Australia's media regulatory settings have been unable to adapt to the digitisation of content such as streaming video-on-demand services including Netflix, according to the federal government.
"Audiences are turning away from traditional content models in favour of on-demand streaming," Communications Minister Mitch Fifield said at the Australian Communications and Media Authority's (ACMA) Australian Content Conversation conference in Sydney on Tuesday morning.
"In many ways, digital disruption has been a positive ... but in the face of digital disruption, it has also become glaringly apparent that Australia's content regulation and policy framework has some gaping holes."
With more than 2.2 million households now subscribed to Netflix and traditional media viewers declining, Fifield said the government must "modernise" its relationship with broadcasters through reform announced during last week's Federal Budget 2017-18.
"Digitisation is presenting both opportunities and challenges for the industry, also for the government and the agencies that have to determine policy," he said.
"We've heard a lot about the unprecedented change facing the industry, and the actions that policy makers and regulators take now will have major consequences for the future direction of the industry.
"We will abolish the broadcast licence fee, a relic of a bygone era ... instead, broadcasters will pay a new annual fee for spectrum, which is more reflective of its use."
According to the Budget, the abolition of broadcast licence fees, datacasting charges, and the existing apparatus licence fees for broadcasting spectrum from this year -- to be replaced with a new regime of apparatus licence fees for broadcasting spectrum -- is estimated to cost the federal government AU$414.5 million in revenue over the next five years.
However, it will enable broadcasters to adapt to modern media viewing and compete with international media sources, Fifield said on Tuesday, as will the government's current review into media reform -- although he admitted that "the right answers seldom come from government".
The government has allocated AU$100,000 to the ACMA during the next financial year to establish a transitional support package to compensate the "small number" of licensees who will be worse off following the media reform changes, with the package estimated to cost the government an additional AU$24.8 million in the next five years, the Federal Budget said.
The federal government has also been attempting to adjust to the digitisation of content and its impact on traditional broadcast owners through policing online piracy despite the Department of Communications continually finding that the availability of streaming services has "significantly" brought down online copyright infringement of TV shows, movies, music, and games.
Throughout 2016, those downloading content illegally fell from 43 percent to 39 percent, while those who streamed content legally rose from 54 percent to 57 percent. Those illegally downloading movies dropped from 18 percent to 16 percent; music dropped from 29 percent to 26 percent; and TV from 19 percent to 17 percent, the government revealed in November.
The government's hard-line on piracy led to Attorney-General George Brandis and then-Communications Minister Malcolm Turnbull asking internet service providers (ISPs) and rights holders to collaborate on creating a three-strikes policy in late 2014 -- which was then shelved by the ACMA last year after ISPs and rights holders were unable to reach an agreement on who should bear the costs of the regime.
Instead, the copyright infringement battle has moved to the courts under the Copyright Amendment (Online Infringement) Act 2015, which was passed by the government in mid-2015 and allows rights holders to obtain a court order to block websites hosted overseas that are deemed to exist for the primary purpose of infringing or facilitating infringement of copyright under Section 115A.