The Copyright Board has stirred a hornet?s nest with its latest order directing FM radio channels to pay 2% of their annual net advertising revenue as royalties to music companies. While FM radio players have cheered the order, the music industry has vowed to challenge the order in court, describing it as ?the final nail in the coffin of the music industry.
Currently, radio operators pay music companies Rs 660 per needle hour of music, as per a 2002 order by the Copyright Board. Broadly, one needle hour is the duration of music played during any given 60 minutes. If music is played for 40 minutes during a one-hour slot, it is taken as one needle hour.
The FM radio industry is estimated to be paying Rs 100-crore royalties every year to the music industry. As per the new order, this will come down to Rs 15-20 crore. India has 40-odd FM radio companies operating about 245 private FM stations. The country?s Rs 750-crore music industry earns around 15% of its revenues from these broadcasters.
The radio broadcasters are excited at the promise of greater profitability, which would help them expand in the upcoming third phase of FM radio that will cover 217 towns where 806 new FM stations will be set up.
The music industry is, naturally, up in arms, with companies like T-Series, Tips, Venus and Saregama expressing extreme unhappiness. They wanted radio broadcasters to pay them on a per-hour basis under the 2002 order. The music industry is now gearing up to challenge the order in the Delhi High Court.
FM broadcasters like Radio Mirchi, Radio City and Big FM are in a celebratory mood. The broadcasters had cited large royalty payments as the biggest issue hampering the growth of FM radio.
?We are happy that the Copyright Board?s order is aligned with the international norms on music royalty. This will help both radio and the music industries grow at a much faster rate as we are both partners and dependent on each other,? said Prashant Panday, CEO of Entertainment Network India which operates Radio Mirchi.
Extending the sentiments, Apurva Purohit, CEO, Music Broadcast Pvt Ltd, which operates Radio City said: ?Acceptance of revenue share model, which is an international practice, would go a long way in improving the profitability of small stations and networks which were bleeding under the impact of fixed fee regime.?
Music companies point out that according to the latest order, the music companies will be dependent on the ability of radio broadcasters to earn revenues. ?If they earn, we earn ? that is what the order means. It is the final nail in the coffin of the music industry. We find the order absurd and one-sided,? said Neeraj Kalyan, vice president of leading music company T-Series.
Kalyan indicated that the music industry will challenge the order in the Delhi High Court. ?We feel the order has been influenced by the strong lobby of certain radio broadcasters who are also big media houses. Their lobby in the I&B and HRD ministries has worked, it seems,? Kalyan said. T-Series is also planning to go to the Prime Minister?s Office if the matter does not get sorted soon.
As per the order, royalties must be paid irrespective of whether the music companies are independent or represented by licensing bodies like Phonographic Performance Ltd (PPL), Indian Performing Right Society (IPRS) or others.