Whenever an Australian or New Zealand song is played, even as telephone hold music, the Australasian Performing Rights Association [APRA] collects royalties and distributes them to the artist.

But, it's not clear how rates for businesses to play music are set and how independent artists are being paid, the Australian Small Business and Family Enterprise Ombudsman Kate Carnell said.

"Even just people who put the radio on in their establishment pay APRA an amount of money for the rights to do that," she said.

"We have no issue with that, if people are playing music than the artists that own that music should be paid, but the way the charges are worked out is pretty opaque."

APRA have the virtual monopoly on music licenses and are re-authorised every five years by the Australian Competition and Consumer Commission [ACCC].

Until transparency issues are addressed, the Ombudsman wants that licence reduced to a year-on-year basis.

Licences to use music are grouped by industry, a gym will pay based on the number of members and classes, while a restaurant is charged by seating capacity.

A one-size fits all fee structure would mean Ruby's Cafe would pay the same amount as The Capitol Theatre, APRA head of legal Jonathan Carter said.

"The fact that we put our hand up to take part in ACCC re-authorisation voluntarily shows we are serious about good governance," he said.

"We will challenge the Ombudsman on year-to-year authorisation, the ACCC has proposed five years and we think that is appropriate."

For every dollar APRA collects, about 86 cents is returned to artists. If businesses paid per play the administration cost could far outweigh the royalties.

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That means artists who aren't played on commercial radio but could be on local airwaves, like Tamworth country music, could be paid less.

Songwriter Allan Caswell has been an APRA member for 46 years and said the business industry has argued the issue like a broken record.

"The bottom line is if a hairdressing salon has magazines they have bought and paintings on the walls, that's part of the experience," he said. "So if they are using our work, we have to be paid for it.

"The amount they pay to use our work and property is criminally minimal."

The ACCC will hold a pre-decision conference on July 19.

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