12.45 In the ALRC’s view, users should not be required to obtain a licence before using an orphan work in all circumstances. This would be inefficient and burdensome on individual and institutional users, and would overly inhibit the use of orphan works.
12.46 Some centralised or collective licensing models require users to pay a fee to collecting societies before using an orphan work. Some stakeholders submitted that without requiring up-front payment, the market for other non-orphan works would be harmed.
12.47 For example, Copyright Agency/Viscopy suggested that collective licensing is preferred on the basis that ‘there should be no benefit to a licensee in choosing to use an orphan rather than equally suitable identified work’. It proposed a model under which a licence to use an orphan work could be granted by a collecting society, but only if an equally suitable licensed work was not available. Upon payment of the licence fee, Copyright Agency/Viscopy would undertake to search for the rights holder. If the rights holder is found and wants to licence the work, the licence fee will be paid to the rights holder, less the search cost. Alternatively, if the rights holder does not want to licence the work, the licence fee is refunded to the user less the cost of the search.
12.48 Where the rights holder is not found, the licence fee would be held in trust for a specified period to allow the rights holder to be identified. If identified, the rights holder receives the fee, less the reasonable administrative fees of the collecting society. If the rights holder is not identified within the period, the licence fee is used for the benefit of rights holders in the same class (for example, photographers), provided the collecting society has done a proportionate search.
12.49 The Music Council of Australia suggested that up-front payment was preferred ‘rather than create uncertainty where the copyright owner might have to seek payment in the future, once the work has already been used’.
12.50 Wiley and Sons proposed a model similar to the UK, with a licensing body or bodies appointed to operate an orphan works scheme. It suggested that ‘the cost of the scheme would be covered by reasonable subvention from licensing fees, with the balance held in a secure escrow account’. In granting the licence, the user would be indemnified by the authority against future action by the rights holder, and the licence could not be terminated by the rights holder when they come forward.
12.51 There was also some support for a statutory licence. The SBS was open to a statutory licence provided that it was ‘efficient and tailored to particular industry needs’ and should be in addition to a limitation on remedies after a diligent search. The University of Sydney also suggested a statutory licence could ‘ensure that important research and dissemination of information for the public good is not impeded by legal uncertainty’. Pearson/Penguin said that it would support a scheme under which, after a duly diligent search, a licence is granted ‘at low cost, with any rights holder coming forward retaining the right to royalties and subsequent control over use of the work’.
12.52 A narrower statutory licence was suggested by Professor Jock Given—based on a diligent search model—but limited to works of a certain age. Under the model proposed, an orphan works scheme would ‘be limited to works created, published or deposited in an archive’ a number of years ago—cautiously 50 years or, more expansively, at the ‘open access period’ prescribed in the Archives Act 1983 (Cth). If a rights holder comes forward within a reasonable time after re-use of the work, he or she should be entitled to equitable remuneration.
12.53 A number of stakeholders submitted that requiring up-front payment of a licence fee to a centralised body or collecting society when there is no guarantee or little likelihood that the money will find its way to the copyright holder is problematic. As the CSIRO argued:
The suggestion that a licence fee would be paid to a collecting society seems strange where the issue is the identity of the recipient. Disbursement of money after a period to members of the collecting society seems unfair to the user of material who may claim to be entitled to a refund or to be obliged simply to agree to pay a reasonable royalty should the correct rights holder be identified.
12.54 Even where the money is held in an escrow account and redistributed to other copyright holders, the recipients may have no great connection with the orphan work. This does not appear consistent with the purpose of copyright; to remunerate the author of the work and provide an incentive to create. Similarly, the AGD orphan works review has cautioned that
There are policy questions about whether it would be appropriate to confer the rights of orphan works owners on collection societies and other representative bodies, which may prioritise corporate advantages ahead of author and user interests.
12.55 Further, up-front payment does not account for the fact that some orphan works were never intended to be commercially exploited, such as those donated to public libraries or archives. Both fair use and the ALRC’s proposed limitation on remedies approach take into account the nature of the work, and whether it is used for non-commercial purposes.
12.56 The ALRC queries whether a centralised licensing system would be an efficient and cost-effective measure to facilitate the use of orphan works, without burdening cultural institutions and users. For example, commentators have criticised the Canadian system as being an expensive and lengthy process, and for which only a small amount of licences have been granted over a long period of time.
12.57 There would be also large transaction costs in setting up a centralised licensing system, and there are questions as to how centralised licensing might operate in practice.
 The Association of Learned and Professional Society Publishers argued that an exception that allows the use of orphan works without payment ‘would naturally make orphan works more attractive than other copyright works that the same user may have to pay for the use of, photographs being a prime example. This puts other creators at a disadvantage and creates an unfair marketplace’: ALPSP, Submission 199.
 Copyright Agency/Viscopy, Submission 249.
 The value of the licence would be assessed having regard to ‘a normal fee charged for such use’.
 Copyright Agency/Viscopy, Submission 249.
 Music Council of Australia, Submission 269.
 John Wiley & Sons, Submission 239.
 SBS, Submission 237.
 University of Sydney, Submission 275.
 J Given, Submission 185.
 CAMD, Submission 236; State Records NSW, Submission 160; National Archives of Australia, Submission 155; National Gallery of Victoria, Submission 142; Powerhouse Museum, Submission 137; Art Gallery of New South Wales (AGNSW), Submission 111; H Rundle, Submission 90.
 CSIRO, Submission 242.
 Australian Attorney-General’s Department, Works of Untraceable Copyright Ownership—Orphan Works: Balancing the Rights of Owners with Access to Works (2012).
 See D Khong, ‘Orphan Works, Abandonware and the Missing Market for Copyrighted Goods’ 15 International Journal of Law and Information Technology 54, 75; J de Beer and M Bouchard, Canda’s “Orphan Works” Regime: Unlocatable Copyright Owners and the Copyright Board (2009) noting that between 1988 and 2009 only 441 applications have been filed in relation to 12,640 orphan works, and only 230 licences were granted. The ADA and ALCC also argued that the model imposes ‘undue administrative burdens, leading to lengthy delays and providing little public benefit’: ADA and ALCC, Submission 213.