers
that where agents or managers handle monies earned by their clients on their behalf,
such monies must be managed through the establishment of trust accounts. The Music
Council questions the proposed threshold of $1,000. For a struggling performer, a fee
of $600 can be crucial and its loss can be as disabling as larger losses for well-
established performers with high net worth. The Options Paper rightly identifies how
precarious life for performers can be and therefore the Music Council proposes that
this suggested threshold be eliminated and all transactions be subject to the use of a
trust account.

• Must keep records of trust account status and fee payments

The Music Council supports this proposal as normal business practice.

• Must keep records for five years

The Music Council suggests that the period be consistent with other reporting
requirements, such as income tax records, GST records and the like.

• Must provide financial statements to performers

The Music Council supports this proposal as normal business practice.

• Remove the requirement for probationary licensee to lodge a $2,000 bond

On the evidence, it seems that those agents and managers who have breached their
fiduciary duty to clients have done so after the first twelve months of operation and
this fact could support the removal of the requirement for a bond for the probationary
licensee. This would also remove a small barrier to entry in a sector that needs
additional competent operators. On the other hand, the probationary licensee will lack
experience and possibly competence in the early period of operation and it might be
expected that this is the period of highest risk. The occupations of agent or manager
attract some people whose enthusiasm may exceed their skills. There is an argument
that a bond of at least this modest size should apply from the inception of business.

• Must keep a copy of all contracts and provide information to performers about dispute
resolutions

The Music Council supports this proposal as normal business practice.

• Code of ethics with penalties

 The Music Council supports the introduction of a code of ethics. A code of ethics for
representatives, developed by industry participants, would foster better relations
between performers and representatives and assist in reducing non-compliance.
Agents and managers should be considered separately.

• 12 months for OIR to commence prosecutions

The Music Council recommends that the extension be consistent with the general
statute of limitations.

• Representative to disclose to performer if also acting for a venue

The Music Council is not convinced that this proposal adequately addresses conflicts of
interest. Declaring a conflict of interest does not remove the conflict of interest and its
attendant disadvantages for the performer in question.

• Financial penalties for breaches

The Music Council supports the introduction of effective sanctions but questions how
the removal of licensing will assist.

• Auditing and inspection powers

The Music Council supports the introduction of auditing and inspection powers but
notes they will only be effective if enforced.

In addition to the above points, the Music Council notes that nowhere in the regulations is
it required for licensees to show evidence of their professional standing nor knowledge of
the industry in which they will work. This is fundamental and the Music Council strongly
advocates inclusion of such requirements. The Music Council proposes that the
specifications must be developed with the collaboration of the industry including its
professional associations such as the Association of Artist Managers.

New South Wales is presently the only state to have regulations covering representatives.
As such, it constitutes national best practice. The Music Council considers that position
must be maintained and indeed believes regulation should be introduced nationally.

However, the Music Council notes that the major shortcomings of the current regulations
lie in a lack of enforcement. Further, as the Options Paper notes, the removal of licence
fees will remove the funding mechanism for enforcement. The Paper then proposes that
other fund raising mechanisms be considered such as the introduction of an industry levy.
The Music Council considers that the better option would be to retain licence fees.

The Music Council appreciates the opportunity to comment and will be happy to discuss
any of the matters raised further.

Yours sincerely

Dr Richard Letts AM
Executive Director