The stand-off between the music industry and private FM radio broadcasters on music royalty payments may deepen if the geographical unit for FM radio transmission changes from city to district, as proposed by the Telecom Regulatory Authority of India (Trai). FM radio licences are now given on a city basis.
FM broadcasters welcomed the Trai recommendation?which will expand their reach?but they fear the music industry might act as a spoiler by not rationalising the royalties. But the music industry claims that if the listener base grows so will the ad revenues, a part of which they are entitled to get, by right. ?If the geographical spread of a private FM increases, so does its listener base. That translates into lower cost (due to economies of scale) and higher ad revenues for the broadcasting company. So why shouldn?t the music industry, the staple of private FM, gets its due share?? asks Neeraj Kalyan, vice-president, international business, Super
Cassette Industries that commands more than 50% share of the music market.
Phonographic Performance Ltd (PPL), the copyright society that collects royalties on behalf of the music industry, feels that as an independent copyright owner, the body should have the right to decide on what should be the geographical basis of charging royalty, exclusive of government?s boundary demarcation for transmission.
The private FM broadcasters feel that music royalties in absolute terms may grow exponentially from the sheer rise in the number of cities and towns. ?This innovative step by Trai will allow FM to penetrate all 607 districts of the country. As the number of cities and towns covered by FM radio multiply throughout the country, one can well imagine what could happen to royalties if the music industry doesn?t reduce royalties,?? said Prashant Panday, deputy CEO, Entertainment Network India (ENI), which owns Radio Mirchi.
But the music industry appears defiant on the issue. Vipul Pradhan, CEO, PPL, says, ?We will watch how government clubs towns and cities for transmission and then decide. Currently we are charging the rate decided by the copyright board under the jurisdiction of the ministry of human resource development. But the current rates have not been reviewed for seven years. Even inflation has not been factored in.?
Citing the case of a leading private FM broadcaster, Pradhan claims that the cost of total content (music) is only 3 % of the total revenue of the company. The corresponding figure for a comparable industry, say music channels, is about 30 to 40 %. He adds, ?We are in talks with the radio industry. We wouldn?t do anything detrimental to the industry.?